Tre Pryor

It seems the popular press today didn't listen to their parents growing up. I'm sure you've heard the instruction, "If you don't have anything nice to say, don't say anything at all." Apparently only bad news sells commercial time, newspaper subscriptions and online ad clicks. Well, here at Louisville Homes Blog, I'd rather tell you the whole story and let you figure out what it means. So here in our ultra-concise delivery method is the 2008 Year in Review for Louisville, KY Real Estate.

Home Values in Louisville

First, you need to understand that most valuations you find online are truly estimates. Some are wildly inaccurate while most are merely averages. Averages are fine if your home is an average home but most aren't. Even still, with the plethora of free online information, we'd be silly to dismiss it. According to this chart from RealtyTrac, the median home value in Louisville dropped about $1,300 in value during 2008. This amounts to about a 1% loss.



We reported in November one analyst reporting the drop in value to be -3.6%. If you look at Trulia, they have 2008 being almost a wash. I think a drop of 2-3% is probably reasonable, which is a real negative when you consider home values in Louisville have risen 4-5% every year for the past five decades.

Home Sales in Louisville

This calculation is quite simple and very reliable given that the data is coming directly from Louisville's MLS system.



As you can see, Louisville has certainly dropped from the high number of sales in 2005 and 2006. But properties are still selling in numbers larger than the first three years of this decade.

Foreclosures in Louisville

Since this is the most negative news in real estate today, it's no big surprise to hear the media clamor on and on about it. So how is Louisville doing compared to the rest of the nation?



About as expected, things are the worst on either coast and Florida. Good news for us in Kentucky is that we have fewer foreclosures than our neighbors in Tennessee, Ohio and Indiana. As always, be conservative when considering an amount to borrow for the purchase of your home.

Conclusion

All in all, it was a down year for real estate here in Louisville but not nearly as bad as the media has made it out to be. Given the historically low interest rates and depending on your situation, now could possibly be the best time to make a move in real estate.

One expert's crystal ball says real estate in Louisville KY is going to take off in 2009.

Now, for every Alexis McGee, there are two or three critics who think that we haven't seen the bottom of this housing downtrend. Who is Alexis McGee you ask? She's the president of ForeclosureS.com who has access to a great deal of real estate data and she predicts a major rebound for housing in 2008.

"Recovery is underway. Affordable is back in the housing market," says Alexis McGee, real estate expert, educator, and president of ForeclosureS.com. "In 2009, housing will not only recover, but we'll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market."

That's pretty optimistic but I can't disagree. If you look at the main reasons why families make the move they are:

• Mortage Rates: Currently at or near historical lows.
• Property Prices: Today lower thanks to two years of price reductions nationally.
• Housing Choices: In most markets inventory is way up!

For some, there are also tax credits from the government, who is making a concerted effort to kick-start our economy. To be fair, there are some negatives like consumer debt and uncertainty in job market going forward. For McGee, some of her viewpoint must be colored by the foreclosure numbers. Read More »

Saratoga Woods is another great neighborhood in the southern portion of Louisville's East End. Just down the road from Stone Lakes, Saratoga Woods has a similar feel with lots of rolling hills and a good variety of homes at just a bit lower price point. This neighborhood began in the early 1990s and quickly built out the subdivision. In some respects it's like the Polo Fields with the hills and age of homes but closer in towards Jeffersontown. If you're looking for a home in the $275k-$325k range, be sure to check out any homes for sale in Saratoga Woods.

Read More >>

Owl Creek is an established and prestigeous neighborhood in the heart of Louisville's East End. This subdivision, located off Dorsey Ln. in Middletown was started about 20 years ago and contains some wonderful, large homes in a scenic setting. With home values from the upper $200's to almost $400k, there are some great values in this subdivision. Similar to some properties in nearby Hurstbourne or The Woods of St. Thomas, Owl Creek has a great deal of appeal. Read More »

My thanks to a reader who thoughtfully sent this in. The Wall St. Journal does certain things very well. One of them is their "handy-dandy" charts. The other is their in-depth analysis. This time with Shrinking Prices, Rising Delinquencies, they only batted .500. This was due in large part to the chart not working properly. That's OK, we'll forgive them because this piece wasn't hidden behind a subscriber log-in. So how did we do? Since the housing market peak in the 4th quarter of 2005, the median home price in Louisville, Kentucky is up 3.2%! Now, this isn't the 4-5% annual appreciation we're used to seeing in our city but in a housing recession that many are calling the worst of 50 years, I'll take it! It's always helpful to compare data from Louisville with other cities of similar size in our geographic region.

Relative to price at U.S. housing market peak (%)

Nashville, Tennessee 106.6
Knoxville, Tennessee 105.1
Louisville, Kentucky 103.2
Cincinnati, Ohio 99.9
Evansville, Indiana 98.2
Columbus, Ohio 97.8
Indianapolis, Indiana 97.1
Memphis, Tennessee 95.4

Turns out Louisville performs better than some, worse than others. Louisville's delinquency rate of 3.30 is less than the national average of 3.86 and the rate of that change also trails the national average, which is a good thing.

Should I Buy?

I'm not going to say that everyone should be buying real estate this year. It's a complicated decision with many variables. But what I do know is that depending on your personal situation, now is a great time for families looking to move up in overall home value. In this housing market, those families will realize a substantial financial benefit. Here's why:

"The amount you will likely lose in the sale of your current home will be more than surpassed by the amount you save on the purchase of a more expensive home."

When you couple that fact with interest rates, assuming you can qualify, which are towards the bottom end of historical lows, making this kind of move in our market is a wise decision. However, if your personal situation says you need to downsize or make a lateral move, then from a financial perspective, this is not the best time for you to make a move.