Louisville Real Estate – 2008 Year in ReviewPosted by Jonathan Karlen on Friday, September 2nd, 2011 at 9:41pm.
So, lets now look at the Louisville real estate market 2008 year in review. If you compare the Louisville metro market for 2008 to 2007, here is what you will find:
A decline of 23.3% fewer homes were sold through November 2008.
The average sales price declined 3.5% (bringing the median price for Louisville to $135,000). The 3.5% drop is significant and insignificant depending on the perspective. How so? Well, its significant in that it represents one of the handful of times over the past several decades, that the Louisville real estate market saw depreciation. And its relatively insignificant from the perspective if you compare it to the other major real estate markets across the country: many saw double digit rates of depreciation this year AND are projected to have double digit rates of depreciation again in 2009.
It is my opinion, that the Louisville real estate market simply got “balled up” so to speak with the rest of the economic problems (high gas prices, banking problems such as AIG and the resulting tightening credit crunch, etc) – and that combined to help make persons more cautious than normally would or probably should have been expected which resulted in lower values and fewer transactions.
I did read an interesting poll on AOL the other day: the vast majority of Americans believe that real estate values declined this year. But when asked if they felt if THEIR HOME VALUE declined, most said no. So, apparently, all the real estate devaluation occurred in their neighbors properties, right?
(An interesting psychological paper could probably be written about that phenomenon….but anyway, back to topic.)
Still, its not all doom and gloom. Some areas of Louisville saw did see appreciation of their homes value. To cite just 2 examples: St. Matthews increased in value approximately 3% in 2008. And the Highlands saw an appreciation of approximately 2%. So it gets back to the old adage: real estate IS local. Even within a relatively small community like Louisville, you can’t say “all home values declined”. And it becomes more important to have a person that knows your area to be able to pinpoint what your home is currently worth, and what it will take to get that home sold in today’s market.
Currently, there are slightly less than 10,000 homes on the market. An improvement from this time last year. But, you can expect that quite a few of the properties were pulled off the market for the holidays, and once New Year’s Day gets here, that a lot of homes that were pulled off for the holidays will be put back on the market.
One boon to potentially aid the Louisville real estate market is the tremendously low mortgage rates. Some 30 year mortgage rates are currently available in the 5% range – which is VERY CHEAP. This should help stimulate the ailing real estate market nationally at least somewhat, as that is fairly unprecedented.
So, what does all of this mean for the Louisville real estate market? Well, its hard to say. Yes, I know thats a cop out. But there are simply too many variables to get a clear read on the good ole crystal ball. Whats going to happen when President-Elect Obama takes office? Whats going to happen to the Big 3 auto makers (GM, Ford, Chrysler)? Will the stock market continue to flounder? What about the foreign policy issues: wars in Iraq and Afghanistan? etc. Will oil prices go back up? Its simply too many variables on a national and international perspective to get a clear picture.
I will say this however: All indicators are that this is a great time to buy Louisville real estate. Louisville has traditionally been a conservative safe haven relative to many other parts of the country. And if you are moving to Louisville, you’ve picked a great time. Mortgage rates are ridiculously low (and cheap money will not remain at this level forever!). Housing inventory is up (law of economics 101: high supply vs. lower demand = cheaper prices). You have the opportunity to purchase Louisville real estate that represent very good values. However, don’t expect steep discounts off the list prices though. Because Louisville is more conservative, most sales typically occur within a few percent of the homes FINAL* list price.
*A Louisville home may have been listed for significantly higher previously and had several price reductions. Whatever the “final” list price is at which it finally sells: is normally within a few percent of the sales price. If that doesn’t make sense, lets use an extreme example: Lets say you have a house worth $200,000. You list it for $1 million dollars. [Absurd, I know. ] You wait a few months. Go through a price reduction from $1 million dollars to $900,000. Then, you wait and drop it again to $800,000. And then $700,000. And so on. When you finally get to a list price at which the home sells, you can normally expect the sale price to be within a few percent of the final list price – whatever it may be. So, eventually when you do get your $200,000 home listed for $200,000, you can reasonably expect that it should sell for around $195,000 +/-. Which is why its HUGELY important to get your home priced correctly in the first place. There simply isn’t the room in this competitive market to be messing around. Get it priced as close to what you think the sale price will ultimately be!
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