Back in 2011, something occurred to me. It seemed that both national experts weren’t giving unemployment much weight when it came to analyzing home sales.
It appeared a reasonable enough premise to research, so I did what I normally did… I jumped right in!
The first piece I published was Unemployment Proves Bigger Factor in Louisville Real Estate Than Rates, Prices. Remember, that was four years ago so two years later I checked again.
We’ve always heard that Prices, Inventory, and Interest Rates were the greatest factors when it came to sales activity. But, that did not seem to be the case, at least here in Louisville, Kentucky.
Now that we’re starting a new year, I wanted to check back, bolster the previous dataset with more current numbers and see where we stood. Let’s do this!
Louisville Unemployment Chart
Louisville unemployment reached a high of 12.2 in February 2010. Since that time the rates have been steadily declining to where we are today.
Louisville Home Sales Chart
Contrast that with this second chart where we look at yearly home sales in Jefferson County.
Due to the recent platform change by GLAR, I needed to go back through and update all these values. In the end, the values moved around a bit more than I would have guessed.
Even still, it’s clear the housing recession for Louisville began in 2008 and lasted for roughly five years. It wasn’t until 2013 that home sales numbers returned to more a more “normal” range.
Unemployment Overlay Home Sales Chart
Now let’s see how these two metrics mesh. Here are my observations.
- Clearly, there is a reverse correlation between these two measurable numbers. There are (many) other forces affecting the housing market but the relationship between unemployment and home sales is valid.
- The housing market did drop before Louisville’s unemployment spiked at the end of 2008. Was the writing on the wall? Were troubled times predicted and believed to be on the horizon?
- While unemployment has decreased to post-recession levels, home sales have not… yet. There’s still a great opportunity for Louisville home sales to rise dramatically in 2015, especially while interest rates continue to hover at historic lows.
The fly in that ointment is the lack of available inventory. Maybe that will be the focus of my next piece.