First Half of 2018 Louisville Market Review
The first half of the 2018 Louisville real estate market was marked by home prices continuing to rise faster than a porch thermometer on a sweltering July afternoon. From January 1 through June 30, the average sale price across the Louisville market was up 5.8% to $217,101 (from $205,194 for the same period in 2017). The median price was $177,500 vs. $169,900 a year ago. For the month of June, that average sale price was a staggering $237,458 (five years ago in June 2013 the average sale price was $195,411).
Rising home prices continue to be driven by a shortage of inventory. For the entire Louisville MLS (multiple listing service), the inventory of available properties was 7% lower than for the first half of 2017. The total number of homes sold from January 1 through June 30, 2018 was 8,516 vs. 8,706 or 2.2% less than the same period in 2017. The inventory situation may be improving slightly according to the industry association the Greater Louisville Association of Realtors (GLAR).
Interest rates have risen modestly and mortgage rates have followed suit with a recent 30-year fixed rate at approximately 4.5% according to Bankrate.com (this compares to about 4% for this time in 2017). Most analysts expect rates to continue to rise gradually through at least the end of 2019.
In its mid-year market analysis, GLAR reported more than 4,000 properties for sale at present compared to 3,000 just a few months ago. As has been the case for the last few years, move-in ready homes under $250,000 continue to set the pace and are selling quickly, often in multiple offer situations.
The high-end market also continues to be robust with 347 sales of properties between $500,000 and $999,999 in 2018 vs. 320 for the same period in 2017. Sales of properties priced at $1 million plus also showed limited growth with 41 sales in 2018 vs. 37 in 2017.
The question on most consumers’ minds seems to be: How long can this bull real estate market last? And for those who lived through the recession of 2008-2009, is the housing market on the verge of another bubble that’s destined to burst?
Nationally there are certainly signs of markets that are overheated and can’t possibly continue at the same torrid pace. One thinks of Seattle where the growth at Amazon, Microsoft and Boeing, combined with an influx of capital from China and other international speculators, is driving unsustainable demand and higher prices. A healthy real estate market typically has about 4-6 months of available inventory. In Seattle, that number is down to two to three WEEKS of inventory.
In Louisville we’re still around three months inventory market wide, which is historically low for a balanced market, but as was mentioned earlier there was a net increase of about 1,000 properties vs. just a few months ago. Lawrence Yun, Chief Economist of the National Association of Realtors®, does not think the US is experiencing a housing bubble. “The fundamental supporting factors of today’s housing market versus what happened 10 years ago are dramatically different. Compared to 2008, we now have much tighter home loan underwriting standards, lower loan-to-value percentages and much less speculative construction.”
While these trends and statistics are helpful for getting an overall sense of the market both locally and nationally, there are nuances to neighborhoods, streets and individual properties that are best understood by consulting with your real estate professional from Kentucky Select Properties. We are always glad to talk with you about current market conditions, comparable sales in your area and things you can do to improve your position as a real estate seller or buyer.