Rep. Blake Johnson: State Legislature should let cities lead on housing policy

Two of Indiana’s fastest-growing cities—Carmel and Fishers—have begun pursuing ordinances limiting the number of single-family homes that can be used as rentals. The policies are aimed at curbing investor ownership and preserving opportunities for homeownership, especially for first-time buyers.

They’ve sparked debate—and in the waning hours of the legislative session, state lawmakers considered preempting such local policies. While the language was ultimately withdrawn, it raises a troubling reality: Local governments in Indiana are increasingly being asked to govern under the shadow of potential state override.

As the ranking Democrat on the House Committee on Local Government, I believe state lawmakers should proceed with caution as we look to the future. While the policies raise legitimate concerns—especially for renters and lower-income families—the larger issue is one of governance. Local governments must be allowed to lead.

The pressure that prompted these ordinances is real. Across Indiana and the nation, institutional investors have begun buying up single-family homes at scale. A 2022 Urban Institute study found that institutional investors now own nearly 14% of single-family rentals in the United States, a share that’s grown rapidly in Sun Belt and Midwestern states. These investors often outbid families, convert homes into rentals and price them at or above market rates. It’s a dynamic that undermines access to homeownership and fuels housing inflation.

Municipal leaders are right to respond. Housing markets are hyperlocal—and so are the impacts of investor ownership. Carmel and Fishers, like many fast-growing communities, are seeing an erosion of entry-level housing and increased pressure on neighborhood stability. Their elected officials heard from constituents, debated options publicly and passed ordinances through democratic process. Whether one agrees with their approach or not, this is how local government is supposed to work.

That’s why I’m concerned when the General Assembly steps in—or threatens to do so—to reverse these ordinances after the fact. The state should not micromanage cities without a compelling, clearly articulated statewide interest. When we override local decision-making simply because we disagree, we undermine the autonomy of the communities we claim to represent.

To be clear: I’m not uncritical of rental caps. These policies are blunt tools for a problem requiring greater precision. They risk reducing rental supply, which could hurt younger residents, workforce housing availability and economic diversity. But if those trade-offs prove too steep, it’s up to local voters to hold their councils and mayors accountable. That’s what local elections are for.

More broadly, preempting local housing policy stifles innovation. Cities are our policy laboratories. They test ideas, adapt to change and develop place-based solutions. The state should support their flexibility—not freeze it.

As someone who’s served in local government and now leads on these issues in the Statehouse, I believe deeply in partnership. The state has a role to play in expanding affordable housing and ensuring consistency where needed. But our default posture should be to trust cities to govern themselves.

The question at hand is not just about rental caps. It’s about whether we believe in home rule. It’s about respecting local democracy, even when it yields decisions we wouldn’t have made ourselves. And it’s about recognizing that policymaking is most effective when it’s closest to the people.

Let’s be clear-eyed about the challenges, open to refining local strategies and steadfast in our belief that cities deserve the freedom to lead.•

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Johnson is the ranking Democrat on the Indiana House Committee on Local Government and represents Indianapolis.