By Robert Hadley
During the last half decade or so, Louisville’s boom in new hotels has earned the city a reputation as a mecca for commercial construction. But that mantle may soon be replaced as a renaissance of residential construction also takes hold.
Louisville is part of a recovery in the home building market affecting the state’s metropolitan areas, with Jefferson County seeing a 30 percent jump in single-family home permits from 2011 to 2014. Yet despite the upturn, the city is still not back to its pre-recession heyday. According to HomeFacts.com, some 3,200 single-family permits were issued in 2004, the biggest year before the nation’s souring economy brought it back to earth-bound levels of less than 1,000, where it has lodged since 2009.
Earning credit for the rise in new home construction in Louisville is the city’s falling unemployment rate, which surged as high as 12 percent during the worst of the recession in February 2010. Six years later, that figure has fallen to 5.3 percent, now comparable to pre-recession levels.
So what else is driving the activity in the housing market? Realtors and others say it’s a result, in part, of the popularity of the city’s noteworthy neighborhoods.
For example, the 40205 ZIP code in the heart of the metro earned a Top 25 ranking on Realtor.com’s annual list of most viewed listings nationally. The ranking is based on how quickly properties are selling and how frequently homes are viewed in each ZIP code.
The 40205 zip code includes parts of the Seneca Gardens, Belknap, Cherokee Hills, Deer Park, Dundee Estates, Strathmoor, and Highlands neighborhoods.
Listings in 40205 received almost three times the views of the average listing in the U.S. and 2.4 times the views as the average listing in Louisville. At the same time, inventory in the area has a median age of 38 days, which is 23 days lower than the market median and 35 days faster than the national median for listing to sale.
“Louisville’s population and housing growth are signs that we are moving in the right direction as a community,” said Deana Epperly-Karem, vice president of regional economic growth for Greater Louisville Inc. “People want to be in a city that has vibrant food, arts and culture, in addition to providing career opportunities, affordable housing and transportation.”
According to representatives from the Greater Louisville Association of Realtors, big factors that contribute to the consistent popularity of 40205 are the mature, well-developed and established neighborhoods that offer ease-of-access to parks, attractions (i.e. The Louisville Zoo), local dining and entertainment. The homes are close to interstates with variably less congestion/density, and in many cases are more affordable than the majority of the nearby and historically sought-after 40204 ZIP code.
Louisville overall is likely to be reaping benefits of the above-mentioned hotel boom. The 600-room behemoth Omni Hotel under construction is one of eight projects in the metro area, along with a 162-room Hilton Gardens Inn at Third and Chestnut streets, and a 304-room offering from Embassy Suites.
As the projects wrap, they will leave a supply of construction industry talent available for building new homes in the metro area.
The Greater Louisville Association of Realtors® (GLAR) reported in February 2016 that home sales are up 22.3 percent, with 1,062 homes and condos sold versus 868 the previous February. Year-to-date, compared with January-February 2015, home sales were up 13.6 percent.
The median price for all areas in February 2016 was up 6.7 percent compared to a year earlier, and the average price was up 13 percent. In Jefferson County, the average price in February 2016 was $205,126 and the median was $139,900. And across the MLS, the inventory of available properties was 23.6 percent lower than the previous year.
“Our Realtor members saw a continuation of a sellers’ market with inventory down over 23 percent compared to this time last year,” GLAR President Greg Taylor said. “The lack of inventory was the driving factor in the median price increase of 6-7 percent compared to last year.”
Across the river from Louisville Metro, Southern Indiana is experiencing a similar rollercoaster of its housing figures. Back in 2005, the county registered 969 single-family permits, with a 2010 dip to 253 before rebounding to 399 in 2014. Unemployment for the region mirrors that of Louisville; both Clark and Floyd counties in Indiana and Jefferson County in Kentucky are hovering around 5 percent.
The recovery has a both a positive and a negative side for Southern Indiana Realtors. Rising demand spells more business, but until new-home construction meets that demand, buyers are competing for a small pool of available homes.
“Right now, the biggest risk to our 2016 market is a shortage of homes,” said Glenda Gasparine, CEO of the Southern Indiana Realtor Association. “We just don’t have enough homes out there, which is pushing up the price for existing homes.”