Louisville home prices continue to drop while sales activity increases in January

Home prices in Jefferson County continue to drop due to many factors, while activity appears to be picking up since the middle of last year.

As in most areas of life, multiple forces work towards producing a particular outcome.

Here in Louisville, Jefferson County in particular, home prices have been declining steadily over the past year.

The following forces are all working these prices lower:

• Seller urgency
• Distressed home values
• Higher unemployment, economic concerns
• Trend towards smaller homes, less expensive housing

Depending on your situation, this could be good news or bad. But before homeowners get too depressed, let’s look at prices over a longer term.

The red area is a 1-year trailing average of the median Jefferson County home sale price. Prices that were trending upward to January 2011, have now returned to where we started at the start of 2009.

As we can see from this graphic, our earlier chart only showed the worst of this financial picture. Perspective is an amazing thing.

Where do we go from here?

Most experts agree that until economic concerns (especially unemployment) are alleviated, most homeowners will remain steadfastly barricaded in their current house.

While home sales will likely increase in 2012, Louisville still has a healthy (or unhealthy, depending on how you look at it) share of distressed properties to sort through. Until distressed properties (foreclosures, short sales, etc.) return to being rare, standard home values will suffer by association.

Access to capital, a barrier to entry for some, has improved since the housing recession began. But it’s almost entirely being directed to primary residents. Investors are on the outside looking in.

Even still, mortgage rates won’t stay at these historically low levels indefinitely, so many are taking advantage of the current buyer’s market.

The national average for a 30-year fixed mortgage is 3.7 percent!