Today is the first day of December. 2010 is almost complete. Thoughts naturally turn reflective. With all the talk of the recession and its apparent end, how did Louisville real estate in 2010 perform? How did it compare with previous years? More importantly, in any given market, which groups benefited from current market conditions and which lost out?
With that in mind, let’s look at Louisville’s winners and losers in the world of real estate!
Louisville Real Estate 2010 Winners and Losers
1. Louisville Home Buyers
There certainly wasn’t much activity but those that did purchase a new Louisville home in 2010 were winners. First, inventory was quite large so home buyers had choices, choices and more choices.
Second, interest rates were at historical lows. This isn’t marketing copy, it is reality. Of all the factors that contribute to the cost of owning and maintaining a home, the interest rate is the biggest.
Lastly, home values in Louisville have dropped to their likely bottom in 2010. As you’ll see in the predictions section below, I feel confident saying that unless something major (i.e. hyperinflation) tackles the entire economy, home values in our city have bottomed out for this current market downturn.
Home buyers in 2010 not only got their pick of the litter and a 40-year low interest rate, they also purchased their home at a bargain price. At Churchill Downs they’d yell, “Trifecta!”
2. Homeowners That Refinanced
So you weren’t ready for that new home just yet but instead refinanced your current Louisville home. Pat yourself on the back, you’re a winner! (Bet you don’t hear that often enough, right?)
3. Home Improvement Services
When homeowners aren’t buying their next home, they usually redirect that money into improving their current one. That was certainly the case in 2010 as Louisville homeowners spent more dollars at Do It Yourself stores like Lowe’s and Home Depot.
They also hired Louisville home services companies to install new hardwood floors in their family room, new granite counter tops in their kitchen or finish their basements and create more livable space. It appears this sector had a great year.
Louisville Mortgage Specialists
This last one is both a winner and a loser. While 2010 didn’t see many new home sale transactions (and regulatory burdens increased), Louisville mortgage specialists did keep busy with all that refinancing business. Busy is income and income is good.
2010 Louisville Real Estate Losers
Now for the bad news.
1. Home Sellers, Especially Expensive Properties
So while Louisville buyers had their choice among a bevy of great home buying options, sellers had their homes buried in all the inventory, fighting for the few buyers that did venture forth. It wasn’t a pretty sight.
This was especially true for more expensive homes. Lower priced houses still moved, especially for first-time home buyers still coming in from the government tax credit but high-end properties stayed on the market—many contributing to the short sale/foreclosure numbers for 2010.
2. Louisville Home Builders
Louisville is different than many cities of comparable population in that our new construction market is predominantly made up of small, custom home builders. These builders only build a handful of homes each calendar year.
Larger builders have the size to weather financial downturns but most small builders in Louisville don’t. Many either retired, changed careers or went out of business in 2010.
3. Real Estate Agents
I’m not looking for sympathy here but the truth of the matter is that real estate agents are hurting. Sales in 2010, which started the year strong, plummeted in July.
If December can muster 600 sales, that will finish the year with 11,199 transactions, down from 11,650 in a dismal 2009 and the worst year since 2002.
Predicting Louisville Real Estate in 2011
Predicting the future is fraught with danger. Even the best prognosticators are wrong most of the time. With that in mind I present three Louisville real estate predictions for 2011.
- One prediction that seems solid is that interest rates will rise in 2010. If you’re contemplating a move, please factor this in. If you’re standing pat, for the love of all that is good, please refinance! Okay, my soapbox segment is over.
- It appears that sales will remain in the 11,000 range for 2011. Rates are too low for it to fall much further but the national economic picture still looks bleak and that affect perceptions locally, as well. Hitting 13,000 would be a nice goal.
- Home prices will start returning to 2006 levels for most of Jefferson and the surrounding counties. Pockets will see decline, as with any fluid situation, but Louisville has a hardy real estate heritage and 4% yearly appreciation is the norm. I expect that to be the case for 2011.
So there you go. What do you think? We’d love to hear your opinion.