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How Is The Louisville Housing Market For Real Estate Investment In 2019?

Introduction To Louisville Real Estate Market

Louisville is the largest city in Kentucky, and it is roughly 30th in the U.S. The city itself contains six hundred to seven hundred thousand residents. However, that’s not the entire Louisville real estate market. The wider Louisville metropolitan area is home to around 1.3 million people. Because Louisville is just south of the Indiana border, this means part of the Louisville housing market extends into Indiana. The bigger question for investors is why they’d want to invest in the area.

Forget hot markets like Miami, New York City and the California coast and look at “flyover country” for some of the best real estate markets for investors. The best choices are those markets with steady growth, long term potential and affordable properties. These are among the ten reasons to invest in the Louisville real estate market. But let’s discuss the fundamental demographics behind the Louisville housing market.

Louisville Real Estate Market

Original Photo via Pixabay

Louisville Real Estate Market Forecast 2019

The median home value in Louisville is $158,700 on Zillow. Louisville home values have gone up 5.6% over the past year and Louisville real estate market prediction is that the home values will rise 0.4% in 2019. The median list price per square foot in Louisville is $133, which is higher than the Louisville/Jefferson County Metro average of $131. The median price of homes currently listed in Louisville is $200,000. The median rent price in Louisville is $1,095, which is lower than the Louisville/Jefferson County Metro median of $1,100.

Louisville Real Estate Market Forecast

Graph Credits: Zillow.com

Louisville Real Estate Market Trends

Louisville real estate market trends indicate an increase of $3,500 (2%) in median home sales and a 0% rise in median rent per month over the past year. The average price per square foot for this same period rose to $124, up from $118. Trulia has 2,035 resale and new homes in Louisville lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

The median sales price for homes in Louisville for Oct 31 to Jan 30 was $166,500 based on 1,715 home sales. Average price per square foot for Louisville was $124, an increase of 5% compared to the same period last year. The median rent per month for apartments in Louisville for Jan 5 to Feb 5 was $1,100.

Louisville Real Estate Market Trends

Graph Credits: Trulia.com

As per the real estate company named Redfin, the Louisville housing market is very competitive. Homes for sale in Louisville, KY receive 1 offers on average and sell in around 36 days. The average sale price of a home in Louisville, KY was $174K last month, up 4.8% since last year. The average sale price per square foot in Louisville is $105, up 7.7% since last year. Homes typically receive 1 offer. Homes sell for about 3% below list price and go pending in around 36 days. Hot Homes in Louisville, Kentucky can sell for around list price and go pending in around 13 days.

Louisville, KY Housing Market Summary

  • Median Sales Price: $166,500 (On Trulia)
  • Price Per Sqft: $124
  • Median Rent Per Month: $1,100
  • Median Household Income: $43,857
  • Home Owners: 65%
  • Single Residents: 37%
  • Median Age: 38
  • College Educated: 27%

There are 3,847 homes for sale, ranging from $1 to $4.6M on Realtor.com. 279 of which were newly listed within the last week. Additionally, there are 608 rentals, with a range of $355 to $5.9K per month. In December 2018 the housing market in Louisville, KY was a buyer’s market, which means there were roughly more active homes for sale than there were buyers. Buyer’s markets are generally more advantageous for buyers rather than sellers.

Louisville Housing Market Trends

Graph Credits: Realtor.com®

In December 2018, the median list price of homes in Louisville, KY was $184.9K, trending up 5.7% year-over-year. The median listing price per square foot was $110. The median sale price was $182K. Homes in Louisville, KY sold for 1.69% below asking price on average in December 2018. On average, homes in Louisville, KY sell after 63 days on the market. The trend for median days on market in Louisville, KY is flat since last month, and flat since last year. This data was taken from Realtor.com.

There are 131 neighborhoods in Louisville. Cherokee Triangle has a median listing price of $499K, making it the most expensive neighborhood in Louisville. Portland is the most affordable neighborhood, with a median listing price of $27.5K. There are 336 schools in Louisville, KY. There are 126 elementary schools, 56 middle schools, 53 high schools and 101 private & charter schools.

The median list price in Louisville is $254,975 on Movoto.com. The median list price in Louisville went up 2% from January to February. Louisville’s home resale inventories is 1,606, which decreased 6 percent since January 2019. The median list price per square foot in Louisville is $122. January 2019 was $120. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.

Louisville Real Estate Market Trend

Graph Credits: Movoto.com

Louisville KY Single Family Homes

As per the data from the real estate company called Neigborhoodscout.com, single family detached homes are the single most common housing type in Louisville, accounting for 64.27% of the city’s housing units. Other types of housing that are prevalent in Louisville include large apartment complexes or high rise apartments ( 20.35%), duplexes, homes converted to apartments or other small apartment buildings ( 9.79%), and a few row houses and other attached homes ( 3.97%).

The most prevalent building size and type in Louisville are three and four bedroom dwellings, chiefly found in single family detached homes. The city has a mixture of owners and renters, with 58.23% owning and 41.77% renting. Currently, Zillow has 3944 single family homes for sale in Louisville KY. There are 442 single family homes for rent in Louisville, KY.

Louisville Foreclosures And Bank Owned Properties

Foreclosures will be a factor impacting home values in the next several years. In Louisville 66.2 homes are foreclosed (per 10,000). This is greater than the national value of 1.2. The percent of delinquent mortgages in Louisville is 1.1%, which is higher than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Louisville homeowners underwater on their mortgage is 6.7%.

On RealtyTrac, there are currently 820 properties in Louisville, KY that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,093. In December, the number of properties that received a foreclosure filing in Louisville, KY was 6% higher than the previous month and 36% lower than the same time last year. Home sales in Louisville for November 2018 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home in Louisville, KY was $0. The median sales price of a foreclosure home in Louisville, KY was $0, or 0% higher than non-distressed home sales.

Louisville Home Prices And Appreciation Rates

Appreciation rates for homes in Louisville have been tracking above average for the last ten years, according to NeighborhoodScout data. The cumulative appreciation rate over the ten years has been 19.58%, which ranks in the top 40% nationwide. This equates to an annual average Louisville house appreciation rate of 1.80%. NeighborhoodScout’s data show that during the latest twelve months, Louisville’s appreciation rate, at 6.00%, has been at or slightly above the national average. In the latest quarter, Louisville’s appreciation rate has been 1.82%, which annualizes to a rate of 7.49%. Relative to Kentucky, our data show that Louisville’s latest annual appreciation rate is higher than 70% of the other cities and towns in Kentucky.

10 Highest Appreciating Louisville Neighborhoods Since 2000: By Neigborhoodscout.com

best neighborhoods in Louisville KY

Courtesy: Neighborhoodscout.com

Should You Buy Louisville Investment Properties For Sale?

Are you planning to buy a rental property for sale in Louisville, KY to get some cash flow going into your account? You’d be glad to know that 2019 is the best time to invest in the Louisville rental real estate. Louisville is making a splash is the real estate world. It is one of the best market for rental property investors in the country. Here are a few observations and suggestions if you are contemplating on buying an investment property for sale in the Louisville real estate market.

1. Louisville Real Estate is Affordable

The median property in the Louisville housing market is around $162,000. Median household income hovers near $55,000 a year. With nearly two thirds of residents owning their own homes, don’t expect a drop in interest rates to cause a surge in housing prices. Prices are stable and slowly increasing, but you don’t have to worry about missing out on a hot market or overbidding on a property.

2. It Has the Best Combination of Inflationary Factors

The population is growing at less than one percent a year. Employment grew about 2% last year. This contributed to the 3% growth in inflation as it drew people into the workforce and healthy competition for jobs pushed up wages. Slow increases in wages and population put gentle pressure on housing prices, while a relative lack of supply prevented easing of that same pressure. The end result was 5% inflation in property values.

3. Lack of Supply in the Middle Market Is Driving Up Prices

The Louisville real estate market has a broad selection of affordable properties. There are a few luxury properties 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.

4. There Is a Sizable Student 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 has 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.

5. There Is a Military Market, Too

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, army reserve training facility and U.S. Navy facility.

6. 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 is 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 there are other states that 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.

7. The Tax Burden Is Rather Low

Kentucky comes in 21st out of the 50 states in Wallethub’s ranking of states by their relative tax burden. Yet that’s somewhat better than neighbor Indiana. It also makes Kentucky an outright deal compared to Ohio; that state came in 11th in the country in terms of tax burdens. Those considering investing in the Louisville real estate market may only be concerned with the property tax rate. That rate is around 2%, and the overall bill is low because properties themselves are likewise low-cost.

8. Redevelopment Is Occurring Downtown

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.

9. 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, their plan is 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%.

10. Literal Floods Provide Opportunity, Too

Louisville sits on the banks of the Ohio River. Each major flood drives some residents out. While some of the land is turned into parks or parking lots, other properties are redeveloped. Whether the area sees better drainage systems built or the properties are designed so they don’t flood next time, these periodic natural events present an opportunity for developers.

Louisville Real Estate Investment Properties

It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. Most investors naturally gravitate to residential property investment. Maybe you have done a bit of real estate investing in Louisville Kentucky but want to take things further and make it into more than a hobby on the side. You must also learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Louisville, KY. The Louisville real estate market provides a steady rental market made up of several, independent populations. It combines slow population growth with healthy market turnover to yield a number of opportunities for redevelopment or rent. The Louisville rental market is stellar one.

Buying investment property is different than buying an owner-occupied home. The investment properties are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business. 

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.

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Apart from the Louisville real estate market, you can also invest in Pittsburgh, PA. The Pittsburgh real estate market is seeing an incredible renaissance unlike many other Rust Belt cities. It is attracting new residents, redeveloping its downtown. And it is an excellent place to invest in real estate while it is still in the early stages of its rebound.

Huffington Post gave Pittsburgh the seventh slot on the top ten places to be a landlord. They used the average three bedroom rent of $991 a month and median home price of $105,700 to get a gross rental yield of 11.3%. The highest grossing rental market was 15.3%, but it is rare for cities to achieve that rate, much less sustain it.

Pittsburgh has been recognized as one of only four metropolitan areas out of 200 studied by economists at Realtor.com currently sustaining an optimal balance between supply and demand. This means that it’s simultaneously a good market for both buyers and sellers, as there is no dearth of  affordable properties available on the market and values are steadily increasing.

Another market that we suggest for savvy investors is the housing market in Boston, MA. Boston is the top market where real estate investments are safe and have high rates of return. Airbnb rentals are the best option for real estate investing in Boston. The Boston real estate market sees steady population growth, faces limited supply, and can’t really go vertical. This means that those who invest in the Boston real estate market will see decent cash flow from nearly any property and guaranteed appreciation.

For most people Boston is a high-priced real estate market, though it isn’t as expensive as Washington DC, San Francisco or New York City. Greater Boston is still an expensive place to buy a house, but the years of relentless price increase may be nearing an end. Because of the large number of students, college and university faculty, it is a no brainer for savvy investors to invest in a rental property in Boston. A rental property in Boston is guaranteed to get a lot of demand from tenants – whether an apartment or a condo or a single family home.

The Boston real estate market and its environs include a whopping hundred universities, colleges and trade schools. There are more than 150,000 college students in Boston and Cambridge alone. You could buy properties across the Boston real estate market and cater to students, and your market is so diverse that you’ll always see demand.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here. 

One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.


*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References:

Introduction stats
https://en.wikipedia.org/wiki/Louisville,_Kentucky
https://en.wikipedia.org/wiki/Louisville_metropolitan_area

Affordable and slow inflation
https://datausa.io/profile/geo/louisville-jefferson-county-ky-in-metro-area/

Student market
https://en.wikipedia.org/wiki/List_of_schools_in_Louisville,_Kentucky

Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states
https://www.landlordology.com/kentucky-landlord-tenant-laws

Tax Burden
https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494

downtown redevelopment
https://www.wdrb.com/news/russell-neighborhood-residents-view-million-redevelopment-plans/article_6fe0cb1e-982d-543f-9887-1dd102d21f64.html

Middle market shortage
https://www.courier-journal.com/story/news/local/2017/05/04/bidding-wars-rising-prices-hit-louisville-housing-market/100874514

Military
https://militarybases.com/kentucky

Short term rentals
https://www.courier-journal.com/story/news/politics/metro-government/2018/08/14/louisville-plans-crack-down-airbnb-operators/989449002
https://www.courier-journal.com/story/life/home-garden/2018/08/16/airbnb-mania-causing-business-boom-louisville/932815002

Flooding opportunity
https://www.courier-journal.com/story/news/local/2018/03/03/west-point-recover-after-ohio-river-flood/384258002

Market Data, Trends And Forecast                https://www.realtytrac.com/statsandtrends/foreclosuretrends/ky/jefferson-county/louisville https://www.neighborhoodscout.com/ky/louisville/real-estate                                https://www.movoto.com/louisville-ky/market-trends          https://www.redfin.com/city/12262/KY/Louisville/housing-market            https://www.trulia.com/real_estate/Louisville-Kentucky/market-trends    https://www.realtor.com/realestateandhomes-search/Louisville_KY/overview            https://www.zillow.com/Louisville-ky/home-values


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