SUNDAY EDITION | Louisville home shortage persists as spring selling season begins
Heading into the traditional spring selling season, buyers in the Louisville area have the fewest choices in at a least a decade – a result mainly of voracious demand by buyers.
LOUISVILLE, Ky. (WDRB) -- After months of considering a move, Matthew Glass and his wife, Stacy, decided last month to finally list their home in the Cooper Farms subdivision of southern Jefferson County for sale.
“We wanted to take advantage of the market -- we knew the market was kind of in our favor,” said Matthew Glass, a retired Louisville Metro police officer.
Sure enough, the Glasses immediately received two offers on their 3-bedroom, 3-bath house, and within a week it was under contract for $225,000, just below their asking price.
But when they set out to buy another house, the couple soon realized the flip side of Louisville’s sellers’ market: Heading into the traditional spring selling season, buyers in the Louisville area have the fewest choices in at a least a decade – a result mainly of voracious demand by buyers snapping up available listings .
There were 3,274 single-family houses and condos listed for sale as of Feb. 15, according to the Greater Louisville Association of Realtors, not even one-third of the 10,710 that were on the market at the same time in 2008, before the housing crash led to the Great Recession.
The number of homes for sale has steadily declined every year since the crash, helping to push prices up. The median sale for the Greater Louisville association, which covers the Kentucky side of the Ohio River, rose to $172,241 in 2017, up from $163,999 the year before.
For the Glasses, finding a home in the Shepherdsville area – they want to enroll their teenaged daughters in Bullitt County schools – turned out to be more difficult than they thought. The clock was ticking, too, because the pending sale of their home meant they needed a place to live.
“My wife and I were online all day, every day, checking listings,” said Glass, who now works for the Bardstown Police Department. “We were panicking. The fear was that we were going to have to sign a long-term lease and go into an apartment, and with teenage girls … that wouldn’t have been a cheap find or an easy find.”
After exhausting the publicly available listings, the Glasses’ agent, Steve Adams, posted on Facebook that he was desperate to find a home in northern Bullitt County with ample garage and storage space.
That yielded a response from agent Gloria Patterson of Semonin Realtors, whose clients hadn’t planned to list their three-bedroom home in the Floyds Fork Estates subdivision until May. The Glasses persuaded them to accelerate their home sale by offering their asking price, $279,900.
Adams, of Bob Hayes Realty, said the shortage of homes for sale means that some buyers with urgent timelines have to resort to means other than the public market to find a property.
“It’s gotten to that, because there is just not a lot out there,” he said.
Economics, demographics drive demand for homes
Louisville is not unique in the shortage of homes for sale. All of the top 50 U.S. metro areas have seen their inventory of homes for sale decline since 2010, according to real estate website Zillow.
The number of homes for sale in the Louisville metro area, including southern Indiana, was down 13 percent in February from a year earlier – a bigger decline than the nation as a whole (10 percent), according to Zillow.
And, a smaller share of homes in the Louisville area (1.3 percent) is for sale than the national average of 2 percent.
Skylar Olsen, Zillow’s senior economist, said in an interview that the lack of available homes has more to do with the pace of sales than with the number of people who are willing to put their homes on the market.
Buyers are snapping up homes at ferocious speed, leaving fewer listings to choose from at any one time, she said.
Members of the Greater Louisville Association of Realtors notched 18,091 sales in 2017, the most in at least ten years and up 65 percent from the market bottom in 2011.
Meanwhile, homes on the Louisville market sold on average in 58 days, the fastest pace at least a decade. In 2011, the average “days on the market” was 144.
Patterson, of Semonin Realtors, said competition is so fierce that earlier this year, she helped buyers make a full-price offer on a house in the Jeffersontown area without seeing it in person – a first in her 24-year career.
“The pictures were awesome, and it worked out,” Patterson said. “When we finally got into the house, I said, ‘I hope you liked what you bought.’”
Olsen said there are economic and demographic factors behind the voracious demand for homes.
A sustained drop in unemployment and years of steady job growth mean more people are in a financial position to own a home, she said.
And mortgage interest rates – while up over the last five months and expected to rise more this year – remain historically cheap, making monthly payments affordable.
“If anyone has kind of been forestalled and unable to afford in the past, it is getting slowly better – there has been enough time through this recovery that now you are ready to do it,” Olsen said.
At the same time, the millennial generation is “aging into” homeownership, with an increase in the number of people turning 30 each year for “the next several years.”
“There are more and more first-time buyers coming onto the market who wouldn’t have considered buying a home because they weren’t married yet – they didn’t have kids yet – they weren’t ready to settle down and stay in one place,” she said.
Some factors are restricting the supply of homes for sale, however. New home construction still has not returned to pre-recession levels, giving buyers fewer alternatives to existing houses.
And the sellers’ market is “a bit self-reinforcing,” Olsen said, because some people who might be tempted to list their home decide against it because they would then be forced to find another home amid limited choices and higher prices.
Another consequence of the current market is that sellers aren’t giving buyers as much leeway as they have in the past.
That’s why the Glasses decided to put their home on the market before going shopping for their next house, even though it meant risking being left with no place to go.
They could have made the purchase of their next home contingent on the sale of their existing home, but sellers aren’t as willing to entertain those terms as they used to be, and the Glasses didn’t want to be at a disadvantage when making offers.
For every buyer who makes an offer contingent on another sale, Adams said, “You’re going to have five more people coming in and saying, we just moved out of our apartment or our parents’ basement and we have nothing to sell.”