I get this questions a lot: “So, Justin, How’s the Real Estate Market?”. Many times people don’t really want the answer to this question, it’s just a conversation starter. But, depending on who you ask, you might hear something like, “Oh, it’s doing well”. I used to say similar things from time to time, but I decided that if I want to actually do someone a service when they ask me that question, it would be better to answer the question, “how’s the real estate market” with real examples, numbers, and statistics. After all, it’s my job as a Louisville Realtor to know the health of the market, and to understand where it fluctuates and what drives it. I’m talking about truly knowing the market, not just telling people, “oh, it’s great” or “I’m super busy right now” like a lot of Realtors will tell you. I’m going to breakdown the why, and explain to you how much better the Louisville real estate market is today versus last year at this time. Home ownership is very affordable right now.
Recently I attended Keller Williams Realty’s annual convention in Orlando, FL. It’s an amazing time to gain knowledge, analyze market trends, and become a better Realtor for my clients. I studied a lot of charts and graphs over the course of the convention, but a few of these graphs stood out to me as absolutely astounding. You hear people talking about mortgage interest rates a lot these days. You may hear people say “money is cheap”. The truth is that our interest rates have been so low for so long that people don’t really hear it when someone tells them that rates are low. I feel that I wouldn’t be doing my job if I didn’t mention it. RATES ARE LOW. They are. Home ownership is more affordable now than it ever has been, and I think these two graphs will explain why:
First, the orange line above shows you a steady increase in median home price at 4% per year. $250,000 would be our median home price right now in the United States if the market had never crashed, but instead the median home price was $208,500 in 2014. Can you see why the market crashed? ’04, ’05, and ’06 home prices went way above that steady increase. The market cannot sustain price increases like that for very long at all. Now look at the green line. The housing market has bounced back enough now that it is beginning to level out and return to that healthy growth rate of 4-6% per year. But note the 17% difference in where we would be, and where we actually are. The trend line is being reset. This is good for home sellers because home prices are increasing again and sellers are realizing a profit when they list and sell their home with proper representation. This is also good for buyers because home prices have not completely returned to where they would be, and the new trend line is lower.
Look above. How about an average mortgage interest rate of 16.6%!?!? 1980 through 1985 was absolutely insane with regards to interest rates, especially if you compare it to what we have now. Look at the last five or six years on the above graph. It’s amazing to visually note the interest rate comparison over that last four decades. Are houses more expensive now? Absolutely, but when you compare costs and factor in cost of living and inflation (see below), you find out just how affordable home ownership is right now.
So, how does this compare to our Louisville housing market? Well, Louisville’s median home price isn’t quite increasing at 4%, but the level of activity in the housing market locally has increased impressively over the last few years. The number of pending transactions in January of this year was higher than January of 2014 by almost 23%! February 2015 pending transactions were up 25% over last year! This is huge. The fact that more homes sold during two of the worst months of the year for home sales paints a promising picture for the rest of 2015. I think it’s also important to note that there were 46% more new listings during January of 2015 compared to last year, and 49% more new listings during February 2015 compared to last year. People are listing their homes earlier to avoid competition and it’s working. Buyers are everywhere, so why wait until May to put your home on the market?
This all means that the home buying and selling frenzy has already begun for the year. Countless people can tell you how seasonal the real estate market is, and that nothing really happens until May (after Derby). But I’m here to let you know that these numbers are telling a different story. If you want to sell your home this year, and you don’t have to wait until a specific date due to circumstances beyond your control, then you need to be ready yesterday. You need to speak with someone who can look at your home through the lens of a home buyer; an unbiased perspective to help you make certain that your home doesn’t sit on the market while all these buyers are out buying other homes. You need someone who knows each of the Louisville markets; a person who can present your property to the world with the highest level of marketing expertise and deliver to you the best service possible.
As a Louisville native and local expert, I can assist you in selling your home and buying a new one. If you’re thinking about buying or selling a home in Louisville, KY I would love to speak to you.
502-509-9278 – firstname.lastname@example.org