The tightened supply of inventory and the tightened supply of credit continue to drive Louisville’s housing market. Together, these two trends have resulted in a slight decline in the number of sales year over year. Fortunately, consumer confidence continues to grow while consumers are generally positive about the economy and job growth. This allows local prices to continue to rise in most of the metro Louisville markets. Home values for Louisville’s high-end market ($400,000 and above) have seen a steady recovery with 2014 nearly reaching the pre-recession peak overall. As with so many other aspects of Louisville’s real estate market though, the story varies widely depending on location. The highest values remain along the River Road and US-42 corridor surrounding some of Louisville’s most established neighborhoods, but several other sub-markets have been experiencing solid appreciation over the last several years.
While most news coverage of real estate values focus on average home prices, the results can be easily skewed depending on the performance of the market’s different price segments. An increase in the average home sale price may only mean that more high value homes have sold, moving the average up; not necessarily that the average home from last year is actually worth more this year. For this report, I’ve instead focused on the median price per square foot for home sales above $400,000 which provides a more stable analysis than averages and a better indication of actual changes in value.
High-end real estate values in Louisville bottomed in 2011 for nearly every area. Since that time we’ve seen cumulative price increases ranging from marginal (Highway 60 corridor outside I-265) to solid, double-digit gains in some sub-markets (Highway 42 corridor from St. Matthews/Indian Hills through Prospect to Oldham County).
With only 2 months left in 2014, Prospect, buoyed by the hot Norton Commons neighborhood, is leading the way with prices 5% higher than its 2008 peak of $175 per square foot while St. Matthews/Indian Hills, US-42 between the Watterson and Gene Snyder and North Oldham are all within 5% of their all-time highs. Before everyone in Prospect gets too excited, it’s important to consider the outsize effect that Norton Commons sales haveon that submarket. Removing the Norton Commons sales data leaves the rest of the Prospect market at a median price of $161 per square foot, down 8% from the 2008 peak. The areas with the most distance left to climb are Anchorage and South Oldham, both of which are still 10% off from their pre-recession highs.
The median prices for each sub-market since the bottom of the recession are displayed in the chart above. Overall, the market has shown steady improvements year-over-year with only the Highway 60 (Shelbyville Rd) corridor and South Oldham County markets stalling or faltering a little in 2014. We’ll be keeping on eye on the activity and will report back in January when we have the full year’s worth of data for 2014, but we anticipate the current trends to continue.
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