Last October, the absorption rate of home inventory for Louisville was 5.21 months. That’s not bad and not far away from a balanced market, which is considered to be 6 months.
What this means is that if no new listings came onto the market, at our current rate of sales, the cupboard would be empty in that number of months.
But by March, that number had plummeted to 3.91 months. This shortage of available homes to buy was dangerously low and threatened to douse the newfound fire of our rebounding housing market.
As we entered the summer months, enough new properties were listed that this value held steady for the next six months. So here we are.
Trend analysis says home sales should trail off and home prices move higher during market conditions like these. Well, we’re only half right.
Since December of last year, the total number of Jefferson County homes sold surpassed the previous year until the dead heat happened. The same number of homes sold in both August 2014 and August 2015.
I took this to mean the diminished number of available properties was affecting sales numbers. That is, until September came and threw that theory on its ear.
There were 977 homes sold in Jefferson County in September. That is a significant 13.9 percent gain over the previous year.
Clearly demand is there. How has this affected sale prices?
Home sale prices are highly seasonal. The increased competition of summer drives the prices up, while during the less busy winter months, prices move lower.
We see this clearly when looking at our median home price chart. The median home sale price for September was $145,000. Compared to last year, it’s actually 2.4 percent lower.
But when you look at the trend-line value, we’re up 3.6 percent and in relatively good shape to reach our traditional Louisville 4 percent yearly appreciation mark.
In the coming months, I will delve further into home-sale values by MLS area and ZIP codes to show you exactly which Louisville neighborhoods are the hottest and which might be the better long-term investment. As always, individual properties offer greater opportunity for gains than assessing change in aggregate. Real estate is no exception.