The watchwords for the Louisville housing market are “cautious optimism” for 2013. As per the home price index issued by CoreLogic Inc., home prices in the region increased by 0.2 percent in December of 2012 compared to what they were a year ago. This is also the biggest annual increase seen since May 2006.
(Editor: With our numbers for Louisville home sales, we show a 1.2% gain December over December. Comparing the 1-year trailing average for the period ending February 2013, we see an even better 5.5% improvement over the previous year.)
This was in keeping with the national trend which saw home prices go up by a solid 8 percent while the unemployment figures remained virtually the same and the jobs remained scarce for college graduates. Some other positive news has also emerged from other segments of the housing market in Louisville including the rise in new construction and the decline in foreclosures.
Wake Up Call
Did it take the country’s largest housing crisis ever for people to realize buying a home with 1-2 more bedrooms than they needed was not the best idea? And perhaps an ARM loan is not for me? Well, perhaps so. There has to be something to these numbers and it certainly was not because taxes were being lowered and energy costs were decreasing.
Rosy Outlook for Housing Starts
Construction activity is picking up in the Louisville region indicating that the clouds that hung over the housing market for many years are finally drifting away. Single-family and multi-family homes are attracting a noticeable deal of interest from prospective buyers going by the number of visits to model homes at the construction sites.
Builders are also reporting an increase in sales by up to 40 percent in 2012 and expect this to continue through 2013.
Laura Sebastian works within an integral sector of the housing market. In her capacity to work with Kentucky lease option housing availabilities, Sebastian affords an enhanced perspective of the issue. She expresses that “the national average increase in single-home starts is at 24 percent with a 22 percent growth prediction for this year. In comparison, Louisville figures can be termed outstanding.”
Apartment construction figures are expected to be much higher given the fact that the number of building permits sought has doubled while weakness is expected to persist in condominiums.
Foreclosure Rates Take a Dive
The rate of foreclosures in the region came down to 2.47 percent in November of 2012 as compared to 2.98 a year ago. Mortgage delinquency rates during this period had also declined and were at the lowest since December 2009.
The foreclosure and delinquency figures are much below the average seen across the nation and this is another indicator of some stability creeping into the housing market in Louisville. “The 90-plus days’ delinquency rate was at 5.66 percent which is almost a half percentage point lower than it was a year ago,” adds Sebastian.
Yet another sign of the winds of change is the ripples seen in the home improvement sector in the region. Professionals in the business are starting to breathe easier after going through tough days. “More people are reinvesting into their homes and spending small amounts here and there if not all at once,” says Sebastian. For a few people, government incentives are helping keep home improvement costs to a minimum while getting their requirements met.
In short, the Louisville housing market has a lot of things going its way. With the real estate forecast for the country, this year is good overall, there is not any reason why it should be any different here.