The home listing lookie-loos are back.
Realtors at Homepage Realty are starting to get messages from clients about houses that are catching their eye. This isn’t the “have to move” crowd marking big life events, but rather the casual scrollers dreaming of their next home.
“We didn't get those texts last year,” said George Barrett, co-owner of Louisville-based real estate agency Homepage Realty. “We're starting to get those texts again.”
Barrett is forecasting a busy summer sales season, one that won’t reach the heights of the red-hot 2021 and 2022 but will rebound from an abysmal 2023 for home sales nationally and in Louisville.
“After Derby in Louisville, that is put your home on the market season,” Barrett said. “I thinkthat it is surprisingly going to be a very busy real estate season for both buyers and sellers.”
A healthy summer market would be a welcome change from last year, which saw home sales down 16% compared to 2022 and about 28% from 2021, according to data from the Greater Louisville Association of Realtors.
It remains to be seen how the improvement in inventory will translate to sales this year. So far, through mid-May, sales in the greater Louisville area are down about 2% compared to last year.
Earlier this year, with the Federal Reserve saying it intended to slash interest rates, analysts forecast a drop in mortgage rates that would woo home sellers and buyers back into the market.
That cut from the Fed has yet to materialize, and interest rates that were at historic lows around 3% three years ago and 5% two years ago are now around 7%.
With inventory slightly up over last year, Barrett said those waiting on the sidelines may be done waiting. He looks to April, particularly to new home listings, as a sign of promise for buyers this summer.
“Ithink the buyers now and even sellers have started realizing this is the new norm,” Barrett said. “If (interest rates) are going down, they're not gonna go down a whole lot. So, I've been waiting for a year or two to move. Now it's time to move.”
Here’s what area real estate professionals are anticipating in the coming months.
Louisville home inventory appears to be improving over 2023
Early signs point to more homes hitting the market this year, offering relief for buyers who have faced limited choice in their home search.
Home listings this year in the greater Louisville area, through mid-May, are up nearly 8% over the same period last year, according to Realtor association data. There were about 7,500 new listings year-to-date compared to about 7,000 last year.
Summer months historically have the highest number of homes hit the market, offering the most choice for buyers. It also offers sellers a larger buyer pool.
While that was the case last year, the typically busy summer home market was muted by high interest rates that hit 7%.
Homeowners who purchased during record-low sub-3% interest rates in 2020 and 2021 or refinanced their homes during that time were reluctant to give up the low rate. Buyers, meanwhile, grimaced at the idea of paying hundreds more on their monthly mortgage as rates rose on top of rising list prices.
Mark Sherrill, team manager at Statewide Mortgage, said even if mortgage rates were to fall if, and when, the Fed cuts its rate, he would not expect to see a return to the record low mortgage rates.
"I don’t know if we’ll ever see that again," he said. "If you’re waiting for rates to get back to 3%, you might not get homeownership."
Looking at data from the first third of the year, Barrett anticipates buyers having more options this summer, though competition remains.
“You're gonna see more houses thatare gonna come across your feed that fit your search criteria on a weekly basis than you would have seen last year,” he told the Courier Journal. “Now, that being said, the demand for houses is up as well. So you might have moreoptions, but you're gonna have to be aggressive in picking the house that you want, and you're gonna have to move fast.”
Home prices, you guessed it, are still rising
Home prices are still up, though their year-over-year increases may be softening.
“Even in the worst market that I've seen in my career, the Louisville average home still increased in price,” Barrett said of 2023.
Last year, overall, saw the median home sales price for the greater Louisville area increase by 3.6% over 2022, according to Realtor association data. For Jefferson County alone, that increase for single-family homes was lower, at 2%.
While an increase, it’s less than the nearly 8.5% rise between 2020 and 2021 and the nearly 8.7% jump between 2022 and 2023, according to local Realtor association data.
"I don't think we're gonna see any sort of drop in price this year, next year, any time soon, just by the nature of we are still at a very low inventory for the demand of housing in Louisville,” Barrett said.
Indeed, in April, the median sales price was about $275,000, up 6% compared to the median in April 2023.
While prices overall are rising, buyers may have slightly more ability to pay under listing price, especially on homes that aren’t in the best shape.
Two years ago in April, homebuyers were paying nearly 101% of the list price, meaning they were paying what buyers were asking for, according to data from real estate company Redfin. This April, that figure is about 99% of the listing price.
“You should be able to get a little bit, not a huge discount,but a little bit of a discount off your sales price,” Barrett said.
Adding to the cost of buying a home are interest rates, which hit a 23-year high of nearly 8% in October 2023. Rates in recent weeks have been around 7%.
Even a one percentage point difference can make a noticeable difference in a monthly mortgage payment.
Take, for example, a $250,000 home loan with a 20% down payment. On a 30-year fixed-rate mortgage, a 7% interest rate would mean a principal payment of $1,330. Dropping the rate to 6% lowers the monthly payment to $1,200.
“You’ve got to ask yourself, the extra $100-$200 a month, is it worth it to buy a home and get on the carousel of building equity?” Sherrill said.
The important of home staging, and not overpricing anything
After a period two years ago marked by fast sales and fierce competition, Barrett said, his agents are having to reeducate both buyers and sellers to the current realities of the market.
“During that crazy time, sellers were told ...‘Ican getabovelist price. I can have everyone waive everything. I don't have to give up concessions,’ and I think that mindset is still in people's minds today," he said.
For sellers, that means putting their best foot forward when listing their house.
“The homes that are ready to show will sell in a competitive nature,” he said. “You can't overprice anything these days. If it's priced correctly and ready to show … that home will go in the first weekend, and it probably will have multiple offers.”
He also stressed sellers “staging” their homes by decluttering, cleaning, and doing small jobs such as fresh painting.
“These little things that sellers used to always do, I think for lack of a better term, we got a little lazy during that crazy time,” he said. “Buyers aren't buying things that they don't absolutely like the look of walking in anymore because we have more options outthere.”
Buyers who steeled themselves after hearing about a hot market with intense bidding wars, multiple unaccepted offers, and waived home inspections will find the heat turned down this year.
There’s still a need to act quickly on a desirable home though, Barrett said, but he doesn’t anticipate buyers feeling like they’re forced to settle or waive important rights.
“I don't think you're forced to make a decision fast on the home that doesn't look ready to sell, but on a home that looks ready to sell, you can expect it's gonna be an aggressive situation,” he said.
Reach growth and development reporter Matthew Glowicki at mglowicki@courier-journal.com or 502-582-4000.
