Monthly Reports: Period Ending January 2012

After a strong end to last year, Area 2 has been down the past couple of months. The median home price of homes sold in January dropped to it’s lowest point of the year.

Area 3 some saw some increased sales activity in January. Home values remain relatively flat, which in this environment is pretty good.

Similar to most of the city, home prices have declined while activity has picked up. Buyers are getting amazing value here as again, the median home sales price for the month was at record lows.

Home values in Area 7 continue their slide. Part of the equation must include lower priced homes being built, but even that can’t account for much due to the low number of new housing starts. Activity, on the other hand, was up big over previous year.

Large increase in sales over previous January, while prices bounce up and down.

Second month in a row with increased sales in Area 9. Fourth down month for prices but overall the trendline is relatively flat.

Mostly level month for Area 20 as both sales and prices haven’t changed greatly from previous year.

It’s common that when prices are up, sales are down, and vice versa. That’s the case in Area 21 where prices are down and sales have moved up.

The good news just keeps coming. National organizations are starting to realizes all the great stuff Louisville has to offer. This week it’s Zagat naming Louisville one of The 8 Best Foodie Getaways Around the World. High praise indeed!

Here’s what the piece had to say about our city.

3. Louisville, KY
What to eat: This is Bourbon Country y’all. In Louisville, you’ll find an impressive amount of top-notch restaurants featuring both rustic and city-fied food…to pair with your brown spirits of course. Visit some distilleries (Maker’s Mark, Jim Beam, Buffalo Trace) before dining at upscale restaurant, Proof on Main, where dinner could include chickpea-ham fritters or split pea panisse and should include some housemade charcuterie. The infamous hot brown – a turkey, bacon and tomato open-faced sandwich covered in mornay sauce – can be found at the Brown Hotel, where it reportedly was created.

Where to stay: The 21C Museum Hotel is THE place to stay in Louisville. This boutique spot boasts eclectic decoration in the heart of Bourbon country. Bonus: Proof on Main, one of the top area restaurants is located in the hotel. Rooms from $185 per night.

Perhaps even more amazing is the Louisville was the only American winner. Wow! Other great destinations in the full list are listed below.

1. Okinawa, Japan
2. Prince Edward Island, Canada
3. Louisville, KY
4. Cornwall, England
5. Vieques, Puerto Rico
6. Morelia, Mexico
7. Kuala Lumpur, Malaysia
8. Cairo, Egypt

This award is much more prestigious than that silly vote-stuffing competition for the South’s Tastiest Town, don’t you think?

Previously, we published Top 3 Real Estate Myths for Louisville Home Sellers to help clear up a few misconceptions that many hold regarding best practices in selling your home. Today we’re looking at a few myths that need busting regarding real estate agents. Think you haven’t been fooled? Let’s find out!

Myth #1: Louisville real estate agents make a ton of money.

The reason I chose this myth to start with is because it’s a very widely held opinion. LouisvilleHomesBlog.com published an article last year looking at real estate agent income for 2010. What we found surprised even me!

You can read the piece yourself but what it boils down to is that the top-performing 5% of real estate agents make close to 1/3 of all the revenue. The top 10% make 54.2%!

While the average gross income for a Louisville real estate agent in 2011 was $27,364, the median income among Louisville agents was much lower at $12,825. This goes to show just how much higher the incomes of the top producers affect the average.

» Important Note: Just because a handful of agents are making incredible salaries, it doesn’t mean that’s typical for the industry. Some agents work harder than others. Many are only part-time. All of these things factor into the reality of what an agent makes in real estate.

Myth #2: Agents have to do everything their client tells them.

The definition of agent, as applied to real estate:

“One who is authorized to act for or in the place of another; a business representative.”

A real estate agent may, or may not, be a Realtor. A Realtor must first be a licensed agent who then also adopts a higher level of service through the Realtor® Code of Ethics. Realtors are called to a higher standard, even though the client may not understand the difference.

When a client works with a real estate agent, their behavior is dictated by the applicable statutes and codes to “protect and promote the interests of their client.” Here are the three kinds of requests that Louisville real estate agents should not heed.

1. Any request that is against the law. This includes Fair Housing statutes.
2. Any request that may be legal but is not in the best interest of the client. The agent’s training and experience gives them the authority to discern the difference.
3. Any request that may be in the best interest of the client but is above and beyond reasonable service. Simply because the client wants to see 42 homes in one day doesn’t mean that is reasonable for the real estate agent. Or, in this case, the laws of nature.

» Important Note: As it does in most of life, common sense rules. The best agents want to serve their clients so well that those clients will refer their friends, thus increasing business for the agent. But if a client’s request puts the agent’s license in jeopardy, then it isn’t reasonable for the agent to perform that request.

Ideally, the real estate transaction is a symbiotic relationship where both parties receive something positive from the experience.

Myth #3: Agents get referral dollars from lenders, appraisers, home inspectors and all the rest.

This one is fairly easy to debunk. By law, a real estate agent is only allowed to receive a referral fee from their own broker and no one else. That broker is only allowed to receive a referral fee from another broker. No other situations are allowed.

Here’s the most common situation where an agent can receive a referral fee. Agent Amy has some great clients who she helped purchase their current home several years ago. Now, this family needs to move to Wyoming. Why Wyoming? Have you visited Wyoming?!?

Anyway, Agent Amy can help this family by locating high-quality, full-time agents in Wyoming. Then she can interview them and select the best agent for her clients. In exchange for this service, the agent’s broker in Wyoming must agree to pay Agent Amy’s broker a referral fee. (All fees are negotiable by law.) These fees are perfectly legal.

» Important Note: Find a Louisville real estate agent you can trust. Word of mouth referrals are the most reliable way to find a trustworthy agent. If you hear someone say, “You scratch my back and I’ll scratch yours” then run for the hills. It’s not worth potentially derailing the new home purchase by using someone willing to skirt the rules in order to make a few extra bucks.

Many held high hopes for an improving real estate market heading into 2011.

Well, maybe that’s an exaggeration but there were some signs that the housing recession was lessening and perhaps we would all see improvement in 2011. In most locations, that didn’t occur. But it did in some!

Looking back on 2011 home value changes

So here we find ourselves in a similar position; looking back on the year and trying to determine if 2012 would finally be the year were things went “back to normal.”

Let me describe normal. For years, Louisville home values annually appreciated 4-5% a year—almost like clockwork. You have to go back to the 1980s to find a year where homes didn’t increase in value.

Since the top of the market in 2007, however, that hasn’t been the case. According to the Federal Housing Finance Agency (FHFA), we didn’t actually see a decrease in home values until the midpoint of 2008. Since then, values have steadily declined. What’s worse is that 2011 appears to be the biggest loser of them all.

Home prices drop, home prices rise, all depends on location

Now here is where it gets interesting. Homes in Jefferson County dropped an average of 4.56% of their value from December 2010 to December 2011 (comparing 1-year trailing averages). That’s likely pretty close to the number FHFA will publish later this year.

But what’s compelling is that depending on where you look in Louisville, some properties have actually increased in value. Homes in one Louisville MLS area appreciated over 10%!

To add more perspective, see how the different MLS areas ranked, with Jefferson County being the aggregate of Areas 0 through 9.

Include 2010 and Louisville home values change again

Because I have access to the data (and I’m a bit of a data nerd) I thought I’d see what the numbers looked like when you included 2010 as well.

Showing how volatile the real estate market is I want to provide this example. Louisville Area 2 (The Highlands, Butchertown, Germantown and nearby areas) was down this past year almost 5%. Go back and include the almost the increase for 2010, the net result is a positive 8.57%. Interesting.

The Internet and high-powered computers have put more data into our hands than we know what to do with but knowing how to slice and dice it reveals insights that can be very useful towards real estate buying and selling decisions.

Recently the National Association of Realtors (NAR) published 7 Best Remodeling Projects for the Money on their consumer-focused Web site HouseLogic.

Here’s a summary of some Louisville home improvements that will net you the most money.

1. Tough-as-Nails Siding Replacement: Percent of investment recouped: 78%
2. A Low-Cost Entry Door with Steely Good Looks: Percent of investment recouped: 73%
3. A Bedroom with High Aspirations: Percent of investment recouped: 72.5%
4. Energize Your Tired Kitchen: Percent of investment recouped: 72.1%
5. Put a New Face on Your House: Percent of invest recouped: 71.9%
6. All Decked Out: Percent of investment recouped: 70.1%
7. Siding with Value: Percent of investment recouped: 69.6%

Other reports I’ve read show the value of a front door replacement to often be more than 100%.

Keep in mind those are national values. Rates will be different here in Louisville. Consult with your real estate expert before tackling any home improvement projects directed towards improving a home sale.

Today is our final Friday covering the wealthiest ZIP codes in Louisville, Kentucky. Drumroll please *ratta tat tat* The #1 wealthiest ZIP code in Louisville is 40025! With only about 130 addresses in this area, it’s a very exclusive and affluent part of Louisville.

Average Household Income: $186,271
Average/Median Home Value: $571,386/$400,000
Number of Homes over $1M: 15
Source: BusinessFirstofLouisville.com

Glenview is located northeast of downtown, just north of I71 up close to the Ohio River. With the addition of the new development Glenview Springs, this area only continues to improve. If you’re looking to build a Louisville estate home and don’t want to be “out in the country” this neighborhood is special.

Of the 31 transactions listed on our MLS that sold for more than $2,000,000, nine of them are located in this ZIP.

So that’s a wrap! I hope you enjoyed this series. Let’s do it again sometime.

If you’re thinking about buying a condo in Louisville you should take some steps to dig deep and find out more about the unit and the association. On the surface, everything can look fine, even when there is trouble brewing below. Here are some things you can do to really find out what’s happening in the condo community you are interested in.

1. Find Out If There Are Any Complaints

Ask to see some notes from an association meeting. This will tell you what the concerns are and how deep they run. You may see some problems that indicate deeper issues at a management level that don’t look right or appear that they will be resolved soon. On the other hand, you may see a well-oiled management system that is running smoothly.

2. Find Out If There Are Any Legal Problems

Get in touch with a Louisville real estate lawyer and have him or her check the association’s bylaws to make sure that they are in accordance with local laws. You can also ask the real estate lawyer to take a look at the records at the courthouse to see if any lawsuits have been filed against the association.

3. Find Out About the Repair Fund

Make sure that there is enough money being funded to handle any major repairs. You need to make sure that the Louisville condo complex is being kept up properly and has reserved money for any emergencies.

4. Find Out About the Management Firm

Before buying a condo, find out who is managing the complex. If it is being managed by the owner this may be a problem if he does not reside in the local area. If it is managed professionally by a Louisville company, dig deep and find out more about the property management company. You can even schedule a meeting with the manager in charge to learn more about the day to day upkeep of the property, and ask residents for their opinion.

Buying a condo in Louisville is a big decision. You need to ensure that the condo you purchase is operating at top efficiency and that all levels of management seem to be doing their job properly.

The East Market District is also known at NuLu, just east of downtown. With many stores, restaurants and art galleries this area is buzzing! Butchertown and Phoenix Hill are nearby as well. Some houses in Butchertown are a good choice for people who do not like to want to pay transportation costs, because the city trolley is free. Trolley stops on Market Street and Frankfort Avenue are within walking distance of some Butchertown homes. New loft condos are all the rage to counter the grand Victorian houses, that are also in this neighborhood.

Liberty Green is a neighborhood in the Phoenix Hill part of Louisville. This is a great spot for people who want to walk to stores, restaurants and attractions. Places to visit in this area include art galleries, Waterfront Park and Slugger Field. The EDGE at Liberty Green is currently under construction. Once complete, this development will have homes, offices and retail space.

Then there is Old Louisville. Did you know that Louisville is home to more Victorian-styled homes than any other city in America? Old Louisville is located between downtown and the University of Louisville’s Belknap Campus. College students find the area’s apartments a convenient place to live. The high number of college students contributes to this area’s vibrant nightlife.

Newcomers to these neighborhoods can look at InsuranceQuotes.org to get information about the cost of insurance for their homes, apartments and even cars.

Each Friday we’ll be counting down the wealthiest ZIP codes in Louisville, Kentucky. Today,
the 2nd wealthiest ZIP code in Louisville is 47119, also known as Prospect. Located in the Northeast portion of Louisville, spanning both Jefferson and Oldham county.

Average Household Income: $170,842
Average/Median Home Value: $448,326/$373,141
Number of Homes over $1M: 286
Source: BusinessFirstofLouisville.com

Prospect is home to some amazing properties! 28 miles of area, including some of the top neighborhoods in the city, such as Bridgepointe, Hunting Creek, GlenOaks, Hillcrest, Moser Farm, Norton Commons, Sutherland and Wolf Trace, to name a few. There’s no shortage of incredible homes in this ZIP to be sure.

So, with only the #1 ZIP remaining in the countdown, can you guess what it is? It’s so easy, you don’t need a hint.

Do you have an real estate questions? Please contact Tre Pryor, REALTOR your trusted advisor in Louisville real estate.