Louisville real estate conditions are so fluid I considered adding a time stamp in the title. Month-to-month variances in each area can be huge and I expect it to get more interesting as the year ends and the $8000 first time home buyer credit nears its expiration date. I'd really like to tell you the water is fine and everyone should jump in the real estate pool, but you really need...
The Straight Truth
The bottom is behind us. That being said, we are still in a trough and the recovery will not be quick. Lending standards and appraisal standards have and will continue to hamper growth. In typical fashion, the fallout from the practices that lead to last fall's meltdown caused overreaction. The elimination of seller-funded down payment assistance programs and 100% financing coupled with tightened credit scores has removed 20-30% of buyers from the market. Many of them would make good homeowners, but will have to wait for another year or so.
The $8000 tax credit and 5-6% interest rates have been beneficial. Early this year, investors and first-time home buyers were the main market players. The credit drove interest and inspired confidence in buyers. As a result areas like PRP, Okolona, and Valley Station bottomed a little sooner. Several buyers were actually surprised at how much they could afford because of low rates.
We have just recently started to see a trickle-up effect. J-Town, Fern Creek (Area 7), Middletown (Area 8), and Anchorage (Area 9) are seeing more activity. That being said, Louisville homes that are even slightly overpriced are just languishing. Sellers who want to test the market are receiving 'F's and those who 'know what their homes are worth and refuse to give it away' are finding that they are going to get to live in said home for the foreseeable future.
As proof that real estate is hyper-local, the Highlands (Area 2) and St Matth
ews (Area 3) were nearly immune from any declines in price. In fact, both areas saw continued appreciation despite a slight decline in sales. At the same time sales in a few select neighborhoods were 20-40% foreclosures
Unemployment in Louisville continues to be high, but appears to have peaked. Major corporations like Ford, GE, Yum Brands and UPS have reaffirmed their commitment to the area and some are hiring (although none are likely to replace the full complement of workers laid off). The Norton-Anthem spat may even get resolved and bring more stability to the large medical workforce.
Supply is also greatly reduced. Many would-be sellers are waiting out the storm and fewer homes are on the market. These shadow-sellers have simply decided they don't need to sell and therefore aren't going to list their home. For some this is a good decision, for others it is not. I sold my personal home in 13 days and traded-up. So, it can be done.
All of this boils down to a few simple realities. Overall demand is down because fewer buyers have the resources to buy a home. The blow is being lessened by good prices, great interest rates, tax incentives, and investor activity. So far, the decreased demand has generally been countered by decreased supply and Louisville home values are essentially flat.
The next few months will be interesting. Historically, Louisville home sales drop from this point until February. Additional uncertainty is caused by the pending expiration/extension/enhancement of the tax credit. If the balance described in the preceding paragraph can be maintained until spring, the recovery will be much smoother. If demand falls off for any reason though, it will be a bumpy ride to say the least.
If you want to buy or sell a Louisville home, call a real estate agent who can guide you through the process. One absolute certainty is you need someone working for you who understands the market and won't sugarcoat or spin the truth. Accurate analysis and timely insights are required for you to achieve your goals. Consultations are free so call (502) 921-3989 now.
See Also
--photo courtesy of makelessnoise on flickr
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Erik Hitzelberger is a licensed REALTOR with RE/MAX Alliancein Louisville. If you need a Louisville Real Estate agent please email me or call 502.921.3989.
I specialize in the following areas of the Metro Louisville Area: Prospect, Middletown, Jeffersontown (J-Town), Fern Creek, Okolona, Shepherdsville, Mt Washington, Hillview, Brooks and Pewee Valley. Click the following links to learn more about Louisville and Bullitt County Real Estateor to Search for Louisville Homes
