Are more people really moving inside the Watterson?

A row of historic houses at Fourth and Hill streets in Old Louisville | Courtesy of Wikimedia

In his gut, local historian and Old Louisville expert Tom Owen says he feels like more people, especially younger buyers, are moving into neighborhoods closer to downtown, neighborhoods like Germantown, which has seen a boom in homebuyer interest during the past few years.

“It seems to me more and more do, but I can’t prove it,” he said.

Since the mid-20th century, white flight and the growth of suburbs has dominated the conversation about where people live, but in recent years, real estate agents, city officials and the media have rallied around the narrative that masses of people — particularly millennials — are moving inward toward downtowns rather than outward.

Although the overall population in and around downtown continues to grow, new data generated by the residential real estate company Redfin indicate that the city isn’t seeing a reversal of suburban flight. The numbers echo the findings of a 2015 University of Louisville study.

What home sales indicate

Redfin crunched the home and condominium sales numbers during the last three years for Insider Louisville. The company separated the home sales into two categories: those within 6.2 miles of City Hall downtown and those outside that radius. The information doesn’t include home sales in Indiana.

The circle shows everything within 6.2 miles of City Hall. | Courtesy of Redfin

While cases can be made for why a neighborhood within the 6.2-mile radius should or should not be considered an urban area, the radius helps to eliminate the debate around what is urban versus suburban.

Urban neighborhood is “a very subjective term,” said Lamont Breland, a real estate agent with Breland Group Realtors and former president of the Kentucky Association of Realtors, adding that most include Russell, Parkland and other West Louisville neighborhoods, while others may add Old Louisville and NuLu in there.

The radius is generous toward what is considered urban, but even then, the number of homes sold within the radius is considerably lower than those sold outside the radius, areas that are mostly outside of the Watterson Expressway.

According to Redfin, 12,141 homes sold outside the 6.2-mile radius in 2016. That’s 12,141 individuals, couples or families moving to Louisville’s suburbs or moving from one suburban neighborhood to another. Meanwhile, 3,401 homes sold within the radius last year.

Lamont Breland was president of KAR in 2016. | Courtesy of Kentucky Association of Realtors

Breland chalked the difference up to the finite supply of homes in and around downtown. Limited supply drives home prices in desirable neighborhoods up, which can keep first-time homebuyers and people who are considered low- or middle-income earners out of those areas.

“I think it’s a big factor,” he said. “Whenever you hear people talk about affordability, they mention the high prices in the Highlands and St. Matthews, and the value is rising and that is because of low supply.”

Looking at the numbers from Redfin, the number of homes sold inside the 6.2-mile radius rose 15.6 percent from 2014 to 2016. For suburban neighborhoods, the number of homes sold increased 22 percent during the same period of time.

It’s not that people aren’t moving toward downtown Louisville; it simply isn’t happening on a large scale. In big cities nationwide, homebuyers also seem to prefer the suburbs.

While urban homes are within walking distance to restaurants and shops, provide better alternative transportation options and appreciate faster, suburban homes have bigger yards, are typically newer and in good schools districts, and are viewed as safer.

Owen posited that the resurgence-of-urban-living narrative had gained traction because there is enthusiasm surrounding a narrative that runs counter to the last half century of city depopulation and out-migration. The majority of Louisville residents “very likely” are still looking to move outside the Watterson Expressway but, he added, he personally sees more young people moving into urban neighborhoods than in the past.

“Urbanists like myself know that most Louisvillians — like most Americans — have for centuries chosen to move out where land for new homes with the latest amenities is often cheaper, yards can be bigger, and there’s a hope for escaping city traffic and problems associated with proximity to poorer people,” Owen said.

“The great news is that a significant and growing minority of scrappy young people are answering the call to neighborhoods with a historic groove where homes have wood floors and trim and — even if they are new — are on sidewalks that lead to a bike lane, bus stop, and walk to shops and restaurants,” he continued.

Expected growth in Louisville’s suburban population

The home sales numbers don’t mean that more people aren’t moving toward downtown, just that they aren’t moving at the rapid rate that some believe. A 2015 UofL study called “Louisville Metro Demographic and Economic Projections 2010-2040” backs that up.

The study shows where Louisville is expected to see the most population growth during the coming decades. | Courtesy of the University of Louisville

The population of most neighborhoods within the Watterson Expressway is expected to grow between 0.8 percent and 14 percent by 2040 when compared with 2010 numbers, according to the study.

However, the population of the area referred to as Northwest Core, which includes the Russell, Portland and Shawnee neighborhoods, is projected to decline 19 percent. The population of the Southeast Core, which includes neighborhoods such as the Highlands, Germantown, Schnitzelburg and Parkway Village, is expected to drop 3.8 percent, the study states.

Meanwhile, the population in the majority of suburban neighborhoods is expected to grow in excess of 20 percent from 2010 to 2040. The population surrounding the Parklands of Floyd’s Fork is projected to jump 65.6 percent by 2040, according to the UofL study.

The study shows that Louisville’s urban neighborhoods, for the most part, are growing, just not as rapidly as their suburban counterparts.

An unknown variable in the urban versus suburban living discussion in Louisville is apartment living.

Nearly 700 new apartments are expected to come online downtown by the end of 2018, bringing the total number of units to 3,275, according to the economic development nonprofit Louisville Downtown Partnership. And those numbers don’t include the hundreds of other units expected to come online in the next two years in neighborhoods near downtown such as Phoenix Hill and Irish Hill.

City leaders have repeatedly stated the need for more density downtown, touting it as an attraction for businesses looking to potentially relocate and for young professionals considering moving to Louisville.

Mary Ellen Wiederwohl | File Photo

However, it is unclear if Louisville has a large enough population — and high enough average median income — to support the monthly rental rates these new luxury apartment complexes plan to charge. For example, the 260-unit Main & Clay apartments will have an average rental rate of $1,500 a month.

“We are going to see some rents we haven’t seen before, but we also have a market particularly in our lovely millennials who are not going to be able to afford a lot of that,” Louisville’s chief economic development officer Mary Ellen Wiederwohl stated at a February meeting of real estate industry representatives. “These are folks that have college degrees and are working at Humana or other places that are not going to be able to afford some of the rents coming along.”

Although young professionals are one demographic that the apartment developers are targeting, Steve Stevens, chief executive of the Kentucky Association of Realtors, said empty nesters and retirees shouldn’t be dismissed in the conversation about urban versus suburban living and might become a growing demographic in urban neighborhoods.

While some young people will look toward suburban neighborhoods for places to settle down and raise their families, empty nesters and retirees are looking to downsize and enjoy the latter half of their life, which is drawing some towards city centers. They may look for condominiums or apartments.

“I feel like it’s a life cycle thing,” Stevens said. “They start thinking about taking care of less.”

Suburban appeal

Limited housing stock and high home prices can keep some homebuyers outside the Watterson Expressway, but the desire to live in the suburbs cannot be discounted. Developments like Norton Commons are popular because they offer urban amenities in a suburban setting, away from the hustle and bustle of downtown.

People are looking for more connected neighborhoods near their workplace, Wiederwohl said. For some, that means a single-family house or apartment in the suburbs close to shopping malls and the interstate; for others, that means living near the Central Business District where they can walk to food and entertainment or bike to work.

Looking at millennials, in particular, some are settling in suburban neighborhoods such as Jeffersontown, Fern Creek and Pleasure Ridge Park; it’s just taking them longer to settle down and buy a house.

“They’re actually not that different from the rest of us, we’re just obsessed with millennials,” Wiederwohl said. “The American Dream is alive and well, but they just might be living in that apartment a little bit longer in a closer-in neighborhood before they go out to purchase their first home” in the suburbs.

A recent survey from the National Association of Realtors indicates that 86 percent of non-homeowners, most of whom are under the age of 35, want to own a home in the future. Many of the non-homeowners surveyed said they haven’t bought a home because they couldn’t afford it.

Tom Owen | File Photo

Also, homeownership is still thought of as something people do when they get married or have kids, both of which Americans are doing later in life. Quality of schools can be a big driver of where younger generations live as well.

Owen’s son and daughter-in-law sold their home on Belgravia Court in Old Louisville earlier this year because the neighborhood has “not as strong quality schools,” Owen said. “Until they fix that, Old Louisville will end up continuing to be folks without children” or families that can afford to send their children to private school.

Breland made a similar move 20 years ago. He lived in Old Louisville, had an office in Old Louisville and owned three other properties in the neighborhood, Breland said, but they moved out to Jeffersontown when their children reached school age.

“Even though I loved Old Louisville and my wife loved Old Louisville, we didn’t feel that was the best place for our next chapter in life,” he said.

One of his daughters, who is now in her mid-20s, was recently looking for a house. She’s settling in Shelbyville, to be close to her job in Georgetown. Plus, Breland said, she wanted more yard for her money — something she wouldn’t be able to get in a more urban area.

Correction: The original version of this story incorrectly referred to Tom Owen as an Old Louisville resident. He lives in the Highlands.