We all have heard that the housing market is “down.” It’s taking longer for people to sell their homes and some just won’t sell at all. (This is primarily true in the higher price ranges.) While this is tremendous news for Louisville home buyers, sellers continue to have a difficult time.
Looking deeper into the data we find that one particular segment of the real estate industry is struggling far more than the rest and that’s new construction.
So why do you think that’s the case? I read a piece on SmartMoney that primarily cites cost:
The reason for the discrepancy is clear, experts say: New homes are currently 29% more expensive than existing homes, about double the typical margin, according to the NAR. At the same time, there are some radical discounts in the existing home market, foreclosures and short sales specifically, which accounted for nearly 40% of all sales in February.
How Did We End Up in This Real Estate Mess?
In the recent past, experts have identified risky, if not illegal, lending practices as the primary culprit behind the housing decline. The government shared blame by pushing these moves on the lending organizations, including Fannie Mae and Freddie Mac.
All of this led to a glut of foreclosures, and foreclosures have brought home values tumbling down.
How Is Louisville New Construction Doing?
National numbers show existing home sales down around 3% from the previous year. This while new construction fell a whopping 28% nationally. Wow! Does the same hold true for Louisville? Let’s find out.
Since the start of 2011, the Greater Louisville Association of Realtors (GLAR) database shows 1,533 homes have sold in Jefferson County. This number includes homes both old and new.
When you pare that number down to only include Louisville’s new construction, the number is a paltry 49. Only 49 newly built Louisville homes have sold since the beginning of the year. That’s just about 3% of the total! Clearly, Louisville home buyers are not currently fond of new construction.
For comparison’s sake, let’s look at the final year of the market boom—2007. In that year, 8,954 homes were sold in Jefferson County. Of them, 679 were new construction or just 7.6% of the total.
It’s not difficult to see that our local builders facing an uphill climb.