Louisville New Construction Has a Long Road to Go to Be ‘Recovered’

The Louisville real estate market is showing great signs of recovery but we are by no means, “out of the woods.”

Photo of construction worker building a Louisville new construction home
Louisville building permits for single-family homes so far in 2012 have surpassed all of 2011. Economists predict there will be a 300% increase by 2015.

One of the large components of a healthy market is a strong showing from Louisville’s new construction. When new homes are being built, it both shows positive consumer confidence, as well as, a tangible contribution to the construction and development professionals, who are not a part of the existing home sales equation.

Home values are rebounding. Existing home sales are up. What about new construction?

Louisville new construction in 2012

Tara Brinkmoeller is the Director of Public Affairs and Communication at the Home Builders Association of Louisville (HBAL). In an interview, here’s what she had to say about the outlook of new construction in Louisville.

“We hear things are actually getting better. Our Homearama this year was outstanding, which took place in two sites and most of the Homearama homes sold, a couple with multiple offers,” said Brinkmoeller.

Because of the nature of new construction purchases, accurate data on sales totals isn’t easy to come by. Homes built to spec are listed on the MLS but many more homes are sold via a contract. Therefore, these won’t be listed for sale and won’t appear in the MLS data.

For this reason, the HBAL gathers building permit data from local governmental organizations. In a report issued by the HBAL, 1,079 building permits for single-family homes have been issued from 2012 to date. This surpasses the 1,027 total for all of 2011.

Condos and patio homes show 62 for 2012, compared to just 25 in 2011.

Chart of Building Permits for Louisville KY
This chart shows that even though it is good to see a bit of growth in 2012 for Louisville’s new construction compared to the previous year, there is a great amount of ground to make up.

David Crowe, the economist for the National Association of Home Builders, predicts that by the first quarter of 2015, Louisville will return to 4,500-5,000 new construction permits per year.

That’s a far cry from where we are today. If Mr. Crowe’s prognostication is correct, that would mean a more than 350% increase—an incredible feat, if accomplished.

Trends in Louisville New Construction

While I had Ms. Brinkmoeller’s attention, I also posed a question that many in the real estate world are interested in, namely, “What new construction trends are you seeing here in Louisville?”

“Better use of space, without much waste. Bigger, better closets. Better design. More family gathering spaces,” she replied.

I’d concur. With open concept still holding sway with a majority of new home buyers, they don’t want vast open spaces but spaces that can serve multiple purposes.

Brinkmoeller continued, “Another focus is outdoor living spaces that flow, as part of the interior. Screened or covered, fire pits and fireplaces with TVs and stereo speakers.”

Gone are the days when a home builder tacks a wood deck on the back and calls it complete. Sounds quite similar to something I noted when reviewing last year’s Homearama, Outside In Living.