I’ve got good news: if you’re reading this, then you made it through 2020! 🙌 That’s no small feat given the incredible dislocations we saw in our business and personal lives over the past 12 months, but now that the dust has settled on 2020 it’s time to take a look back and see how the changes at work and at home affected the Louisville real estate market and what it could mean for the year ahead.
The Overall Louisville Market
A shortage of housing inventory was the big national real estate story this past year and Louisville was no exception. The number of available homes (as measured by the number of months required to sell all current listings) fell from an already low 3.25 months in January 2020 to less than 1.5 months by September and has stayed there ever since. This lack of supply greatly constrained sales activity, but the overall market still managed a respectable 5% increase in the number of homes sold year-over-year (YOY). As demand outstripped supply, sellers benefited from healthy price appreciation with an impressive 7.8% increase in the median sale price per square foot. However, most of the pricing gains were distributed across the lower end segments of the market as we’ll see below.
High-End Louisville Market
Available homes for sale were slightly more plentiful at the high-end ($400,000 and above) with inventory levels averaging 3.56 months throughout the year. This fueled a boom in sales with transactions up an astounding 31% over 2020 levels for this segment of the market. While this segment benefited greatly from the higher sales activity allowed by the availability of inventory, the higher relative competition among sellers dampened price appreciation with the median sale price per square foot increasing by 3.1%, or less than half that of the overall market. Of course, these gains were not equally distributed across the market so I’ve included a breakout by submarket in my 2020 Louisville Market Report so you can see what’s going on in your neighborhood.
The highest end of Louisville's market is fairly thin with less than 1/2-percent of annual market transactions occurring above $1M. This price segment has seen steady growth over the past decade with the number of annual sales increasing from a low of 20 sales in 2010 to a high of 96 sales in 2019. In 2020, the pandemic and associated economic uncertainty had a chilling effect on sales in this segment in the second quarter, but activity quickly rebounded in the third and fourth quarters with 85 sales closing in the calendar year. While this represents an 11% decrease from 2019, absent the near-complete hiatus in sales that accompanied the onset of the pandemic and the collapse of the equity markets in February, 2020 would have undoubtedly been a new record year. Sales activity finished the year unseasonably strong with higher than typical levels of activity carrying over into January which bodes well for this coming year.