Currently, the Louisville housing market exhibits characteristics of both a buyer's and seller's market. While buyers benefit from relatively affordable median prices and a diverse range of options, sellers enjoy the advantage of swift sales and competitive offers, particularly for desirable properties. However, the evolving dynamics of the market underscore the need for adaptability and strategic decision-making for both buyers and sellers alike.
Louisville Housing Market Trends in 2024
How is the Housing Market Doing Currently?
According to Redfin, in February 2024, Louisville witnessed a 2.5% increase in home prices compared to the previous year, with homes fetching a median price of $230,000. This growth, while notable, reflects a 44% lower median sale price compared to the national average, making Louisville an attractive option for homebuyers seeking affordability without compromising on quality.
On average, homes in Louisville spend 42 days on the market before being sold, a slight uptick from the 34 days recorded last year. Despite this increase, the market remains relatively brisk, with some properties garnering multiple offers and selling within 36 days.
How Competitive is the Louisville Housing Market?
Louisville's real estate landscape can be described as somewhat competitive, with homes typically selling at 2% below the list price. However, hot properties often fetch list price offers and go pending in a mere 9 days, showcasing the dynamic nature of the market.
One key metric indicating competitiveness is the sale-to-list price ratio, which currently stands at 96.5%, down 1.4 points from the previous year. Additionally, 19.2% of homes are sold above the list price, albeit experiencing a slight decline year-over-year.
Are There Enough Homes for Sale to Meet Buyer Demand?
Despite the buoyant activity in the Louisville housing market, there are indications of a supply-demand imbalance. While 584 homes were sold in February 2024, reflecting an increase from the previous year, 27.1% of homes experienced price drops, indicating a potential surplus in inventory.
Migration and relocation trends further illuminate this imbalance, with 24% of homebuyers considering moving out of Louisville, while 76% prefer to stay within the metropolitan area. However, only 0.22% of homebuyers nationwide are searching to relocate to Louisville from outside metros, suggesting a need to stimulate external interest in the market.
Notably, data reveals that homebuyers from Los Angeles, Chicago, and New York express the highest interest in moving to Louisville, presenting an opportunity for market expansion and diversification.
What is the Future Market Outlook for Louisville?
As we peer into the horizon, the future outlook for the Louisville housing market appears promising yet nuanced. While recent trends indicate robust activity and steady growth, addressing the supply-demand gap will be paramount in sustaining long-term market health.
Factors such as economic stability, employment opportunities, and infrastructure development will play pivotal roles in shaping the trajectory of the market. Additionally, initiatives aimed at attracting external buyers and enhancing housing affordability will be essential in fostering a balanced and resilient real estate ecosystem.
Louisville Real Estate Market Forecast for 2024 and 2025
According to Zillow, the average home value in Louisville stands at $233,464, reflecting a 4.5% increase over the past year. Homes in Louisville typically go pending in approximately 13 days, indicating a market that's moving swiftly.
Understanding Housing Metrics:
Let's delve into the various metrics that paint a picture of the Louisville housing market:
- For Sale Inventory: As of February 29, 2024, there were 1,776 properties available for sale in Louisville.
- New Listings: On the same date, there were 647 new listings, showcasing ongoing activity in the market.
- Median Sale to List Ratio: In January 2024, the median sale to list ratio was 0.994, reflecting the relationship between listing prices and actual sale prices.
- Median Sale Price: The median sale price as of January 31, 2024, stood at $224,410, providing a benchmark for property values.
- Median List Price: Concurrently, the median list price on February 29, 2024, was $256,600, offering insight into sellers' expectations.
- Percent of Sales Over/Under List Price: In January 2024, 22.5% of sales were over list price, while 52.2% were under list price, indicating varied negotiation dynamics within the market.
Louisville MSA Housing Market Forecast:
The Louisville Metropolitan Statistical Area (MSA) encompasses a broad geographic region, including several counties in Kentucky. This MSA serves as a key economic hub for the state, with Louisville being its central urban center. With a diverse economy and robust job market, the Louisville MSA attracts residents seeking a balance between urban amenities and suburban tranquility.
As for the housing market forecast, data from Zillow projects a 0.2% increase by March 31, 2024, followed by a 0.4% rise by May 31, 2024. However, a slight decline of 0.4% is anticipated by February 28, 2025, suggesting a potential shift in market dynamics over time.
Are Home Prices Dropping in Louisville?
Despite fluctuations in the housing market, data indicates that home prices in Louisville have experienced consistent growth over the past year. While there may be minor fluctuations in specific neighborhoods or property types, overall, there is no significant trend indicating declining prices across the market.
Will the Louisville Housing Market Crash?
As with any market, the possibility of a housing market crash is a concern for both buyers and sellers. However, current indicators in the Louisville housing market do not suggest an imminent crash. While there may be corrections or adjustments in response to economic factors or external events, the market's overall stability and moderate growth mitigate the risk of a sudden and severe crash.
Is Now a Good Time to Buy a House in Louisville?
Deciding whether it's a good time to buy a house depends on various factors, including personal finances, long-term plans, and market conditions. In Louisville, favorable interest rates, relatively steady home prices, and a diverse selection of properties make it an attractive time for many buyers. However, prospective buyers should conduct thorough research, consult with real estate professionals, and consider their individual circumstances before making a decision.
Louisville Real Estate Investment Overview
Are you planning to buy a rental property for sale in Louisville, KY to get some cash flow going into your account? Louisville is making a splash in the real estate world. It is one of the best markets for rental property investors in the country. Here are a few observations and suggestions if you are contemplating buying an investment property for sale in the Louisville real estate market.
Louisville Real Estate is Affordable
Louisville's real estate market offers opportunities for investment, but whether it is considered affordable depends on various factors and individual financial circumstances. While the market has seen rising home values, it still remains relatively affordable compared to many other major metropolitan areas. Investors can find properties at various price points, and the potential for long-term appreciation is promising. However, the affordability of an investment in Louisville depends on your budget, investment goals, and market conditions at the time of purchase.
The current metro area population of Louisville in 2022 is 1,107,000, a 0.82% increase from 2021. The metro area population of Louisville in 2021 was 1,098,000, a 0.83% increase from 2020. The metro area population of Louisville in 2020 was 1,089,000, a 0.74% increase from 2019. Kentucky's Unemployment Rate is at 3.90%, compared to 4.00% last month and 4.70% last year. This is lower than the long-term average of 6.66%.
Louisville has a nearly one billion dollar, twenty-year plan to redevelop west Louisville. About a third of that money will be spent in the Russell neighborhood. This means that investors in the Louisville real estate market know where new infrastructure, amenities, and housing will be built. They can buy up properties now to renovate and flip later or rent out at a premium.
Lack of Supply in the Middle Market Is Driving Up Prices
The Louisville real estate market has a broad selection of affordable properties. A few luxury properties are coming onto the market. Where demand is greatest and supply is limited is the middle of the market. Both first-time home buyers and empty nesters are looking for properties priced between $100,000 and $300,000. Yet supply is so short that there are bidding wars on properties in this price range. If you can buy affordable properties and either renovate them or expand them, you could reap a significant profit.
There is a sizable Rental Market
As the largest city in the state, it is logically the home of multiple universities. The University of Louisville is home to around five thousand scholars. The Jefferson Community and Technical College have around three thousand students. Sullivan University educates another 1500 students. There are several private universities in the area such as Bellarmine University, Boyce College, Indiana Wesleyan University’s
Louisville campus, Louisville Bible College, McKendree University, and Spalding University. These schools provide a diverse market for investors in the Louisville housing market. Fort Knox is one of the largest military facilities in the United States, and it is located in the Louisville, Kentucky real estate market. It brings around twelve thousand jobs to the Louisville metro area. Louisville itself has a MEPS base, an army reserve training facility, and a U.S. Navy facility.
As of March 2024, the median rent for all bedroom counts and property types in Louisville, KY is $1,228. This is -39% lower than the national average. Rent prices for all bedroom counts and property types in Louisville, KY have increased by 9% in the last month and have increased by 7% in the last year. The monthly rent for an apartment in Louisville, KY is $1,346. A 1-bedroom apartment in Louisville, KY costs about $1,033 on average, while a 2-bedroom apartment is $1,295. Houses for rent in Louisville, KY are more expensive, with an average monthly cost of $1,695.
It Is Landlord Friendly
Property owners profit from their property in two ways. One is by selling the property for a profit. The other is by receiving rent for the property. States that give preference to the tenant over the landlord make it hard to receive the rental income you were expecting; in these states, you risk losing money if you have a non-paying tenant that costs thousands of dollars to evict, too. On the other end of the spectrum, Kentucky is a landlord-friendly state.
The state of Kentucky allows landlords to file an unconditional quit notice if a tenant has been late on rent once in the past six months. If someone has failed to pay their rent at all, the tenant can be evicted rather quickly. The state’s laws say seven days to remedy or the quit notice can be filed. The landlord can refuse to “cure” it by accepting past due payments in these cases.
Kentucky is unusual in allowing landlords to hold deposits up to sixty days as part of its laws, though other states don’t address security deposit returns. However, a move-out checklist itemizing damages and charges against the security deposit is required. Tenants can deduct rent for repairs only if the expense is minor and the landlord doesn’t address the issue within two weeks. Someone cannot refuse to pay rent claiming they fixed a bunch of little things.
There are no statutes addressing rent increase notices or rent grace periods. Landlords can recover court and attorney’s fees if a tenant must be evicted. And if the tenant is allowed to live there as part of their job and quits the job, they can be evicted immediately.
Louisville Is Encouraging AirBnB Where It Helps Tourism
The Louisville real estate market isn’t as open to short-term rentals as some places, but Louisville is making concessions to tolerate AirBnB and other short-term rentals where it can help both local property owners and area tourism. For example, they plan to allow short-term rentals in industrial and commercial neighborhoods like Butchertown.
Demand for short-term rentals downtown has caused some property developers to devote condos solely to short-term use, and the city allows it. Conversely, all short-term rentals must be registered with the city, or else you have to pay a fine. There are limits on how many people can stay in a property and property owners have to pay a local “bed tax” of nearly 10%.
References
Market Data, Trends, And Forecast
https://www.zillow.com/Louisville-ky/home-values
https://www.neighborhoodscout.com/ky/louisville/real-estate
https://www.redfin.com/city/12262/KY/Louisville/housing-market
https://www.realtor.com/realestateandhomes-search/Louisville_KY/overview
Student market
https://en.wikipedia.org/wiki/List_of_schools_in_Louisville,_Kentucky
Military
https://militarybases.com/kentucky
Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states
https://www.landlordology.com/kentucky-landlord-tenant-laws
Downtown redevelopment
https://www.wdrb.com/news/russell-neighborhood-residents-view-million-redevelopment-plans/article_6fe0cb1e-982d-543f-9887-1dd102d21f64.html
Short term rentals
https://www.courier-journal.com/story/life/home-garden/2018/08/16/airbnb-mania-causing-business-boom-louisville/932815002
https://www.courier-journal.com/story/news/politics/metro-government/2018/08/14/louisville-plans-crack-down-airbnb-operators/989449002