Strong Economic Conditions and Balanced Housing Market Conditions in the Fort Wayne HMA

Strong Economic Conditions and Balanced Housing Market Conditions in the Fort Wayne HMA

Tomasz Kukawski is a regional economist in the Chicago Regional Office for HUD's Economic and Market Analysis Division

HUD's Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.

The Fort Wayne, Indiana Housing Market Area (Fort Wayne HMA) is coterminous with the metropolitan statistical area of the same name and includes Allen, Wells, and Whitley counties in northeast Indiana. The principal county of Allen includes the city of Fort Wayne, which is the second most populous city in Indiana with a population of 267,900 as of July 1, 2022 (U.S. Census Bureau population estimates). The current population of the Fort Wayne HMA is estimated at 458,200, an average annual increase of 0.6 percent per year since 2020. A recent comprehensive housing market analysis highlighted economic and housing market activity in the Fort Wayne HMA. This report reflects local conditions as of January 2024.

Historically an area known for manufacturing rail cars, the HMA shifted to producing insulated wires, tires, trucks, and cars during the 20th century. At its peak in the 1970s, the manufacturing sector accounted for 40 percent of jobs in the HMA. Although the manufacturing sector is much smaller today, accounting for 16 percent of total jobs, it continues to be important to the local economy and includes 5 of the 10 largest employers in the HMA. General Motors Company and Goodrich Corporation are the largest employers in the manufacturing sector, with approximately 4,375 and 1,500 employees, respectively.

Nonfarm payrolls rose in 9 of the 11 sectors over the past year, led by growth in the education and health services sector

Economic conditions in the HMA are strong, but the pace of job growth slowed during the past year. Nonfarm payrolls in the HMA during 2023 totaled 236,400, an increase of 5,300 jobs, or 2.3 percent, from a year ago. The pace of job growth was slower than the average annual increase of 3.5 percent during 2021 and 2022, when the local economy recovered from steep job losses during the pandemic. The pace of job growth in the HMA during the past year, however, was on par with the growth rate nationally. The education and health services sector led job growth in the HMA during 2023, accounting for 28 percent of the total increase. The unemployment rate in the Fort Wayne HMA during 2023 was 3.1 percent.

The education and health services sector grew by 1,500 jobs, or 3.5 percent, to 43,800 during 2023. The sector is the largest in the HMA, accounting for 19 percent of all nonfarm payrolls, and it has added more jobs than any other sector in the Fort Wayne HMA since 2011, with a net gain of nearly 8,250 jobs. Supporting the demand for health care is the population aged 65 years and older, a cohort that typically uses more healthcare services and has increased at an average rate of 3 percent a year since 2010. Parkview Health and Lutheran Health Network are 2 of the 3 largest employers in the HMA, with 8,975 and 4,075 employees, respectively.

During the next 3 years, the number of jobs is estimated to grow at an average rate of 1.1 percent annually. Ongoing new development at Lutheran Health Network that includes the construction of an 8,000-square-foot medical building in the city of Fort Wayne and planned expansions at several manufacturing firms are expected to fuel overall job growth in the HMA.

Balanced home sales and rental markets despite declining home sales and rising construction of new rental units

The home sales market in the Fort Wayne HMA is balanced, with an estimated vacancy rate of 1.2 percent, slightly up from 1.1 percent in April 2020. Home sales in the HMA declined for the second consecutive year. Higher mortgage rates reduced demand for sales housing; however, market conditions remain balanced because the supply of homes available for sale is low. In 2023, the annual average interest rate for a 30-year fixed-rate mortgage rose to 6.81 percent from 5.34 percent in 2022 and was substantially higher than the 2.96 percent rate in 2021 (Freddie Mac). In December 2023, home listings in the Fort Wayne HMA represented 1.5 months of for-sale inventory, up from the inventory of 1.2 months a year earlier but less than the 3.4-month supply in December 2019 (Redfin, a national real estate brokerage). During 2023, total home sales fell 20 percent from a year earlier to 7,500 homes sold. This decrease followed a decline of 11 percent during 2022 (Zonda). The average home sales price rose nearly 10 percent during 2023 to a new high of $250,000, which followed a gain of 11 percent in 2022. The low inventory of homes available for sale was a contributing factor to robust home sales price gains during the past 2 years. Rising home values and a growing population gave builders confidence to increase production. In 2023, the number of single-family homes, townhomes, and condominiums permitted increased 17 percent from a year ago to 1,775. During the next 3 years, demand is estimated for 4,525 new homes.

The rental market in the Fort Wayne HMA is balanced but easing, with an overall rental vacancy rate estimated at 9.0 percent, up from 8.5 percent in April 2020. Increased construction activity since 2022 has resulted in a large supply of new apartment units entering the market, which has outpaced the stable demand for rental units supported by economic growth and net in-migration. As of the fourth quarter of 2023, the apartment vacancy rate was 6.7 percent, up from 6.1 percent during the same period a year earlier and substantially higher than the recent fourth-quarter low of 3.8 percent in 2021, when apartment market conditions were tight (CoStar Group). The average monthly rent in the HMA as of the fourth quarter of 2023 increased 1 percent from a year earlier to $1,022, slower than the increase of 6 percent from the fourth quarter of 2021 to the fourth quarter of 2022. Tight market conditions early in the 2020s encouraged builders to increase construction activity. Approximately 1,150 rental units were permitted during 2023, an increase of 21 percent from the 940 units permitted during 2022. By comparison, an average of 510 units were permitted annually from 2014 through 2021. Approximately 97 percent of apartment units that have been constructed in the Fort Wayne HMA since 2014 were built in Allen County, primarily in downtown Fort Wayne and surrounding neighborhoods. During the next 3 years, demand is estimated for an additional 1,325 rental units.