Kentucky’s current real estate market conditions are varied, depending on the part of the state you look at.
Louisville continues to show positive signs of significant improvement. While the area did not face the full brunt of the economic downturn of 2008-2009, the local market was still forced to correct itself after the short-lived real estate boom.
Early in 2013, the market appeared to continue the upward trend of the past several years, reviving the market.
Beginning in 2011, there were new signs that the Louisville market was stabilizing and the number of real estate transfers between private parties began to climb. Many real estate experts attribute this to exceptionally low interest rates, made possible by the Federal Reserve’s monetary easing policy and targeted bond purchases.
This injection of capital into the housing market from the Fed also led to banks loosening mortgage lending rules to the extent that regulations would allow. This helped to increase the total number of buyers actively looking at purchasing a home in the Louisville area.
Louisville’s local economy has played a substantial role in boosting the housing market in the area. The city’s job market is relatively stable and supported by key industries that look to remain viable in the current economic climate. These industries include healthcare, the overnight shipping business, and an abundance of small businesses.
Adding up these and other factors, the real estate market in Louisville has recovered into a hybrid buyer’s/seller’s market, which has reintroduced a measure of health into the market.
There are, however, several challenges facing Louisville’s real estate market, including the marked lack of desirable housing inventory in the Greater Louisville Area. Some area real estate professionals say sellers have been slow to react to the market changes in this regard, and are missing a chance to catch the attention of motivated home buyers.
According to CoreLogic, a provider of business information and analysis, Louisville’s rate of foreclosures fell to 2.43 percent in January, from 3.13 percent in January of 2012. CoreLogic reported that the local rate of mortgages more than 90 days delinquent was 5.62 percent versus 6.31 percent in January of 2012.
Statewide, Kentucky’s foreclosure rate in January was 2.21 percent versus 2.91 percent at the same time the previous year.
The Greater Louisville Association of Realtors recently reported its members collectively sold the highest number of homes in five years.
“Our members were busy in February helping clients buy and sell properties,” GLAR president Paul Ogden said in a news release. “Almost 23 percent more properties were sold this February, compared to a year ago. These numbers will show up in the March and April statistics that should also be strong compared to 2012. Interest rates have ticked up just slightly, and we are seeing more buyers get off the fence.”
Year-to-date through February, home sales in Louisville are up 11.7 percent compared with the same period in 2012, to 1,690 homes. The median sale price is $130,450, which is up 0.73 percent from a year earlier. The average sale price for the period is $160,856, which is up 3.6 percent from 2012.
Louisville received national attention in March when Forbes named it as one of 15 U.S. cities making strides in improving their downtowns.
The article reads in part, “over the past decade, Louisville, Ky., converted much of its subsidized housing downtown to market-rate real estate, and it expanded retail offerings. Now it’s adding a twist. In 2011, the mayor unveiled a public-private initiative to restore downtown Louisville’s Whiskey Row. Buildings were rescued from scheduled demolition by an investor group for promising, with the help of government aid, to preserve the facades of the area’s cast-iron buildings. Two years later renovations are underway, and the buildings are expected to house bourbon-themed restaurants and nightlife spots, adding to the success of nearby projects like the mixed-use Whiskey Row Lofts.
“‘Bourbon is an industry that is growing in Louisville, especially downtown,’ says Alan DeLisle, executive director of the Louisville Downtown Development Corporation. ‘Distillers are reinvesting downtown where they were once located off the river and we are building visitor centers and a streetscape plan that tells the story of the industry.’
“Still, Louisville’s downtown has a long way to go. A mere 4,500 people live in the area according to 2012 data from the Louisville Downtown Management District, up 19 percent from a decade earlier and nearly 45 percent from 1970. Yet real estate developers, demographers and economists believe demand across the U.S. for downtown living will flourish in coming years. Louisville, for example,found that 23 percent of residents under the age of 31 would like to move downtown, especially as more housing stock is created.”
Meanwhile, Lexington, Ky. home sales began to bounce back in 2012 with year-over-year growth occurring in every month through November, according to City Property Valuation Administrator David O’Neill’s office.
Average price per square foot for Lexington was $114, an increase of 1.8 percent compared to the same period last year. The median sales price for homes in Lexington, Ken. for Dec. 12 to Feb. 13 was $160,000 based on 855 home sales. Compared to the same period one year ago, the median home sales price increased 6.7 percent or $10,100, and the number of home sales increased 12.9 percent. There are currently 2,395 resale and new homes in Lexington on Trulia, including 86 open houses, as well as 1,092 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in Lexington was $255,827 for the week ending Mar 13, which represents a decrease of 0.7 percent, or $1,803, compared to the prior week.
When it comes to the general economy statewide, Kentucky’s seasonally adjusted preliminary unemployment rate stayed at 7.9 percent from January 2013 to February 2013, according to the Kentucky Office of Employment and Training.
The preliminary February 2013 jobless rate was .4 percentage points below the 8.3 percent rate recorded for the state in February 2012.