With the second quarter in the books it’s time to look at the year-to-date stats for the first half of 2016. Overall, the Louisville real estate market remains strong with good sales activity across nearly every area and price range. C
1. Lower Price Segment Continues to Gain Momentum
Most notably, this year has seen a reversal of the trend of the last several years during which the high-end market led the way in sales growth. Through June 30th, high-end sales ($400,000 and above) remained steady while the overall market reported a solid 8.3% increase in home sales compared to the same period last year. As noted in my report last quarter, 2015 was a great year for the high-end segment so just keeping pace with last year’s performance isn’t necessarily a bad thing.
Sellers in the under-$400,000 market continue to enjoy pricing power and competing buyer interest as the inventory level of available homes has dropped 7.9%. However, high-end inventory levels continue to climb slowly with 3.9% more homes available for sale at $400,000 and above putting some competitive pressure on sellers.
2. Trends for the Rest of 2016
New pending sales (homes under contract whose sales have not closed) followed the same trajectory as the closed sales indicating that the 3rd quarter is likely to continue the trend lines that were established earlier this year. Again, just repeating last year’s performance for the high-end segment would still make this year one of the best on record although I anticipate sales momentum to increase velocity as upwardly-mobile buyers step up to larger, more expensive homes.
3. Pricing Dips, but Appreciation Still Possible
The flat sales growth for the high-end, coupled with an increase in inventory has put a little pricing pressure on those sellers with the median price per square foot dipping 1.7% to $170.16 compared to the second quarter of 2015. With the smaller data sets used for quarterly reporting, I wouldn’t put too much emphasis on this slight dip until we show a decline over a full calendar year. A strong 3rd and/or 4th quarter could easily keep us on track for another year of price appreciation for high-end homes.
All data used for this statistical analysis sourced from the Greater Louisville Association of Realtors and MetroSearch, Inc.