Spring weather may have just arrived, but the spring housing market started unseasonably early this year with activity ramping up in January and never letting up. As we mentioned in the previous report, the high-end home sales activity from year-end carried over into January which started 2021 off on very solid footing. Activity has continued to accelerate across nearly all price ranges with limited inventory remaining as the primary constraint on additional growth. With that said, let's dig into the numbers!
The Overall Louisville Market
The limited supply of homes for sale remains the biggest story in the Louisville market, but despite that significant headwind the overall market managed a 6.8% increase in the number of home sales in Q1 2021. With the inventory crunch most evident at the lower end of the market (there are less than 3 WEEKS of homes for sale below $400,000) sales activity has begun to translate further up the price scale where inventory levels are more plentiful. Of course, intense competitive demand for a limited supply of homes, coupled with historically low mortgage interest rates, has led to substantial pricing gains with the median sold price per square foot increasing by 10.7% across the overall market (with more moderate gains at the high-end as noted below). As always, real estate is hyper-local so your results may vary depending on area and price range so check out our full First Quarter Market Report for a better picture of what's happening in your neighborhood.
High-End Louisville Market
Available homes for sale were more plentiful at the high-end ($400,000 and above) with inventory levels dipping from 3.56 months in 2020 to just over 3 months in the first quarter of 2021. The relative availability of homes in this price segment, coupled with the increased buying power afforded by record low interest rates, has continued to fuel the surge in sales reported last quarter with closed transactions increasing an incredible 35% in Q1 compared to last year. With a less competitive environment for buyers at this end of the market the pricing gains were more moderate, but still substantial with a 5.5% increase in median sold price per square foot. With inventory levels continuing to trend downward (22% decrease from 2020 levels) and interest rates starting to creep up, we expect the sales activity to cool off slightly in the near term, but current price appreciation rates should remain stable as buyers compete for fewer available homes.
The highest end of Louisville's market is fairly thin with less than 1/2-percent of annual market transactions occurring above $1M. With that said, this segment (and its smaller sample size) has continued to outperform all other price segments with closed transactions up an astounding 85% in Q1 fueled by the impressive year-end performance referenced in last quarter's report. Of course, this price segment was most impacted by the early COVID shutdowns in Q1 2020 so the year-over-year performance should lessen in later quarters this year, but all signs point to a record-breaking year for the highest end of the market. Available inventory of homes in this price range still averages 6.3 months so the market conditions remain fairly balanced between buyers and sellers.
All in all, the buyer demand remains historically strong at all price levels with market activity primarily driven by the availability of homes for sale. Thinking of selling this year? Contact us to find out how the market conditions impact your home and what it means for your next purchase.