Low mortgage rates boost 2004 home sales
Spurred by continued low mortgage interest rates, last year's Louisville-area home sales rose more than 9 percent from 2003.
And some industry experts think 2005 sales will at least match last year's, but rising interest rates may temper growth.
For last year, the Greater Louisville Association of Realtors recorded 14,036 Realtor-assisted sales of new and existing homes, up from 12,830 in 2003, while median sales prices rose less than 1 percent to $132,500.
The sales increase lagged a 15 percent gain between 2002 and 2003, but still, "we had a strong market in Louisville" last year, said Kathy McGann, president of the Realtors association and vice president of education and compliance for Semonin Realtors.
Nationally, year-end sales data are due out this week, but through November, existing-home sales were up 6.1 percent compared with the first 11 months of 2003, according to the National Association of Realtors in Washington.
A. Howard Young, president of the Mortgage Bankers Association of Louisville and a loan officer for GMAC Mortgage, said the local market last year was a bit tricky.
"The second and third quarters were booming, but the fourth quarter slowed down a whole lot," he said.
Home sales typically slow toward year's end, he said, but last year's activity was slower than normal. Fourth-quarter sales rose only 2.8 percent over the prior year, compared with increases of 12.9 percent in the first quarter, 19.4 percent in the second and 4.1 percent in the third.
Young attributed the fourth-quarter lull to homebuyers taking a wait-and-see attitude as to who would win the presidential election. October sales were down 4.4 percent from the prior year.
"This election had a huge impact on real-estate sales," said Charles Ballard, a Realtor and chief operating officer with Century 21 Realty Group-Hagan. "People really got wrapped up into the election and into the debates, and that had a negative impact on real estate. Other than that, things got back to normal before the end of the year."
Programs that helped first-time homebuyers also boosted the market, McGann said.
About 40 percent of buyers are first-time homebuyers, she said, "so anytime you have low interest rates and products that help them get in a home, that's where that growth is coming from, not just locally, but also across the country."
One trend that stood out last year, Ballard said, was increased sales activity for rural land, triggered in part by farmers getting out of the tobacco business and selling their acreage to developers.
In rural Bardstown, for example, "our auction market was its best ever," Ballard said, adding that the sales activity has been pushing up property values in the city as well. "Bardstown is a hot market, Bardstown and all of Nelson County."
Mortgage rates, though, were the big story last year.
Ballard said mortgage rates pretty much hovered around 6 percent throughout the year, and "the market will grow at 6 percent."
This week, 30-year, fixed-rate mortgages averaged 5.67 percent, up slightly from 5.64 percent a year ago, according to the mortgage company Freddie Mac.
Young said homebuyers also were enticed by more mortgage programs and products, including interest-only payments, which helped consumers buy bigger homes.
Meanwhile, the median sales price of about $132,000 means Louisville housing remains affordable, McGann said.
Nationally, the median sales price was $183,100, she said, so Louisville's median means "you can get into homes a lot easier in Louisville than you can compared with the nation as a whole."
And while some markets have seen soaring price appreciation, Louisville's growth, historically, has been steady at 4 percent to 6 percent for the past 14 years, McGann said.
That's a little higher, though, than the latest increase in household income, according to the U.S. Department of Housing and Urban Development, which said that for fiscal 2004, median family income in the Louisville metro area rose 3.5 percent from a year earlier.
Outlook for 2005
This year, McGann said, "we will continue to have strong growth, probably in the single-digit growth mode, because we're going to be dealing with an upward trend in interest rates."
One bright spot she sees is the potential growth in people buying condominiums in downtown Louisville.
Young also said Louisville is positioned for another strong year, maybe even better than last year, partly because of the increase in new condominiums and condominium conversions, coupled with attractive mortgage options.
"It seems like there's a boom in housing and financing as well," he said. "The market is really strong."
Young thinks 2005 will be a good year for increased homeownership among minorities such as African Americans and Asians, but especially Hispanics.
"The Hispanic market is untapped; it's a lucrative market," he said.
Ballard thinks this year could be close to 2004, but probably not enough to set a record.
Among trends he foresees are an increase in the number of homeowners fixing up their homes and staying put because of the increase in the cost of land, and that some people might shy away from buying bigger homes because of increasing utility rates.
As for mortgage rates, Young doesn't expect much fluctuation in the Louisville market and thinks the 30-year fixed-rate mortgage could end the year between 5.75 percent and 6 percent. McGann envisions rates at 6.5 percent by year's end, while Ballard expects a slow, steady rise to 6.5 percent to 7 percent.
And some industry experts think 2005 sales will at least match last year's, but rising interest rates may temper growth.
For last year, the Greater Louisville Association of Realtors recorded 14,036 Realtor-assisted sales of new and existing homes, up from 12,830 in 2003, while median sales prices rose less than 1 percent to $132,500.
The sales increase lagged a 15 percent gain between 2002 and 2003, but still, "we had a strong market in Louisville" last year, said Kathy McGann, president of the Realtors association and vice president of education and compliance for Semonin Realtors.
Nationally, year-end sales data are due out this week, but through November, existing-home sales were up 6.1 percent compared with the first 11 months of 2003, according to the National Association of Realtors in Washington.
A. Howard Young, president of the Mortgage Bankers Association of Louisville and a loan officer for GMAC Mortgage, said the local market last year was a bit tricky.
"The second and third quarters were booming, but the fourth quarter slowed down a whole lot," he said.
Home sales typically slow toward year's end, he said, but last year's activity was slower than normal. Fourth-quarter sales rose only 2.8 percent over the prior year, compared with increases of 12.9 percent in the first quarter, 19.4 percent in the second and 4.1 percent in the third.
Young attributed the fourth-quarter lull to homebuyers taking a wait-and-see attitude as to who would win the presidential election. October sales were down 4.4 percent from the prior year.
"This election had a huge impact on real-estate sales," said Charles Ballard, a Realtor and chief operating officer with Century 21 Realty Group-Hagan. "People really got wrapped up into the election and into the debates, and that had a negative impact on real estate. Other than that, things got back to normal before the end of the year."
Programs that helped first-time homebuyers also boosted the market, McGann said.
About 40 percent of buyers are first-time homebuyers, she said, "so anytime you have low interest rates and products that help them get in a home, that's where that growth is coming from, not just locally, but also across the country."
One trend that stood out last year, Ballard said, was increased sales activity for rural land, triggered in part by farmers getting out of the tobacco business and selling their acreage to developers.
In rural Bardstown, for example, "our auction market was its best ever," Ballard said, adding that the sales activity has been pushing up property values in the city as well. "Bardstown is a hot market, Bardstown and all of Nelson County."
Mortgage rates, though, were the big story last year.
Ballard said mortgage rates pretty much hovered around 6 percent throughout the year, and "the market will grow at 6 percent."
This week, 30-year, fixed-rate mortgages averaged 5.67 percent, up slightly from 5.64 percent a year ago, according to the mortgage company Freddie Mac.
Young said homebuyers also were enticed by more mortgage programs and products, including interest-only payments, which helped consumers buy bigger homes.
Meanwhile, the median sales price of about $132,000 means Louisville housing remains affordable, McGann said.
Nationally, the median sales price was $183,100, she said, so Louisville's median means "you can get into homes a lot easier in Louisville than you can compared with the nation as a whole."
And while some markets have seen soaring price appreciation, Louisville's growth, historically, has been steady at 4 percent to 6 percent for the past 14 years, McGann said.
That's a little higher, though, than the latest increase in household income, according to the U.S. Department of Housing and Urban Development, which said that for fiscal 2004, median family income in the Louisville metro area rose 3.5 percent from a year earlier.
Outlook for 2005
This year, McGann said, "we will continue to have strong growth, probably in the single-digit growth mode, because we're going to be dealing with an upward trend in interest rates."
One bright spot she sees is the potential growth in people buying condominiums in downtown Louisville.
Young also said Louisville is positioned for another strong year, maybe even better than last year, partly because of the increase in new condominiums and condominium conversions, coupled with attractive mortgage options.
"It seems like there's a boom in housing and financing as well," he said. "The market is really strong."
Young thinks 2005 will be a good year for increased homeownership among minorities such as African Americans and Asians, but especially Hispanics.
"The Hispanic market is untapped; it's a lucrative market," he said.
Ballard thinks this year could be close to 2004, but probably not enough to set a record.
Among trends he foresees are an increase in the number of homeowners fixing up their homes and staying put because of the increase in the cost of land, and that some people might shy away from buying bigger homes because of increasing utility rates.
As for mortgage rates, Young doesn't expect much fluctuation in the Louisville market and thinks the 30-year fixed-rate mortgage could end the year between 5.75 percent and 6 percent. McGann envisions rates at 6.5 percent by year's end, while Ballard expects a slow, steady rise to 6.5 percent to 7 percent.
posted by The Kid at 9:56 AM
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