In the Indianapolis region, roughly one in every 1,250 housing units had a foreclosure filing — about three times worse than the national average. Evansville was the only other Indiana metro to make the list, right behind Indy at No. 4.

The problem isn’t new, but it’s growing worse. After falling between 2020 and 2021 thanks to pandemic relief programs, Indiana’s foreclosure filing rates have since rebounded. Throughout 2025, Indiana consistently ranked among the 10 worst states, according to the Fair Housing Center of Central Indiana.

What’s behind the affordability crisis

Experts like Coers and FHCCI Executive Director Amy Nelson say the recent spike in foreclosure filings is in part due to rising escrow amounts — monthly payments for property expenses like taxes and homeowners’ insurance.

From 2019 to 2025, Indiana’s average escrow payment rose more than 50%, according to data analytics company Cotality. Today, about one-third of the money that Hoosier homeowners send to lenders each month goes toward those escrow costs, rather than paying down the home loan itself.

Beyond those property costs, residents are consistently spending more money on electricity bills, groceries and now gasoline, because of the war in Iran.

Higher costs especially strain residents in Indiana, a state where wage growth has lagged further behind the U.S. average in recent years, IU’s Indiana Business Research Center reports. More Hoosiers work lower-wage jobs in manufacturing or transportation than the national average, Coers said, and therefore they struggle to weather economic crises.

“Credit card usage is way up, savings rates are way down, and people just don’t have anything to back them up if things don’t go perfectly,” Coers said. “And if your expenses keep rising, but your wages are not keeping pace, it’s just really hard to stay abreast of your own household expenses.”

Households can often avoid foreclosure proceedings by being upfront about their financial struggles with lenders and finding alternate payment plans, said Trevor Meeks, chief consumer solutions officer for the Indianapolis Neighborhood Housing Partnership. Instead of losing the home through foreclosure, they might be able to sell it to help cover housing costs while they recover.

He said he’s worked with local families who found themselves in financial crises after losing jobs or working reduced hours. He mentioned one single-parent household that was forced to choose between paying for their child’s college tuition and paying the mortgage.

“Our mortgage borrower made the very difficult decision to cover the cost of tuition themselves and jeopardized their ability to make the mortgage payment on time,” Meeks said.

How Indiana leaders are responding

Indiana lawmakers in both political parties have increasingly called affordability a top concern, including Republican Indiana Gov. Mike Braun.

In a March 19 interview with IndyStar, Braun noted that Hoosier homeowners will soon get some relief as his sweeping property tax reform law, Senate Enrolled Act 1, takes effect this year. Two-thirds of homeowners are projected to see a lower property tax bill in 2026 than last year, mainly through tax credits that will save households up to $300.

With policies like this year’s House Enrolled Act 1001, Republicans also took steps to reduce the cost and regulatory burden on homebuilders so they can build more housing to help ease prices, Braun said.

To tackle the other side of the issue and boost wages, the governor said he’s pushing the Indiana Economic Development Corp. to create 100,000 more high-wage jobs in agricultural and life sciences in Indiana over the next decade. He said the state will commit $1 billion to that goal.

Braun’s property tax reforms have been criticized for offering meager savings to homeowners while sapping revenue from local governments, likely forcing leaders to make cuts to services like education and infrastructure unless they impose higher income taxes.

But Braun said Indiana’s staggering foreclosure filing rate shows that households need relief and local governments need to make do with less.

“I think if local governments are complaining about revenues being too slim, well, that obviously would be something that’d be hard to square with the fact that property tax payers, specifically as it relates to homes, are having trouble making ends meet,” Braun said. “So that means something’s got to give in the middle.”

Email Indianapolis City Hall Reporter Jordan Smith at JTSmith@indystar.com. Follow him on X @jordantsmith09 and Bluesky @jordanaccidentally.bsky.social.