Home in Rock Springs Louisville KY | Record year in Louisville real estate

Despite extremly low inventory and rapidly rising home sale prices, 2016 was a record year for Louisville home sales. | Photo: Tre Pryor

Wind, reel and print… that’s a wrap! 2016 is in the books and it was a record year in Louisville real estate.

Both of our primary metrics — home sales and sale prices — increased over an already strong 2015. What makes this more astounding is that this performance was accomplished despite some significant challenges — namely a record low housing inventory.

Charts of Louisville home sales and Louisville home prices for the 12 month period ending December 2016.

While a healthy market holds an absorption rate around 6 months of inventory, all of 2016 experienced less than half that. We’re currently sitting at a paltry 2.4 months. As far as I can tell, this is the lowest it’s ever been.

But now let’s get back to the good news: 2016 was simply outstanding!

At the time of this writing there were 12,036 homes shown as sold in the GLAR database. This is a 5.13 percent increase in home sales over the previous year and the new high-water mark for Louisville real estate.

Buyers had far fewer choices, but that wasn’t going to deter them. Perhaps the interest rate increase on the horizon provided additional incentive to make a move now.

Rates are expected to rise in 2017 but remain extremely low when viewed with a long-term perspective.

Even more incredible than the record-setting home sales totals are the price increases in sold properties. Since I began charting values, I’ve used the median rather than the average for stability purposes. Comparing the December 2016 trend value (12-month trailing average of medians) of $160,971 to a year ago, we see that prices increased a whopping 7.1 percent.

What this means is that our busiest real estate year on record took place when prices were rising at their fastest pace and housing inventory was at its lowest. Truly phenomenal.

The median home sale price for December 2016 was $162,000. Last December this value was $152,000.

Just think what sales totals might have been reached if more Louisville homeowners put their homes on the market. Maybe that’ll be what happens in 2017?