Louisville Homes Blog

It should be no surprise to you that things in Mortgageland are all topsy-turvy. The word “subprime” is almost taboo. A good percentage of Americans are already abusing credit yet choose to pursue risky loans all the same. The potential for financial calamity is great.

But while some parts of the country are suffering from falling home values and risky loan practices, Louisville, when compared to these locations, is relatively strong. This piece by Alex Davis underscores how local banks and lenders are capitalizing on the opportunity arising when national companies like Countrywide are taking major hits.

Republic Bank, a Louisville success story, is going on the offensive because they didn’t play in the subprime sandbox and have sufficient assets to cover loans. Here’s another piece of evidence that’s showing Louisville’s real estate market is rebounding.

If you’ve been anywhere near a TV, radio or magazine (and who hasn’t?) then you’ve probably heard how “down” the real estate market is, right? To be exact, sales nationally fell 3.8% in June. Ouch. That’s a quite hit.

But, what about home sales here in Louisville?

Joe Simms, president of the Greater Louisville Association of Realtors, said yesterday that from January through June, 229 more property sales closed in the area, representing a 3.1 percent increase. [link]

That’s not too shabby. And by comparison is downright beautiful!

Now, not every homeowner is experiencing the rewarding sensation of a house sold, after all there are 10,711 listings on our MLS right now. But take solace in the knowledge that Louisville is doing better than other parts of the country. Remember, every house sells. It’s only a matter of time.

I was looking for this information before but couldn’t find it. Then my brother sent me a link and *viola!* we’ve got it!

If you have other inquiries of a real estate nature, please pass them along.

Louisville generally doesn’t experience the highest highs nor the lowest lows, which generally makes for a more sane situation. On the housing front, today we learn:

Building permits for one- and two-family homes were up 10 percent in the Louisville metro area last month compared with May 2006, according to city records. The Home Builders Association of Louisville reported that the increase held up in surrounding counties as well. [link]

Sure, inventory is still quite high but builders are now working more new home starts because they expect an increase in the number of buyers over the next 12 months.

David Seiders, the national home builder’s chief economist, isn’t convinced and expects sales to drop even further nationally. What this basically says is that the “risky” lending practices that are hurting so many borrowers nationwide, aren’t snagging as many here in Louisville. And that’s good news for us!

It’s not just the wealthy who are buying second homes anymore. More and more baby boomers are working towards having a second home ready and waiting for their retirement years.

“The demand for second homes is big and growing,” said Joseph H. Badal, president and chief executive of Thornburg Mortgage in Santa Fe, N.M. “Baby boomers are feeding the second home buying now, and young families are also in the market.”

With rates being at such affordable levels, a second home isn’t out of the question for millions of Americans. But again, it’s about planning, setting a budget and then living by it.

The Realtors said the typical vacation home buyer was 44 years old, came from a household with a median annual income of $102,000 and purchased a property that was about 215 miles from his or her primary residence. Nearly 80 percent of buyers said they wanted to use their second homes for vacations or as family retreats, while nearly 30 percent saw their second homes as a primary residence in the future.

There’s so much to cover, rather than devote a post to each topic I thought I’d hit them all at once—bullet style. Let’s go!

1. New-home sales skyrocket in April
   “Builder optimism is much higher now than it was at the end of February.” I should think so!
2. Existing-home sales, prices decline
   Free market forces are forcing sellers to bring down prices to accommodate the large number of available homes.
3. Aslan Recognized in Affordable Housing Finance’s “Top 50”
   This Louisville-based development firm is turning some heads as they focus on “affordable housing projects” in the Southeast. This sector is often ignored because of the lower margins.
4. Habitat for Humanity due award
   The Louisville chapter has built 250 homes since it began. That’s incredible!
5. Urban areas see biggest gains in property value
   City planners understand about all the benefits of urban renewal, but I wonder if they knew that it could also be so profitable?
6. Habitat to seek new areas for its homes
   In my opinion, Louisville homebuyers are looking for more low-end housing choices and, as you might guess, that is Habitat’s specialty.

Why the Courier-Journal is just full of good news these days. Ok, I’ll quit with the sarcasm.

But honestly, the positive data in this article really deserves some notice.

Nearly 17 percent more homes got default notices, auction notices or were repossessed in Kentucky during the quarter — far less than the national increase of 62 percent, according to RealtyTrac, a Web-based research firm.

No increase is good and certainly 17% is far from a desirable outcome, but when compared to 62% it’s much preferred.

While national media home prices dropped by almost 2% in the first quarter, values in Louisville were up!

The median price for a single-family home in the Louisville-Southern Indiana market was $133,300 in the first quarter of 2007, the Realtors reported, up 1.7 percent over the same period a year ago. The median condominium price was $127,500.

Let’s hope these positive trends continue.

There’s a growing trend towards smaller, less expensive houses here in Louisville.

“It seems like the trend is going back down to ranches and smaller homes,” Miles said “We are seeing people, as they get older, deciding, ‘I don’t want steps.’ We’re going to see that change our market a lot in the next 10 years.” [link]

This also is reflected in average home prices moving from $180,555 last year, to “$171,259 for Jefferson County permits issued in March and April.”

We look for this trend to continue, even as some retiring baby boomers choose to spend their retirement savings on higher-end homes in places like Prospect and Anchorage.

Lately, we’ve all been bombarded with negative news from the media regarding a “down housing market.” It’s everywhere you look! What we don’t hear enough about is the amazing interest rates that are currently at historic lows. These rates should be prompting more investors to consider real estate as part of their overall investment plan.

Add to that fact the increased number of foreclosures and other “at risk” properties, investors should be giving real estate a very hard look.

If you’re lucky enough to live in Louisville (and I welcome my wonderful readers from abroad as well) there’s even greater cause for optimism as our interest rates (check our tracker in the sidebar at the right) consistently track lower than the national average.

Compared to the national housing market Louisville is in great shape.

Louisville sales are up 2.3 percent for the first three months of the year. [link]

This while the national market of existing home sales fell 11.3% from last year.

Now, everything is not wine and roses because there’s still close to 10 months of inventory. Prices will continue to be pushed downward as Sellers’ need to sell increases.

For buyers, however, it’s still a very attractive market. There are some great deals out there and savvy buyers will be able to take advantage of them. The biggest lesson is to remember to do your homework, so having a professional on your team to help you in that regard is imperative.

Hot on the heels of my last post—Foreclosures Affect Us All—comes this piece from the Courier-Journal:

Through March, Louisville has logged 915 foreclosures and could surpass 3,600 by the year’s end.

According to housing coalition data, there were 2,800 foreclosures in 2006.

Again the moral of the story is to be conservative in estimating the amount one is able to borrow.

Let’s have some fun! “U.S. home prices adjusted for inflation plotted as a roller coaster.”

The Courier-Journal published an article Tuesday that talked about the decline in sales for new construction. On the whole the news is as expected. Some builders are feeling the pain, but the flip side (as always) is that buyers are getting great deals.

From the article:

The weakness in sales was accompanied by a drop in prices, with the median price of a new home falling to $250,000 in February, down 0.3 percent from a year ago.

When you combine that piece of information with:

“Anything under $250,000 has picked up steadily,” said Chuck Kavanaugh, executive vice president of the Home Builders Association of Louisville.

That tells this Realtor more builders need to follow the example set by companies like Ball Homes and Dominion who are catering to the under $250k buyers.

Isn’t it great when technology can make our lives easier? Of course it is. Which is why so many home buyers and sellers are looking to technology to help them in their important real estate decisions.

A new National Association of REALTORS survey shows:

Buyers used a wide array of resources in searching for a home: 85 percent used a real estate agent, 80 percent the Internet (up from 77 percent in 2005), 63 percent yard signs, 55 percent print or newspaper ads and 47 percent attended open houses.

It won’t be long before the Internet passes Agents as the #1 resource in a home search. Tools that make that process quick and easy are a huge plus. Companies that understand that power of communication tools like e-mail alerts, automated phone information lines and more powerful online listings continue to lead the market.

Another thing this survey highlights is that customers prefer full-service companies, such as Semonin, in increasing numbers.

The survey finds 83 percent of sellers use full-service brokerage, 9 percent limited services and 8 percent use minimal service, such as simply listing a property on a MLS.

The whole article—Survey Shows Buyers And Sellers Use Technology And Want Personal Services— is filled with great information so I recommend you read it all. But I’ll leave you with this last tidbit. Sellers who use Agents are getting more money for their homes than when they try and go it alone.

The median home price for sellers who use an agent is 31.9 percent higher than a home sold directly by an owner; $247,000 vs. $187,200.

Which says nothing about the peace of mind that comes from working with a professional.

Four out of five homebuyers use the Internet when shopping for a house, according to the National Association of Realtors. [link]

That’s up from 73% last year. It also underscores the importance of having a presence on the Internet.

Realtors who promote their listings on the Internet with more than just the MLS will be ahead of the game as buyers flock to sites like Realtor.com to narrow their search. When comparing properties, surveys have shown that professionally taken photographs and tons of them, lead the list of must haves.

So to all you sellers out there, make sure to include the following question when you interview Realtors for your listing:

“What kind of online listing will you create for my property?”

Of course, I’m a little biased but I’ve received quite a few compliments on my deluxe online listing.

I received a handful of interesting facts from the National Association of REALTORS® (NAR) today. Let me know what you think.

• The biggest group of home buyers by far is still married couples, accounting for 61% of all homes bought.
• Single women now purchase 22% of all homes. A recent Census Bureau data analysis by the New York Times concluded that 51% of all American adult women now live without a spouse. Women also account for about 57% of all college graduates, almost the reverse of the ratio of 40 years ago.
• Single men account for only 9% of purchases.
• Minority homeowners, who now account for 30% of all homes bought. Homeownership among African Americans grew from 44% to 48%, among Hispanics it grew from 43% to 49% and among Asians from 51% to 60% all during the 10 years leading up to 2005.
• The average age of the largest group of home buyers (Generation X and Y) is 35. The average age of REALTORS® is 57.
• The level of homeownership across the nation currently stands at 72%.
• Second-home buyers from abroad made about $41 billion worth of residential real estate purchases in the United States during 2005.
• Foreign buyers from Germany account for 13% of the total purchases from overseas, the largest foreign group. Latin Americans are also at 13%. Other countries at the top of the list include Japan and the United Kingdom, both at 10%.

In addition to the growth in ownership among minority groups, which is a good thing, it’s nice to see the total ownership numbers increase from 68.9% in 2005 to 72% in 2006.

The downside, which these numbers don’t indicate, is the smaller percentage of equity that owners have in today’s market compared to years past. Credit can be a dangerous thing.

Anyone who deals with forecasting the future understands that it’s not an exact science. There are just too many variables. In other words, it’s tough to bet against the house and win.

Like trying to predict a sports contest or the stock market, predicting housing trends is also a risky business. The website, Housing Predictor, has recently launched to try and tackle this beast. Because it is relatively new, we can’t assess their accuracy just yet but it’ll be interesting to follow their performance over time.

So what are they predicting for Louisville?

The median price for a single family home in Louisville stands at $142,000 and should fall slightly just 3.4% through 2007.

That’s not a very sunny picture for all of us homeowners, is it? I’ve got a prediction of my own. I’ll give you 2-to-1 odds that we beat their forecast. Any takers?

Found these keen maps that overlay housing data on Google maps at a site called Neighboroo. How cool is that?

Head over and play with the gadget. Louisville is looking good and I don’t care who knows it. 8^) [via The Big Picture]

Where would you expect to see the largest jump in median home prices? If you guessed Atlantic City, NJ you’d be correct. Scanning CNNMoney’s chart, you’ll see that the high and low-ends of the price spectrum are both seeing big jumps and major drops.

For example, high-priced areas like Seattle, WA are going even higher—11.3% leap—while another pricey spot, Sarasota, FL is experiencing the biggest decline in the country, with values down 18%.

Here in Louisville, homes are up to $137.6k from $134.6k last year, which is a 2.2% increase. This result tops the national average of -2.7% and is much better than the South region’s average of -3.7%.

So while nationally, last year was a difficult year for home values, here in the Greater Louisville area, we are seeing small but steady growth, which is certainly a good thing.

While many analysts debate whether 2007 will be an “up” year for real estate, Taylor Blair of the Listing Information Network says their latest report “shows the possibility that we’re just coming out of the housing recession.”

One positive sign is being reported by the National Association of Realtors, who cite a 5% increase in December of pending contracts.

While today it’s certainly a buyer’s market, this condition may not stick around for long.