The health of any real estate market is measured by steady increases in home values along with activity levels that trend upward along with population growth. The same is true for Louisville real estate. Going back 10 years gives us a more historical viewpoint on where we were and where we are now.
Looking Back on Louisville Home Sales
From 1995 to 1999, home sales in Louisville rose more than 25%! The next three years saw activity remain level, each year having roughly the same number of homes sold. Then starting in 2003 home sales increased dramatically. Climaxing at our high point in 2005 where 11,393 homes were sold in Jefferson County.
Like most markets, everything is cyclical. Increases are met with drops in activity. As you can see from the chart at the beginning of this article, sales dropped off a bit for the next two years but not in a dramatic way… until 2008.
The national housing recession, originally brought about by a government push to put a larger portion of our population into home ownership whether they could afford it or not, came to Louisville. The number of homes sold dropped from 10,550 (2007) to only 7,991 (2008). Foreclosures further impacted the market as home prices took a hit, whether they were distressed properties or not.
Current Condition of Louisville Market
From 2008 until today, we’ve seen sales hover around the 8,000 mark, with this year being the worst of the four. Why do we think this is the case?
In a piece I wrote in March, unemployment has proven to have a greater impact on home sales than mortgage rates, home values, or inventory. Unemployment began to rise in 2008 and currently sits at 9.6%. So even though other factors are all favorable to more people purchasing a new home, many are concerned about their own jobs and the condition of the larger economy, so they sit and wait.
Real Estate Going Forward
It’s very difficult to predict the future with any accuracy. Some surveys late last year reported that employers were planning to increase hiring in 2011 but that hasn’t borne out. Mortgage rates can not remain at the current levels for the long term but until they do rise, people have a wonderful opportunity to:
- choose from a wide selection of homes (currently 8,670 active listings in Louisville),
- purchase a home whose price has dropped during the past 4 years, and
- finance this home at historically low-interest rates.
So while home sellers are sitting on the wrong side of the see-saw, most home buyers are in a position to take advantage of the current Louisville real estate market.