If you’re eager to engage in real estate investment, you should look no further than St. Louis real estate market. Characterized by a steadily rising median price, this Midwestern city offers a unique opportunity for property investors, particularly rental property, to make a fortune. For that reason, WalletHub recently dubbed Louisville one of the United States’ best cities for renters.
However, if you wish to invest in real estate in the region, you have to act fast. As reported by Fox Business in June 2022, the rising mortgage rates give a glimpse of the future of the real estate market in the area. The average home prices have risen by about 11.4% from May 2021 to May 2022. As stated by Realtor.com, the average home in Louisville sells for $239,000 on average.
Being a part of the Midwestern region of the United States, many people know Louisville as the gateway to the south. As the largest city in the state of Kentucky, Louisville is also known for its low cost of living, dynamic economy, and a wide variety of industries from various sectors. So, what more to like about the Louisville real estate market?
Louisville Population Growth
The city of Louisville is located in the north central of Kentucky, which borders Jefferson County in Indiana and the Ohio River. As previously mentioned, Louisville is the largest city in the state and the 28th most populated city in the whole country. A 2020 report by the United States Census Bureau reveals that 246,161 people reside in the city.
In addition, its metropolitan area is the 43rd largest metropolitan statistical area in the United States, with a recorded population of 1,395,634 in 2020. For the past 10 years, the metro area of the city has gained nearly 45,000 new residents. As a result, the state of Kentucky has one of the biggest population growths in the country, which is an ideal factor for real estate investors.
From the 1970s to the 2000s, the population in Louisville City is in constant decline. As of 2020, Louisville’s population growth remains stable, with an increase of 6.0% since 2010. In 2003, the city merged with the county region, resulting in a massive increase in population by 133.1%
Louisville Economy
In the past, Louisville’s economy was supported mostly by the shipping and cargo industries due to its strategic location. In addition, the largest city in Kentucky is also famous for being one of the largest producers of whiskey and bourbon. In addition, the economy of Louisville is also mostly supported by the prominent manufacturing industries, with two major Ford Motor Company plants and the headquarters of GE Appliances. As reported by Fortune.com in 2019, Louisville is the home to three Fortune 500 companies, namely Humana, Kindred Healthcare, and Yum! Brands.
Despite the absence of tech-related industries, Louisville’s GDP remains in sharp ascend since 2010. As reported by the United States Bureau of Economic analysis, the city’s GDP peaked at $74,921,053in 2019 followed by a slight decline to $74,308,945 in 2020.
As with other cities on the continent, the slight decline in GDP happened due to the impact of the COVID-19 pandemic on local businesses in the city. However, as reported by WHAS11 in January 2022, downtown Louisville started to thrive as more and more people came to the city following the removal of the city’s quarantine rule.
Louisville Job Market
The availability of the region’s job market and the unemployment rate are often considered when choosing a place to invest in real estate. Luckily, all data show that the Louisville job market is thriving. As reported by the United States Bureau of Labor Statistics in May 2022, Louisville’s unemployment rate is at 3.7%, a slight improvement from the beginning of the year with 4.1%.
In addition, the US Bureau of Labor Statistics report also suggests that the number of employed individuals in Louisville has also been increasing since January 2022, from 639,100 to 656,000 in May 2022. As reported by Kentuckiana Works, six industries account for two-thirds of local private sector jobs, namely health care and social assistance; manufacturing; retail trade; transportation and warehousing; accommodation and food services; and finance and insurance.
Cost of Living in Louisville
The cost of living in Louisville is considerably low compared to other populous cities in the country. Number estimates that the average monthly cost for a family of four in Louisville is around $3,222 without rent. This makes a single person’s average monthly cost $914. In addition, the website also suggests that the rent prices in Louisville are 23.11% lower than in another Midwestern city of Columbus, Ohio.
Furthermore, PayScale’s most recent report revealed that the cost of living in Louisville is 4% lower than the national average. According to the website, it seems that there has been a decline in prices for housing and groceries, with an 18% and 6% decrease respectively.
Overview of Louisville Real Estate
As reported by HousingWire in 2020, the COVID-19 pandemic provided an excellent opportunity for investors to make a fortune in the city as the prices had gone up and the housing inventory reached its lowest point. The website also indicates that most Louisville residents preferred upsizing to bigger homes as they spend more time working and schooling at home. So, if you wish to invest in real estate, buying bigger houses may be the right option.
Below are some exciting statistics to solidify your decision to invest in the Louisville real estate market.
Real estate in Louisville, KY
Louisville’s real estate market has experienced a somewhat fluctuating journey for the last five years. However, the overall home values seem to be on a continuous rise. As of June 2022, Zillow reported that the home values index in Louisville had reached $232,705 with an 11.7% of appreciation since last year. In addition, a recent report from Realtor.com indicates that the median listing price for homes in Louisville is around $145 per square foot.
On average, homes are sold at a 100% ratio of the listed price, which means that buyers typically pay the same exact amount for the price of the home when listed online. Based on the ratio, Realtor.com determines that the real estate market in Louisville, Kentucky is in heavy favor of the buyers. This means that the supply of housing units is greater than the demand.
Louisville Renter’s Market
As of June 2022, Point2Homes reported that around 40% of real estate units in Louisville, Kentucky are renters occupied. While considerably lower than other Midwestern cities, investors can quickly gain a fortune by investing in rental properties in Louisville. This is because the median rent prices in the city have risen quite significantly over the last five years.
As reported by Zumper, the average rent in Louisville, KY for their-bedroom homes in June 2017 is $1,171. As of June, this year, the average rent price for the same home model has increased by $357 to $1,528. In this year alone, the median rent price has increased by 13% since 2021.
However, please beware that the average rent in Louisville, KY varies between neighborhoods. According to Zumper, some of the most affordable neighborhoods in terms of rent are Germantown, Park Duvalle, and Southside, where the average rent can go from $650 to $850 per month. On the other hand, the most expensive neighborhoods in Louisville are Audubon, Deer Park, and Bon Air, where rent can go between $1,980 to $1,745 a month.
Historic Price Change and Housing Affordability
Historic pricing and the housing affordability index (HAI) are two of the most important aspects to consider before investing in real estate. In most cases, investors use historic price changes to determine how much money they need to invest in a certain number of housing units. On the other hand, the housing affordability index measures the typical family income required for a mortgage loan based on recent price data.
Some data suggest that home prices in Louisville, Kentucky are rising rapidly over the years. For instance, Redfin reported that the median sales price for single-family homes in Louisville reached its peak in April 2022, with a median price of $270.000 and 17.4% year-over-year growth. This number is significantly higher compared to the median price in June 2017 with $193.000 and 10.3% year-over-year growth.
In addition, the United States Federal Housing Finance Agency also reported that the house price index for the Louisville/ Jefferson County region has increased exponentially since 1995 (Q1:100), reaching a record-breaking price index of 264.06 in May 2022.
In terms of housing affordability, the November 2021 report by the National Association of Realtors indicates that the housing affordability index in Louisville experienced a somewhat fluctuating trend. For instance, data from December 2018 shows that the region’s HAI reached its lowest point at 203.40. However, in November 2021, the HAI in Louisville had reached 224.50, a massive improvement since 2019 with an HAI of 202.1.
Louisville Real Estate Market Forecast
Uncertainty is one of the downsides of real estate investment. Luckily, we can roughly predict the future trend by paying attention to the current state of the market. In the case of Louisville, the market seems to be in a constant trend of appreciation, which makes it ideal for real estate investors.
As stated by NeighborhoodScout, the home appreciation rate in the Louisville/ Jefferson County region has been above average over the past 10 years. In addition, Zillow reported that the home values index in Louisville had reached $232,705 with an 11.7% appreciation since last year. On top of that, the United States Federal Housing Finance Agency has also reported that HPI for the Louisville/ Jefferson County region reached 264.06 in May 2022.
This is similar to neighboring Jefferson County, in which home values have gone up by 12.1% since last year. Currently, the average home in the region is valued at $232,877. If the appreciating trend continues to persist, Zillow predicted that Louisville metro home values will rise by 7.6% by May 2023.
Louisville Real Estate Market FAQs
- How many people live in Louisville?
The United States Census Bureau’s 2020 report reveals that 246,161 people reside in the city of Louisville. This makes Louisville the biggest city in the state of Kentucky and the 28th most populated city in the United States. In addition, Louisville metropolitan is the 43rd largest metropolitan statistical area in the United States, with a recorded population of 1,395,634 in 2020.
- Is now a good time to buy a house in Louisville, KY?
Louisville home prices have and always have been on the rise for the last decades. However, as reported by Courier-Journal in April 2021, investors don’t hesitate to secure some of the hottest inventories in the region. On top of that, Zillow also predicts that the home values in the Louisville/ Jefferson County region will rise by 7.6% by 2023. So, if the appreciating trend continues, now is a good time to buy a house in Louisville.
- Is the Real estate investing Louisville markethot?
The real estate market in Louisville is characterized by its high prices and low inventory. This makes the real estate market in the region extremely hot as buyers compete to buy the soon-to-be-rare investment properties. The most recent data from the United States Federal Housing Agency showed there is no sign of the prices going down.
- Is the housing market slowing down in Kentucky?
As stated by ListWithClever, despite the recent investors’ activity, Kentucky’s real estate market seems to slow down. With low numbers of buyers, units are staying on the market longer. On average, reports stated that housing units stay up for 42 days before being sold.
Final Words
Louisville‘s real estate market is one of the hottest markets in the United States. This is proven by the continuous rise of the home price, be it monthly or annually. Despite the soaring prices, buyers are not hesitant to take action to secure some of the hottest inventories in the region. In addition, houses are becoming more affordable as the local economy began to rise before the pandemic.
If you wish to engage in one of the hottest real estate markets in the country, look no further than Louisville real estate market. With its steadily increasing price and the lack of inventory, Louisville can be a gold mine for real estate investors. So, be sure to check out the local listing for hot inventories in the region.