We hear it all the time. Louisville new construction prices just keep going up, up, up! I’m looking at the numbers and it appears that this is the case.
What is happening here in Louisville, isn’t unique though as new construction prices are up all across the country. The ingredients needed to build these new homes have risen steadily for the past decade, even while wages have remained fairly stagnant.
I decided to dig into the Greater Louisville Association of Realtors (GLAR) database and see what I could find.
Louisville New Construction Prices on the Rise
Before the housing recession, there would be more than 1,000 new construction homes sold via our MLS each year. We’re not including condos in this number, just single-family homes. For 2007, that number was 1,439. Wow. Just one year later than number drops 59%!
At the same time, there’s no law that says a builder must list their home on the MLS. Therefore, the actual number of new construction homes sold is higher, potentially much higher. We can only run with the available data.
Let’s take a look at the stats!
|Number Sold||Avg. Sale Price||AG SqFt||Sold Price/SqFt|
Notice that the average above-grade square footage hasn’t really changed from 2008 to today. Consumers are buying basically the same-sized home. But the price to build this home has gone up about 20 grand. To be honest, I expected to see an even greater difference.
During the housing recession, builders were putting fewer and fewer “bells and whistles” into their homes as homeowners wanted as much space as possible for the least money.
Once we turned the corner, the nicer finishes became less of a wish list items and more of a “must have” items.
We expect these numbers to increase.
Wages are only expected to account for a 3% increase but raw materials have been soaring. Concrete, in particular, has increased in cost dramatically since April.
What I tell my clients is that buying a Louisville new construction home is like paying retail. You’ll never get a deal and depending on where you’d like to be, you can pay a premium. But what you get is brand new and exactly want you to want.
Next time you look at a home for sale, take special note of its above grade price per square foot. Then come back to this article and see how it compares to our current $135.56 per square foot.
Of course, larger lots, high-end appliances, and luxury finishes greatly increase this number. But I’m sure you already knew that.