It’s certainly been an interesting year so far. Coming off a record-breaking 2016, Louisville real estate was poised for a letdown. If nothing else, at least a major correction. With housing inventory levels at record lows, it seemed impossible that 2017 could come close to last year’s numbers.
What’s that Adidas slogan?
Impossible is nothing. (As it turns out, our very own Muhammad Ali coined the phrase. What can’t that man do?)
Back to real estate, 2017 has been a very pleasant surprise. With the May numbers added to the fold, comparing the total number of homes sold year-to-date, it’s almost a dead heat.
There was a 6.2 percent increase in home sales in May for Jefferson County, with 1,190 homes exchanging hands. After a dip in April, the tally puts 2017 ahead of the previous year by the slimmest of margins — just 0.3 percent.
Still, this performance is akin to an underdog overcoming the odds.
Switching gears, let’s look at home values.
In May 2016, the median home sale price was $167,500. This May, the mark jumps to $175,548. Not the highest on record but good enough for a 4.8 percent year-over-year increase.
Looking at the 12-month trailing average, the comparison is even greater. Comparing the values for each May, there was a whopping 8 percent gain.
The other metric that’s critical to continued success is the absorption rate. Starting last July, the rate declined sharply to land at 1.99 months in February 2017. A balanced market has a six-month absorption rate, so it’s clear this anemic value is hurting sales.
It remained below 2.0 for the next couple of months but rose slightly to 2.21 months in May. It’s a positive move, to be sure, but for this market to really get moving, the absorption rate needs to move much higher.
Here’s the challenge for Louisville real estate right now. There are homeowners who would like to move, but they can’t find enough great options for their next home.
In today’s market, selling is the easier part. Buying is more difficult, even with some of the great new constructions options coming in 2017.