Don’t look now, but we may have an upset in the making. If you remember, 2016 broke all kinds of records in Louisville homes sold. Given that housing inventory in our city has dwindled to anemic levels, most experts thought matching those sales totals was completely out of reach.
“Hold all tickets!”
Keep in mind we’ve just finished August with four more months to go before the year’s total is tallied. Things could certainly go off the rails quickly. But August performed quite well. How well? Let me tell you.
Looking at our chart, the sales totals have been going back and forth, with 2016 winning some and 2017 winning others. Year-to-date, 2017 is holding an ever-so-slim 16 unit margin of victory. What’s so incredible is that it’s doing so with such a low number of available listings for buyers to choose from.
For August 2016, the absorption rate was a paltry 2.95. Our current rate is even worse, at just 2.5 months of inventory. A balanced market is considered six months. Clearly, buyer demand is strong while homeowners appear content to stand pat.
Let’s take a look at how these higher-than-expected sales totals are affecting home prices.
The median price of homes sold in August 2017 was $169,900. After seeing that value at $183,000 just two months back, it’s a little disconcerting — especially considering the increased competition that comes with higher sales totals. One must also remember the seasonality effect of home pricing as well. I expect prices to continue to fall as we head out of the summer selling season.
When we compare the trend-line values of $155,936 for August 2016 with $166,837 for August 2017, we realize a 7 percent gain. This value is above average for Louisville real estate where we typically see a 4 percent annual appreciation. Home ownership is paying well these days.
The Louisville real estate market is moving rapidly, and with it comes increased competition … thus higher prices. Great for homeowners, not so great for home buyers. But the historically low interest rates are more than making up for this discrepancy.
That is if you can actually close on that property you’ve been eyeing.