Following the recession, Louisville real estate was stagnant. However, nearly a decade removed from the onset of the downturn, the Louisville real estate market is on the mend. In fact, you could argue that properties have been undervalued for a few years and the city’s outlook is even better than it appears. Either way you look at it, the Louisville real estate market is in a better position today than it was just a few short years ago. Subsequently, experts expect the positive trend to continue for the foreseeable future.
The Greater Louisville Association of Realtors (GLAR) reported year-to-date sales up 8.3 percent, with 2,891 homes and condos sold versus 2,669 at the same point last year. Sales were up 9.6 percent in March 2015 (1,140 units) compared to March 2014 (1,040 units), and the median selling price in all Multiple Listing Service (MLS) areas was up 8.7 percent compared to the same month last year.
GLAR President Paula Colvin commented that, “homes that are staged and priced correctly are selling quickly.” She also added that, “the inventory of homes for sale is still relatively low and we hope to see more sellers decide to list their homes in this spring. Early April data shows a continuation of the strong sales trend and a modest rebound in the number of new listings.”
The Louisville housing market has seen encouraging price growth in recent months. With appreciation rates in the local market surpassing the national average, the current median home price is $143,200. While it is not quite the $208,067 demonstrated by the national average, it is considerably more affordable, and therefore more attractive to first-time buyers and those interested in Louisville real estate investing. In fact, three consecutive years of price growth has people in the area very excited about the direction things are heading.
Appreciation rates have seen a lot of equity return to the market – at least compared to the depths of the recession. Both Louisville real estate investing and homeownership have seen incredible growth. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Louisville housing market one year ago have appreciated, on average, by $10,062. The national average was $14,170 over the same period.
- Homes purchased in the Louisville housing market three years ago have appreciated, on average, by $21,130. The national average was $53,857 over the same period.
- Homes purchased in the Louisville housing market five years ago have appreciated, on average, by $22,957. The national average was $48,036 over the same period.
- Homes purchased in the Louisville housing market seven years ago have appreciated, on average, by $22,489. The national average was $13,870 over the same period.
- Homes purchased in the Louisville housing market nine years ago have appreciated, on average, by $25,685. The national average actually declined $2,822 over the same period.
The Louisville housing market is receiving a great deal of support from the local economy. The job sector, in particular, appears to be promoting supply and demand on a high level. At 4.8 percent, the Louisville unemployment rate is well below that of the national average. Perhaps even more importantly, however, is the progress unemployment has made in the last year. In a period of 12 months, Louisville has decreased its unemployment rate by an impressive 2 percent. On the other hand, the national unemployment rate is somewhere around 5.6 percent. Even Louisville’s job growth rate is higher than the national average, 2.3 percent and 1.9 percent respectively.
While the local job sector is providing an encouraging boost for the economy, the Louisville housing market has one more impressive trick left up its sleeves: affordable housing. That’s right – Louisville housing is more affordable than most major metropolitan areas around the country. Not only that, but affordability is historically strong and improving. Homeowners in the Louisville housing market spend approximately 7.4 percent of their income on monthly mortgage obligations. The national average is just over 15 percent, meaning Louisville homeowners spend a lot less of their income on housing.
Affordability does not stop there. Louisville real estate investing has found that the local distressed market provides great discounts. According to RealtyTrac, the Louisville housing market has about 959 homes in some state of distress. That is to say that these properties are either in default, to be placed up for auction, or have been repossessed by the lender. At just under 1,000 foreclosures, distressed property filings declined about 72 percent from the previous year. However, while the numbers have decline, the discount remains high. The median sales price of a non-distressed home was $129,900. The median sales price of a foreclosure home was $62,100, or 52 percent lower than non-distressed home sales. That is an average discount of $67,800 per home. The discount has served as a valuable source of deals for Louisville real estate investing.
Those interested in getting into Louisville real estate investing should pay close attention to local auctions. In fact, 62 percent of all Louisville foreclosures are to be placed up for auction. The remaining foreclosures are all bank-owned, meaning lenders could be looking to get a lot of non-preforming loans off their books. In each scenario, Louisville real estate investing can benefit from a great discount.
The Louisville housing market was subjected to a period of stagnation following the recession. However, a combination of strong market fundamentals and affordability has helped turned the city around. Homeowners in the area have seen equity return and Louisville real estate investing has continued to revitalize the whole city. As it stands, the Louisville housing market is in a great position to grow in the coming years.
Louisville Housing Market Summary:
- Current Median Home Price: $143,200
- 1-Year Appreciation Rate: 5.9%
- Unemployment Rate: 4.8%
- 1-Year Job Growth Rate: 2.3%
- Population: 597,337
- Median Household Income: $50,905