Broker Market Observation
(10/28/09)
Traffic is cooling quickly on the lower end of the market as the expiration of the housing tax credit approaches. From what I read and hear, however, it is likely that the credit will be extended into next year. If it is extended, it will not be because it is a good idea for the economy, but because its so popular that no politician wants to be the one that killed the goose that laid the golden egg!
If it is not extended, its probably too late to take advantage of it, but if it is extended, DO NOT let this opportunity pass you by. Please note that if you have not owned a home in the last three years, you qualify as a first time buyer under this program.
On an alternative note, the rental market is pretty hot right now, including high end rentals that would normally be on the market for sale. I have two $250,000 to $300,000 homes that I have leased in the last week with multiple people interested and applying to lease them. This is not the ideal situation for those that are looking to sell, but its a whole lot better than having two mortgage payments with no income coming in on a vacant house!
If you would like to discuss the possibility of leasing your home to wait out the market, please call me. Also, if you've decided that you want to diversify your investment portfolio by buying real estate that you intend to lease out from the get-go I can help you find opportunities for that as well. I've been invested in real estate for 10 years or more and would love to help you leverage the current market conditions to your benefit.
I just bought a building myself and happily locked in a 5.75% 30 year fixed rate mortgage. When rates go up (and they will, trust me), my expenses will stay the same while inflation pushes my rents and my income higher.
Broker Market Observation
(posted 9/25/09)
I listed two houses last week for less than $150,000. One was under contract within 30 hours, the other has had two different groups look at it twice, with the potential of an offer from each in the next few days as well as having 2 showings already scheduled for the weekend. This segment of the market is on fire, that's the good news.
The bad news is that the higher end of the market is not moving quite so much. Additionally, I believe that the tax credit program is drawing demand from the next 12 months or so and once it ends, the market will slow down in the low end as it has in the high end.
I have heard discussion about extensions of the tax credit but nothing has been put in writing yet that I am aware of. Personally, I think an extension would be a mistake in the long run as it will simply put off the inevitable market correction that needs to happen.
Broker Market Observations
(posted 8/30/09)
The $8,000 tax rebate for new home buyers is having a significant effect on the real estate market in the first time buyer price segment. One of our office listings has received 4 offers in a fairly short period of time. The most recent offer we received was from a first time buyer who's agent told me that two other houses they were interested in had been sold before they could make an offer.
Sellers in this market segment have regained a little bargaining power, but I feel that that will end quickly around the first of November. The tax benefit is set to expire on November 30 and you must close before the deadline to receive the benefit. It typically takes 30 days to close a sale (and may take more with the rush to beat the clock on this one) so you should have a home picked out and under contract ABSOLUTELY no later than October 31.
If you are a seller, don't get too cocky! There are still lots of houses out there to choose from and buyers still hold most of the cards. A commentator on Fox News today said that she thinks the tax program is just borrowing demand from the future and that we will pay a price again for this sometime before the recovery really takes hold, I couldn't agree more. Until there is a recovery in the job market, the real estate recovery will be somewhat anemic. Things are looking up, but we're not out of the woods yet.
If you are first time buyer, buy now! You will not have a better time to buy UNLESS the tax rebate is extended and/or increased. I have heard rumors of such, but they are just that, rumors. If you are a buyer, but not a first timer, I'd hang on till mid winter, I believe there will be better deals to be had then.
If you are a seller and you receive a reasonable offer . . . and you want or need to sell . . . take it! If you don't really need to sell, try renting your property or staying put for the time being.
Broker Market Observations
(posted 7/29/09)
Inventory continues to trend down in the Louisville market. After hitting a high of 14.03 months in January of this year (this means it would take 14 months to sell all of the houses on the market at the current rate of sales), inventory had been roughly cut in half to 7.31 in June.
It is important to note that inventory traditionally goes up in the winter, however this winter was particularly bad. In January of 2008 we had 10.37 months while in June of the same year it was 6.81. It doesn't take rocket science to figure out that the ratio of inventory for the same months is improving as the year progresses.
There are many signs that the real estate market is improving, not the least of which is the shear fact that people are talking about the market improving! Markets are very sensitive and emotional and don't always behave in a rational manner. A restoration of confidence that the world is not coming to an end is doing wonders for markets of all types these days. In my opinion there some degree of a self fulfilling prophecy at work here.
I believe that things will continue to improve over the next 12 to 18 months, but I am a little fearful of where interest rates will be in 24 to 48 months and what effect that may have on the market then. All the more reason to buy something and get a 30 YEAR FIXED MORTGAGE now!
Broker Market Observations
(posted 7/20/09)
It was a busy week last week and I didn't get a chance to make an entry, my apologies! This should tell you something about the market activity we're seeing.
The biggest trend that I am seeing on a micro-economic level with my own buyers is that the sub $150,000 segment of the market is REALLY starting to move due to the $8,000 tax credit. I am working with a buyer right now that has a very busy schedule and can only get out to look at property two or three times per week. He is finding that whenever there is a nice property that is priced properly, it is under contract before he can get out to see it.
We had our seminar last week about the tax credit. While I was there, I spoke to a few representatives of the bank that was kind enough to host the event. They all told me that they are expecting a big surge in business in September and October as late comers try to beat the deadline of November 30th. If you are considering buying and want to take advantage of this program, DO NOT wait any longer, you should be looking now at a minimum.
Broker Market Observations
(posted 7/8/09)
I was involved in the real estate market as a buyer last month in the purchase of a 5 unit apartment building. This was an old (very old, over 110 years) home that had been converted to apartments. It is a very nice and well kept building. With more than 4 units, however, 30 year fixed financing is not an option and in the current rate environment, I believe that is a major detriment. Additionally, this building was originally built as a single family home and later converted to apartments. My experience is that its best to use things as they were originally intended and not to "force a square peg into a round hole."
I decided to walk away from the deal because I had broken two of my own cardinal rules of real estate investing: never buy a building that you can't get fixed rate financing on and never buy a building that isn't being used as it was built. These rules will keep me from becoming the next Donald Trump, but that can be a good and a bad thing! I will be a willing investor with others on larger projects, but I'm not willing to take that risk on my own. Anyone interested in investing, let me know!
Broker Market Observations
(posted 7/2/09)
From this graph, its easy to see the run up we had in the market during the first half of this decade. It is important to note that the appreciation rates in Louisville were nothing near the astronomical numbers seen on the coasts and other hotspots of the early 2000s. Likewise, our fall has not been as hard as those other areas. The first major drop in appreciation rates occured around 9/11. The market was relatively stable after that until last year. I belive the last 4 data points indicate that the market is starting to bottom out and things will get better from here.
Broker Market Observations
(posted 6/24/09)
We sold that house in St. Matthews in less than a week (see previous posting below). Inspections were today and we will know if its going through or not within the next 48 hours. Good properties that are priced right and in the first time buyer's range are definitely moving. I sense an uptick in activity that I think will continue until 11/30/09 when the tax credit is set to expire.
Interest rates jumped a little over the last week or so which also indicates to me an increase in demand for money. A quick check of the inventory on the market shows that year over year, inventory is up by about 15%, sales activity is down by about 25%.
In order to sell your house these days, you MUST be priced right and/or have a very desireable house that has no glaring defects. In order to be a buyer, you need a downpayment and good credit, if you have both, you are in a once in a lifetime position to leverage the market and make some money.
The seminar on the $8,000 tax credit will be at the St. Matthews branch of Stockyard's Bank and Trust Company and starts at 7:00. Please call or email the office if you are interested in attending.
Broker Market Observations
(posted 6/16/09)
The Louisville market is starting to heat up in the $100,000 to $200,000 segment of the market. I had an open house on Sunday with 8 to 10 visitors. This property is listed for $144,000 and about 75% of the people that came through were first time buyers hoping to take advantage of the $8,000 tax credit which expires on 11/30/09.
Another listing is currently under contract with two offers coming in in the last 2 weeks. The buyer wanted to shop prices before making an offer and found that 4 out of the 5 houses they wanted to see were under contract.
I just listed a house in St. Matthews around 2:00 on the 15th and have had 5 showings in the first 36 hours on the market. This house is the only house currently on the market, under $150,000 in the 40207 zip code that is not under contract. I expect it to sell within a week or less given the traffic we are getting right now. If you are a first time buyer, don't get too caught up in getting the deal of the century and miss an opportunity. The $8,000 tax credit will go a LONG way towards sweetening any deal you can make.
ALS Realty will be hosting a seminar on the $8,000 tax credit on July 15th at 7:00 p.m. We will have Mark Metcalf, a local accountant speaking and coffee and dessert will be served. For more information, email me at graham@louisvilleals.com
Louisville Housing Market Wrap Up
June 2009
Graham Mowry, Broker ALS Realty
(posted 6/10/09)
What a ride its been for the last 6 months! The Louisville market which is known for being stable and slow moving has experienced negative price growth for the first time in many years. The average sales price for a home in the Louisville market in January of 2000 was roughly $135,000. It reached a peak of $175,000 in March of 2008 and has since retreated to about $162,000. It is important to note that even with our negative growth over the past 12 months, homes in Louisville have appreciated at an average rate of about 2% per year over that nine year time frame.
Current inventory in the marketplace is approximately 10.23 months meaning that it would take 10 months to sell all of the houses on the market at the current rate of sales with no new properties coming on line. Inventory in May of 2008 was 6.54 by comparison. A balanced market will have 5 to 6 months of inventory, anything less than that is a "seller´s market" and anything more than that is a "buyer´s market." We are obviously squarely in a buyer´s market right now.
Year to date, houses in the Louisville market are selling for 95.67% of asking price. In 2008, that number was 96.38% and for most of the early 2000s that number stayed around 97%.
In addition to the favorable market conditions for buyers, we have very low interest rates and an $8,000 gift from Uncle Sam for first time buyers or those who have not owned a home for the last 3 years. If you have even considered buying a home, there has not been a better time to be in the market in 10 years or more.
If you would like more information on any of the statistics or programs mentioned here, please call the office at (502) 326-0470 or email at graham@louisvilleals.com.