Today I am in the 840 WHAS studio preparing to record one of our radio shows that airs Sunday morning, but first I want to take a quick look at what is happening in the real estate markets in Louisville and Southern Indiana
Rising interest rates and a lack of inventory are slowing the real estate market throughout our area. Remember, we measure the market with a figure called the absorption rate. A six-month (or higher) supply of homes is a buyer’s market, five- to six-months’ is a neutral market, and anything less than five months is a seller’s market.
Every Sunday we publish a market report which gives us an indication of where the market actually stands week-to-week. We are starting to see an increase in the absorption rate in homes that are below $350,000. While it is still less than a five-month supply, it is creeping up. For higher priced homes it is a buyer’s market which is a problem for anyone who has a luxury home.
Add all this to climbing interest rates, and the numbers do not look good for buyers. In fact, Freddie Mac predicts that, by the end of the year, we could be seeing interest rates at or just over 5%.
This does not mean that homes prices will decline. Instead, we will see the exact opposite—continually increasing prices will mean that buyers will have less purchasing power.
Unfortunately, according to Lawrence Yun, chief economist for the National Association of Realtors, it is not the interest rates but the lack of inventory that’s keeping buyers from being able to find their home. They do not care as much about interest rates as they care about finding their perfect home; however it is just not out there for many.
The good news is that if you own a home and are thinking about selling, the prices continue to increase despite the possibility of interest rates going up. With the way equity is increasing currently, a home worth $250,000 in January of 2018 could be worth over $301,000 by 2023. We do expect the market to get even hotter as we move forward in the year.
Returning to my radio show that I mentioned earlier, each Sunday from 8:30 a.m. to 9:00 a.m. we get together on 840 WHAS to answer your real estate questions. You can listen live to this show, visit either www.louisvillequestions.com or www.louisvilleanswers.com, or go to iTunes and search for our podcast.
If you would like us to answer your questions, you can pre-record it at (502) 252-1890 and we will play it on the air.
If you have any additional questions about our market, please feel free to call or email me. I look forward to answering your questions.