Whether you’re a buyer or a seller, the Louisville Metro area is feeling the crunch. Managing Editor Kevin Broady takes a look into the highlights of the real estate market ups, downs and the trends for the 2019 forecast.
Agents and economists tracking the trends agree that the current market is a seller’s dream. Mortgage rates are low and so is inventory of new properties. Meanwhile, the number of millennials now looking for entry-level properties is high.
With fewer choices and heated competition, buyers are often snapping up homes within days, even hours. “The overall Louisville housing market remains extremely strong, but not all areas and price ranges are fairing equally,” says Julie Parks, a broker with Berkshire Hathaway. “This is typical when you come out of a hot market and sellers are expecting increasing prices based on past expectations, but the buyers who actually set the market have cooled a bit.”
The infusion of first-time home buyers in their late 20s and 30s may be the biggest game changer. It certainly wasn't the case five years ago, when many economists worried that this generation (born roughly in the early 1980s through 1996) was struggling with student loan debt and meager savings and postponing families and first homes. A lot of millennials graduated in to the recession and couldn't build up a nest egg, but now that they're a bit older, national data shows they're earning more money and can save for down payments and have "more of a desire for stability" and home ownership.
So what does all of this mean to you…whether you’re looking to downsize, upsize, remodel or move? Below, the stories only the numbers can tell.
SHOW ME THE MONEY
Low— and lowering— interest rates are also helping to stimulate the housing market. On average, the rates for a 30-year fixed mortgage are inching downward (4.5%), which means that buyers can get more housing bang for their buck during this time of year. Interested buyers who want the best deal should act quickly, though, since the spring housing sale season is right around the corner. That usually means an increase in demand and spike in prices. Many industry analysts expect the average rate for 30-year fixed mortgages to hit 5% in 2019, according to Bankrate.com.
Over the next five years, the construction industry will likely become one of the fastest-growing industries, with a 4.5% projected growth rate. According to the National Association of Home Builders, we’re already seeing signs of this impending boom. During the first part of 2018, the total number of single-family permits issued nationwide increased 8.4% over the previous year, reaching 279,302. While, new construction permits statewide for Kentucky increased to 12,630 and to 21,664 in Indiana.
Despite the demand for more available homes, the industry’s growth has been held back by certain factors that continue to plague builders. High employment rates, for example, have led to fewer job seekers and have exacerbated the industry’s labor shortage, while a new wave of tariffs is expected to drive up material costs even more. Although lumber prices have fallen from their record high last spring, new tariffs on imports from China include close to 600 products related to home construction, representing roughly $10 billion in goods. But these challenges won’t stand in the way forever. As builders and local communities devise new solutions for addressing the housing shortage, these innovations will help pave the way for the construction industry to reach its growth potential.
Increase in home values: 5.6% over the past year | Predicted increase within the next year: 0.4%
The median home value in Louisville: $158,700
Median list price in Louisville: is $133 per square foot | Median list price in the Louisville/Jefferson County Metro: $131 per square foot
Median price of homes currently listed in Louisville: $200,000
Median rent in Louisville: $1,095 | Median rent in Louisville/Jefferson County Metro: $1,100
Here’s a snapshot of home sales in 2018.
Number of houses sold: 17,829
Average selling price: $218,690
Median selling price: $180,000
Average Days on Market: 40 days
Average cumulative Days on Market: 54 days
Farm-to-table restaurants, dive bars, breweries and independent thrift stores give a city a “hipster” vibe, which can also attract the unexpected home buyer: the millennials. Columbus, Ohio, zipcode 43202, for instance, came in first place for its art, music, theater and museums, according to bizjournals.com.
Locally, zipcode 40217, located in central Louisville and including Germantown and Parkway Village, came in number eight due largely to an influx of locally owned businesses and young homeowners. This area has the largest population of residents between their late twenties to early forties. These mostly single adults or adult roommates are divided evenly between genders at fifty percent female and fifty male.
There, an average two-bedroom home is priced at $124,800 and rents for $500 to $750 a month. These homes are being purchased, updated or remodeled as the millennials’ first home investment. This area is close to the University of Louisville, downtown nightlife, culture, museums and major shopping sources. It’s one to watch over the next few years.
A look at the average sales price in a few popular neighborhoods...
Jeffersontown | Average home sale price: $175,017
Lyndon | Average home sale price: $192,394
Middletown | Average home sale price: $215,690
Brownsboro Farms | Average home sale price: $268,133
St. Matthews | Average home sale price: $268,569
Highlands | Average home sale price: $292,756
Crescent Hill | Average home sale price: $315,857
Springhurst | Average home sale price: $343,852
Owl Creek, Owl Creek Estates | Average home sale price: $363,439
Hurstbourne | Average home sale price: $396,819
Glen Oaks, Glen Oaks Estates | Average home sale price: $447,509
Prospect | Average home sale price: $447,896
Norton Commons | Average home sale price: $509,783
Cherokee Triangle | Average home sale price: $540,763
Hillcrest | Average home sale price: $542,882
Oxmoor Woods, Oxmoor Woods Estates | Average home sale price: $586,727
Cherokee Gardens | Average home sale price: $635,889
Anchorage | Average home sale price: $711,846