Louisville Business First
Dec 23, 2015, 11:44am EST
David Serchuk Reporter
2015 was a good year to sell a home.
Louisville’s residential real estate markets saw strong growth across most major sectors, and across many parts of the greater Louisville area in 2015. Multifamily units continued to be a hot seller, attracting investors both locally and away. Residential real estate prices hit a new record in 2015, and downtown finally started to pop. But at the same time affordable housing remained a problem for many residents in the River City.
1. Record home prices: Anytime there are record home prices they will top this kind of list, and Louisville had just that in 2015. As recorded by home price data firm RealtyTrac home prices in the Louisville-Jefferson County area hit a record high median price of $155,000 in June 2015, besting the prior high, $150,000, set in July 2014. Median prices have rocketed up 92 percent since bottoming out in December 2012. And new data from the Federal Reserve Bank of St. Louis’ Burgundy Book for the Louisville zone also provides different measures of home sales health. According to the new Burgundy Book, which came out on Dec. 18, and tabulated data from the third quarter of 2015, single family building permits rose 3.6 percent year-over-year in Louisville, and new and existing home sales rose 13.2 percent, also year-over-year.
2. Apartments continued to rev up: This sector couldn’t have been hotter in 2015, so much so that Business First even dared ask whether there could be an apartment bubble headed Louisville’s way. Just this month we wrote about how Indianapolis’ Cityscape Residential LLC has plans to build a 261-unit apartment complex off Brownsboro Road. We also wrote about how there will be new, huge East End apartments. And there are many developments planned more in the heart of town. Going into 2016 the apartment pipeline seems to be more than healthy, as finance types look to focus on multifamily deals.
3. Affordable housing problems: On Dec. 8 Louisville’s Metropolitan Housing Coalition released the newest edition of its annual housing report for Louisville/Jefferson County. And the truth is Louisville has a long way to go in order to shore up its chronic lack of affordable housing. The report shows that what affordable housing stock Louisville has is extremely segregated by geography, with 77 percent of all public housing units located in just two Louisville Metro Council districts: 4 and 6. Also, having a job does not guarantee you can afford a home. Within the Louisville Metropolitan Statistical Area, about 86,000 workers have jobs that don’t pay enough to afford a two-bedroom unit at what MHC calculated to be Fair Market Rate. This is 14 percent of the total workforce.
4. Downtown is finally a thing: We checked in with Reed Weinberg, president of Louisville’s PRG Commercial Property Advisors. He told Business First that two big 2015 stories were the construction starts at the Bristol Development project at Main and Clay, and the 800 Building sale. “With those two projects – one being new construction and one a renovation – you will be delivering some amazing Class A rental products to the market that Louisville’s never seen,” he said. “We are way behind other peer cities in downtown housing growth, but seem to have finally turned a corner in 2015. The hope for me is that this new product means new companies with younger, educated workers and new retail other than restaurants will follow.”
5. The outskirts of town are hot, especially in the south and east ends: A few big residential deals capped off 2015, showing investors see real opportunity in and around the southern part of the city. This past October the undeveloped part of the Little Spring Farm subdivision sold for $3.9 million, and in November the Villages at Newbridge sold for $2.4 million. Plus the south end also saw the construction of Apex on Preston this year, yet another apartment complex; it’s goal is to lure professional types that are cool living near the Bullitt County line. Late November also saw the $3.5 million sale a 445-acre East End plot of land that had been a farm; the owners are sitting tight, and want to see how things develop around this new property.
6. Out of town, and institutional buyers are looking for Louisville deals: Weinberg also told Business First he’s seen a lot of interest in 2015 from institutional-type investors who want a piece of Louisville’s multifamily projects. As examples he pointed to the recently completed Claiborne Crossing, sold to an institutional buyer. He also noted that the Grove at Lyndon sold to an institutional buyer at $80,000 per unit. I can say, personally, that when I talk to my friends on the East Coast this makes a lot of sense. Places like New York City are so expensive that even wealthy people are frozen out of deals, so they’re looking to park their money into secondary markets like ours. What we consider expensive is pretty small change to them.
7. The hunt for the next Germantown: As we reported in a cover story the Germantown explosion has been a heady one, and driven up demand for those quaint little homes. But savvy investors are looking for what’s next. And where could that be? Well, speculators, we’ve just written a whole lot about the big arts and retail complex planned for Paristown Pointe. Hello dots, can we connect you?