The Overall Louisville Market
2023 was marked by another notable contraction in the number of homes sold, down by 15.9%, to 14,537 (this is the lowest level seen in 11 years!). The number of active listings dropped another 8.1%, and the combination of low inventory levels and high interest rates continues to suppress market activity. The scarcity of available homes pushed the median price per square foot up by 3.3%, indicating some resilience in demand, but the rate of price appreciation has finally returned to the range seen in pre-pandemic years. The average days on market increased by 35.7%, reflecting a market where buyers may be taking a bit more time to commit due to high interest rates, yet the overall supply, just 1.7 months of inventory, suggests that the market is still very much in favor of sellers. Unfortunately, the price increases were not large enough to offset the lower number of transactions, resulting in a 12.3% decrease in total market value to $4.5 billion, approaching Louisville's pre-pandemic market cap of $4.2 billion in 2019.
High-End Louisville Market
As we anticipated in last year's report, market dynamics displayed more resilience in this segment but were not immune to broader trends as the inventory shortage finally caught up with Louisville's high-end (homes $500,000 and above). The number of homes sold in this sector dipped by 5.4% compared to 2022. However, property values continued to appreciate, with the median price per square foot rising by 4.9% as buyers continued to compete for the relatively few homes available. In a notable divergence from the overall market, active listings in the high-end segment increased by 8.1%, providing some relief for buyers. With only 3.1 months of inventory available, this segment still favors sellers, but it is trending towards a more balanced market with a notable 16.5% increase in Q4. We will be keeping a close watch to see if this additional inventory results in a more traditional spring season for buyers, or whether the easing interest rates just fuel more demand as buyers jump in from the sidelines to absorb the new listings.
Performance in this price segment varied quite a bit across the submarkets we tracked. The majority experienced similar contractions in sales caused by low inventory, but Anchorage/Lake Forest and South Oldham were this year's standouts, posting solid year-over-year sales growth. As always, make sure and check out the full 2023 Louisville Market Report to see how your neighborhood did.
The highest end of Louisville's market continued its winning streak (and defied even our expectations) with 202 homes changing hands during the year, an increase of 6.3% and the third consecutive year of gains. This uptick suggests a sustained interest in top-tier properties, despite broader market challenges, as buyers are less sensitive to the higher interest rate environment. Despite the increase in transactions, this segment maintained a relatively healthy 4.8 months of inventory, providing a broader selection for high-end buyers which should continue to fuel activity in the year ahead. However, the median price per square foot saw only a marginal increase of 0.9%, indicating a more stabilized pricing environment in this luxury segment.
As we close the chapter on 2023 and look ahead to 2024, the lessons learned this past year will undoubtedly influence the strategies of both buyers and sellers. The importance of understanding market trends, timely decision-making, and strategic pricing has never been more pronounced. For sellers, navigating a market where pricing correctly can make a significant difference in outcomes is crucial. Buyers, on the other hand, need to remain alert and ready to act in a market where opportunities, though fewer, still present themselves.
Despite the hurdles of low inventory and shifting market dynamics, the underlying fundamentals of the Louisville market remain strong. Those considering entering the market, either as sellers or buyers, need to be well-prepared to navigate these complexities. As always, we are here to provide expert guidance and insights, helping you make informed and strategic real estate decisions in this evolving market landscape.