CARMEL, IN — In response to growing concerns about the increasing presence of corporate investors in the housing market, the City of Carmel is contemplating a new ordinance that would impose a cap on rental properties in residential neighborhoods.
The proposal aims to limit the percentage of rentals to 10% per neighborhood, a move that mirrors recent actions taken by the City of Fishers.
"Carmel has never been a rental community, and I want to make sure that people have the opportunity to actually purchase a home," said Carmel City Councilor Matthew Snyder.
Carmel’s initiative comes after the City of Fishers identified similar issues stemming from large corporate buyers acquiring homes, prompting them to enact a cap on rentals in their community.
“9.6% of the total homes in Carmel are single-family rentals, and 22.8% of those are considered large corporate investors,” Carmel City councilor Rich Taylor explained.
While both cities are pursuing this ordinance to protect neighborhoods and promote single-family home ownership, Carmel's plan includes numerous exemptions for properties that have been on the market for an extended period and inherited properties.
However, not everyone is convinced that this is the right approach.
Chris Pryor, Chief advocacy officer with the MIBOR Realtors Association and who served on Carmel's Housing Task Force, argues that current circumstances differ significantly from previous housing market trends.
"Circumstances today are very much different. We have much higher interest rates. Housing prices have risen significantly. And so corporate investors are not purchasing at the same rate that they were years ago," he explained.
Pryor expressed skepticism about the ordinance.
"They are also interfering with the free market system by limiting the number of rental properties out there, which is going to drive up rental rates."
Doug McCoy, an expert at Indiana University’s Center for Real Estate Studies, echoed Pryor's concerns.
"Government interference has a lot of unintended consequences," he explained.
"I think for those reasons, we need to go back and think about protecting those property rights and letting free markets work."
Despite the push back, some city officials believe the proposed ordinance could create a more level playing field in the housing market.
"We want to encourage the American dream of single-family home ownership," Tayor explained.
Pryor wishes the city would create more affordable housing instead.
"If they truly had an interest in providing opportunities for homeownership, we would look at ways that we could provide more housing options for folks at an affordable rate."
The proposed ordinance will be heard by the finance committee before it will come back for further discussion or a final vote.
