In Louisville right now, there are more real estate agents than there are property listings, according to Rip Phillips, head of the statewide real estate association Kentucky REALTORS.
Roughly 4,200 real estate agents belong to the Greater Louisville Association of Realtors, and there are under 2,400 houses active listings, he said. That doesn’t include vacant lots.
For Louisville’s homes sale numbers to rise in 2019, something’s got to give, and that something is inventory, said Phillips, principal broker with Keller Williams Realty. “At some point, I’ve got to see that the inventory comes up. In 15 years, I have not seen it this low.”
Phillips noted that newer real estate agents with Keller Williams Realty have had to knock on door after door to ask homeowners if they are interested in selling in the hopes of generating new listings.
“It’s our hope that perhaps the construction industry will pick up a bit,” he said, which also would add new inventory to the market.
With continued low housing inventory, it is a seller’s market – despite the fact that sellers can benefit from low mortgage rates, at least in the first part of this year.
The Federal Reserve on Wednesday announced that it wouldn’t alter federal funds rates from its current target range of 2.25 percent to 2.5 percent, which likely is good news for those seeking a new mortgage. The move comes after four interest rate increases in 2018 and the worst end to the year for the stock market in a decade; meanwhile, some fear a possible economic slowdown.
“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” the Fed said in a statement that called the economy “solid.”
While mortgage interest rates remained at historical lows last year, the average 30-year fixed-rate mortgage rose from 4 percent to start the year, peaking at 4.87 percent in November before declining to 4.64 percent in December. A decision by the Fed to increase interest rates could have sent mortgage rates up.
The decision, Phillips said, “is a benefit for people out there who still want to buy a house.” However, as Phillips noted, they could have trouble finding one.
The Kentucky housing market slowed slightly in 2018 but still had its second best year on record. Statewide home sales reached 52,305 units sold last year, which is 753 short of 2017’s record year, according to numbers provided by Kentucky REALTORS.
Lawrence Yun, the chief economist for the National Association of Realtors, said in a statement that higher interest rates in 2018 influenced housing numbers nationwide.
“The housing market is obviously very sensitive to mortgage rates. Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today. Now, with mortgage rates lower, some revival in home sales is expected going into spring,” Yun said.
Despite a 4.2 percent drop in median home prices in December compared to the year prior, home prices in 2018 overall for Kentucky were up 2.7 percent from 2017, at $131,995. Inventory for the year was down 1.4 percent, to 4.2 months, and the average days spent on the market was 110, according to Kentucky REALTOR.
In Louisville alone, homes sold declined 1.8 percent, with 17,829 units sold in 2018. The median home price was $178,000, up 5.4 percent.
“Our market has about three months of inventory, so it’s still technically a seller’s market, but it really depends on your neighborhood,” Karen Story, president of the Greater Louisville Association of Realtors, said in the organization’s monthly numbers release. “In today’s market, on average, listings that do sell are taking about two months to go under contract.”
Story told Insider last month that she expects the market to normalize, with strong demand for competitively priced homes.