Fall has arrived, but you wouldn't know it by looking at the Louisville real estate market as it continues at the record pace set during the summer selling season. Available listing inventory continues to be outstripped by demand driving marketing times lower, sale prices higher, and buyers crazy! Aggressive offer terms, multiple-offer situations, and the waiving of various contract contingencies continue to be routine, particularly at the lower-end of the market where quality listings are especially scarce. Inventory levels for high-end homes ($400,000 and above) continue to hold at last year's levels giving this market segment room for growth. The base effect from our previous 2021 quarterly reports has largely diminished providing more incremental year-over-year changes when compared to last year's performance. Notably, the highest end of the market (homes $1,000,000 and above) lagged in the initial recovery in 2020, but has since taken off resulting in the historic performance noted below.
While we tend to avoid making market predictions, the question is often asked about where it looks like the market is heading so we'll touch on a couple key factors effecting supply and demand which will likely drive activity in the coming quarters. From a supply perspective, it does not appear that there will be any near-term relief as building material pricing has increased dramatically due to inflation and supply-chain constraints making new homes costlier and more time-consuming to build. Consequently, there are no residential development projects underway which will adequately address the current supply shortage. On the demand side, Louisville remains a very desirable city for remote workers due to its amenities and relatively low cost of living which has attracted buyers from larger metropolitan markets. This net influx of new buyers, coupled with interest rates still near historic lows, continues to fuel a strong real estate market. Absent a meaningful change in prevailing mortgage interest rates, remote work opportunities, or residential construction costs, the Louisville market is likely to keep its current pace in the coming quarters due to its healthy underlying fundamentals.
The Overall Louisville Market
With only a 4.7% decrease in available homes for sale, listing inventory stabilized somewhat keeping home sales close to last year's levels with 5,449 closed transactions in the quarter, a nominal 3.4% decrease year-over-year (YOY). Of course, the supply of homes for sale only tells half of the story and the demand side of the equation remains extremely strong. As buyers competed for available listings, bidding wars and more aggressive pricing by sellers ensued which resulted in an 11% increase in the median price per square foot, the second consecutive quarter of double digit price gains. Average marketing time frames dipped to a record low of 20 days on market, less than half of what was required to sell a home just a year ago. With 1,712 homes on the market at the time of publication, the inventory level has remained near historic lows with just 1.04 months of homes available for sale. While this is great news for Louisville homeowners, the usual caveat still applies: real estate is hyper-local and these statistics vary widely depending on area and price range so check out our full Third Quarter Market Report for a better picture of what's happening in your neighborhood.
High-End Louisville Market
Louisville's high-end market (homes $400,000 and above) managed to post a respectable 5.2% increase in existing homes sales during the quarter despite a 6.7% decrease in the number of available listings. High demand coupled with the lower supply kept upwards pressure on pricing with the median price per square foot climbing just under 10% YOY. The inventory level in this segment remained higher than the overall market, but is still historically tight with just 1.68 months of homes available for sale. As we reported last quarter, low interest rates, the wealth effect afforded by record-high equity markets, and more available inventory continue to feed growth in Louisville's high-end market. The number of sales and home values varied from small decreases to double-digit increases depending on the submarket so be sure to check out our full Q3 Market Report to see how your neighborhood performed.
More plentiful inventory continued to attract buyers up the price scale with the highest segment of Louisville's market posting an incredible 89% increase in transactions during the quarter! As mentioned above, this impressive gain is partly due to the base effect as the seven-figure price range was the last to recover following last year's shutdowns, but the year-to-date performance of this market segment has already eclipsed the prior all-time high of 96 sales set in 2019 by 55% so the gains are historic in both relative and absolute terms. With 92 listings of $1M+ homes currently on the market, inventory levels remain the most attractive for buyers with nearly 6 months of homes available for sale. As we mentioned in last quarter's report, this relatively high inventory level should continue to fuel strong performance in this segment in the near-term.
As has been the case each quarter this year, 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 and curious what all this means? Contact us to find out how the market conditions impact your home and what it means for your next home purchase.