Wow! I knew Louisville was a great city but #1?!? Now I’m blushing.

This just out from Livability.com; they reviewed 500 cities and awarded Louisville, Kentucky as the most affordable vacation spot! Sure, if you have deep pockets you might select Honolulu but who has money these days?

Rich history, modern culture, free attractions and deep discounts make Louisville, Ky., a prime vacation destination for families.

Home of the world-famous Kentucky Derby, Louisville prides itself in all things equine. Take a historic walking tour of Churchill Downs with admission to the Kentucky Derby Museum. Kids under five are admitted free, and AAA members receive discounts. Join in the citywide Derby Week celebration at the Kentucky Derby Festival and Thunder of Louisville, the largest fireworks display in America.

If this doesn’t make you proud of your city, I don’t know what to tell you. Share the news!

This post was originally published on InsiderLouisville.com: Smart news for smart people.

In one of my light-bulb moments, I discovered that (at least here in Louisville) unemployment has proven to be a bigger factor in determining home sales activity than traditional real estate metrics.

Now that unemployment has started trending lower it will be interesting just how much sales will be affected, especially considering that interest rates continue to reside at historical lows.

Let’s take a look at what rates have done over the past decade.

A hot topic in real estate circles is, “How long can mortgage rates stay this low?” Experts fall into one of two camps.

Camp One feels that with the economy improving, albeit slowly, the Fed will be forced to increase the prime rate, which in turn will affect all tied rates. Once that happens, mortgage rates will rise above 4 percent and move towards 5 percent over the course of 2012.

This is a realistic approach, understanding what we know about how this country’s financial institutions work, but is not the most popular view among experts.

The second camp takes a more political approach. With an election around the corner, it’s highly unlikely that the Obama Administration allows rates to be raised when the overall economy is still far from healthy.

This view appears to be supported by an unprecedented announcement.

In January the Fed went on record saying it wouldn’t raise interest rates until the end of 2014.

It’s unlikely the institution is obligated to adhere to this proclamation.

Moving back to the unemployment metric, we see a couple of things stand out.

First, understand how dramatically unemployment rose throughout 2008 to 2009. Consumer confidence was severely shaken, and even with more recent declines, unemployment is still 4 percent above what brilliant minds like Beveridge, Fridman and others deem “ideal.”

Secondly, it’s interesting to see how Louisville somewhat mimics the National trend but in a partially delayed state. During almost all of the 1990′s Louisville bested the National rate. Since then, we have been living a half point or more above it.

So with unemployment improving and mortgage rates likely to remain low throughout 2012, the Louisville real estate market should gain momentum. While other parts of the country are seeing more dramatic improvements in their real estate markets, ours will be a more modest gain.

There’s so much going on that I couldn’t possibly give it all the time it deserves in this post. So I’ve decided to bullet this post like Dirty Harry, Rambo or John McClain, whichever silver screen star you prefer.

Let’s get to it!

• March Madness is in full swing! Yes, I understand that college basketball has nothing to do with Louisville real estate but we live in the basketball state of Kentucky and the state’s two big rivals are both in the Final Four. The world may end after this game on Saturday.
• The real estate market in Louisville is picking up! Yeah, like you didn’t already know that. I’m sure you already subscribe to my monthly email newsletter, right?
• Networking increases referrals. Networking regularly regularly increases referrals. Are you getting enough word of mouth referrals? If not, maybe our Grow Your Business Louisville club could help?
• Just moved to REMAX Champions! We want to be your real estate champion! Well… actually I just made that up. Kinda hokey, in my opinion. What I’d really like to be is your Trusted Advisor in Louisville Real Estate. Much better.
• We have so many people in our extended family that we have a birthday celebration several times a month. This month was Kim and Gigi! Love you both!
• Last but not least, there’s big stuff going on over at InsiderLouisville.com in case you haven’t read that site. The news age is now predominantly digital and some newspapers that will remain nameless have dropped the proverbial ball so we can pick it up and run with it. Check out my piece on how the mis-labeled “Historic” Drumanard Estate isn’t being bought by the State of Kentucky by FAR more than it’s worth. Taxpayers revolt!

I’ll admit it, I’m an idealistic. Whether that’s genetic or learned behavior, I’m not in a position to deduce. But I am, and at the mid-way point of this life, I doubt that’ll change.

It’s my desire that the media is supposed to report the unbiased, un-embellished truth.

The truth, as it turns out, is that the media fits the facts to their agenda, whether that’s selling more newspapers, getting more hits on their Web sites or influencing people to their cause. I can’t say it any more simply than that.

Today’s example is truly a mild one. But because it falls under that mantle of Louisville real estate, it caught my eye.

Eric Flack wrote “Law not on side of property owners hurt by vinyl homes” earlier this month. Sticking up for the everyman against big corporations has been the modus operandi for many in the media since Day One.

But what’s interesting to me about this piece is how the case was made with such exaggeration. Flack apparently interviewed Louisville Metro Councilman James Peden for the story; there are direct quotes in it. But look at this paragraph.

Peden said all brick homes that sold for $300,000 in Washington Green are having their property values pulled down by vinyl homes that sell for half that. Peden said the cheaper homes bring down property values so much existing homeowners often can’t sell or refinance because they’ve lost so much equity.

Doesn’t that read like, switching a brick clad home to a vinyl clad home reduces the home’s cost by 50%? Absurd!

That tells me that the truth must bend to make their point.

Next time you’re chatting with a builder, ask them how much more brick is than vinyl and they’ll confirm that brick is generally 2x-4x the cost of vinyl but that’s only the exterior cladding, not the cost of the entire home.

The main thrust of the story is whether or not developers have the legal right to modify a subdivision’s deed restrictions due to market changes but that question doesn’t seem to get answered. Incite aggression and the WAVE3.com Web site gets more traffic.

See? Even I got hooked by their strategy.

It had long been my belief that the majority of sales were garnered by a small handful of real estate agents.

Running the numbers again this year for 2011, I saw similar results. Keep in mind that these charts show sales volume, not salary. If an agent sold five, $1 million homes that would be $5 million in sales. (That would also be an outstanding year!)

But, determining their salary would require estimation.

Let see how this year’s tally concluded. These numbers take into account only agents who completed a deal in the calendar year, not agents with no sales or whose licenses were in escrow.

We are now forced to make a few estimates in order to translate sales volume into salary. Understand that commissions aren’t paid directly to the agent, but rather by law to their broker.

Then the broker “splits” the commission with the agent. Splits are negotiated between the agent and their firm. New agents most often start with a 50/50 split, while more experienced agents can negotiate a much better arrangement.

For the purpose of this article, and because there is no public data available on this topic, I’ve chosen to split the total commission 65/35. Using this percentage, I created the following chart.

Under this equation, the top performer in Louisville garnered a $425,146 salary in 2011.

In reality, it was likely much higher as brokerages are driven to bring in the most successful agents, which helps their firm in both revenue and prestige. Those agents can negotiate better splits. Therefore, on a sales volume of $21,802,330, it wouldn’t be unreasonable to guess Louisville’s top agent made more than $550,000 last year!

Please remember that these dollar amounts are gross sales, so taxes, expenses, mandatory fees and insurance, bring this number down, sometimes considerably.

2011 performed very close to the previous year in percentage of sales.

	2010	2011
Top 5%	30.7%	30.5%
Top 10%	45.8%	45.6%
Top 20%	63.2%	64.5%

Maybe the Top 5 percent and Top 10 percent couldn’t keep up with last year but the Top 20 percent gain more than a percent.

Also interesting to note, was that 2,737 agents had deals in 2010, while just 2,594 did this past year. That’s a 5.5 percent drop in the Louisville’s real estate workforce.

Wow! Look at that! I’ve just been given the 2011 Louisville Award for Real Estate Agents. All I have to do is log into their Web site, commerceaward.com and enter this code they have for me and… wha…??

You mean I have to pay for it?

Why would anyone need to pay for the award they’ve been given? Didn’t their email just say:

Tre Pryor – Rick Shaw Realtors has been selected as the 2011 Louisville Award winner in the Real Estate Agents category by the US Commerce Association.

Did Chritian Bale pay for his Oscar? Did Tina Fey pay for her Emmy?!? This is an outrage!!

Oh, wait a sec… I see now. I have to pay for it because it costs so much. That way, these fake little companies can make some money handing out worthless awards to gullible recipients. Aha! Does anyone actually give them their credit card?

Well… so I don’t have a trophy for being the Best Real Estate Agent in Louisville 2011 but I’ve got their graphic. And by golly, I’ll display this thing proudly for all of 7 posts until it drops off at the bottom of my blog’s homepage.

2011 was a busy year. In fact, despite the market being down again here in Louisville (see this handy dandy chart that compares Jefferson County monthly home sales back to 2006) I actually had my best year yet. Yeah me!

I want to use this post to look back and see what worked and what didn’t. If you know me, you’ll already know that I’m a straight shooter. I don’t steer. I don’t spin. And I don’t care for people that do. So here we go!

2011 Lousville Real Estate Highs

• Louisville Homes Blog Founder, Tre Pryor, Interviewed by MSN for Real Estate Article
  This one just happened! I’m honored to be considered a subject-matter expert (SME) for real estate, not just here in Louisville but nationally as well.
• Serving Some Great Clients
  I was blessed to work with some great clients over the course of this year. I’m especially pleased that many of these good people realized that I do put them and their needs ahead of my own and are referring me to their friends and family. You know who you are… you’re the best!
• Grow Your Business Louisville
  I became a Director with Gold Star so that I could start my own networking group. We meet weekly and I’m blown away by some of the great people that have joined with me. 2012 is going to be awesome. You are invited to visit our club too.
• Silas Joined the Family
  Family ranks high on my priority list. So when we are blessed with a new family member it’s a personal highlight! My nephew Silas was born this year. Psyched again to hear a little say, “Hey Uncle Tre!”
• TrePryor version 3.0
  Found a solid database programmer who’s working hard to help me deliver a new version of TrePryor.com in the new year. My plans are for it to be the best real estate Web site in Louisville. (I know I promised it this year but finding quality help can be a challenge.)

2011 Lousville Real Estate Lows

• Sales Continue to be Sluggish
  There was hope that real estate sales would strengthen in 2011. That didn’t pan out. This December, we’re in the same position as last December, hoping next year will be better.
• Psychotic Clients, Disloyal Clients
  For people not in the industry, it’s almost impossible to understand how good agents put themselves out there for their clients, generally without any guarantee of compensation. That’s part of the business but it’s not easy, especially for me, because I treat ALL of my clients with the best that I have. This past year I’ve wasted hundreds of hours serving clients who either knew from the outset they were just “playing games” or decided to treat another human being like a machine, with little regard for the agent’s feelings. It can be very hurtful and it’s one aspect of this business that I will never like.
• Economic Uncertainty
  Global economic problems affect us all. Our economies are so linked that problems in Europe hurt us here in the States. Unemployment continues to be a plaque no matter how our current administration tries to place blame on others. This uncertainty hurt us in 2011 and will likely continue to hinder our economy in 2012.

All in all, the good outweighs the bad. Optimism trumps negativity. And I choose to be excited about what next year will bring. How about you?

Just want to wish all of you a very Happy Holiday season. As we get closer to Christmas, please remember that I always have time for your referrals so if you know anyone looking to buy or sell their Louisville home, I’d love to meet them!

Happy real estate Holidays Louisville!

Was just thinking about some of my great clients and one brought by this photo and thought I’d like it. And I do! It’s especially gratifying when my clients trust my expertise to help them achieve their goals. In this case, their dream home came next!