I have included a chart below that shows the number of homes for sale in the Louisville market over the past year, with one line showing weekly data points and the other line shows a trend line, which some people call a 90 day rolling average. Just one look and you can see how difficult it is to answer the question I receive frequently, “How’s the real estate market in Louisville?”  Well, inventory levels are lower now than they were three or four months ago, but higher than they were a year ago.

But those are just the raw numbers.  Let’s look at it differently and see if that would affect how I would normally answer my problem question.  The graph below shows a percentage increase or decrease of our current inventory compared to the past year.  Are we up, or down?  The graph should be similar, but with a different measurement scale.

Look back one year, our local real estate market was tracking along with about 5-10% more homes on the market than the previous year.  And then in January, wow, straight to the moon!  The measurement of Year Over Year goes from 10% in January all the way up to 45% in February.  That’s a lot of extra homes on the market.  And then it falls back down, lots and lots of home sellers leaving the market in the end of April and early May, bringing the percentages of year over year increases back to between 5 and 10%, which still isn’t great.

Another measurement to keep your eye on, instead of averages, is the Median DOM for Louisville homes for sale.  The median shows us where the breaking point is, at what number half of the homes for sale are taking longer than to leave the market, and the other half is taking less time.  The overall shape of the two graphs are similar, but there are certainly some differences.

First, it should be noted that in the averages graph, our current measurements were higher than at this time last year.  But if you look at the median scores, it shows that the measurement for Louisville real estate is actually lower today than one year ago.  The other striking difference is the scale of the two charts.  Current measurements for the average is somewhere around 140 or 150 days.  But if you look at the median, we are much closer to 90 days.  And the difference between the two is about two months worth.  My guess is that higher end homes are taking longer to sell and throwing the averages off.  But the one segment of our current market that is still selling is the lower end to lower mid priced homes, and they still seem to be leaving the market in a relatively quick time, three months or less.

Another data point I like to track for Louisville real estate is the inventory level, which measures just how many homes there are for sale in Jefferson County.  For my purposes, I track only single family homes and only in the city limits of Louisville, so I am not counting many properties in surrounding counties.  Looking at the numbers below, we have another case of good news, bad news.  The good news is that there aren’t as many homes for sale in Louisville as there were just a few months ago.  But the bad news is that we are still seeing more homes available today than were for sale this time last year.  Lower prices combined with higher inventory is not a great mix for a recovering real estate market.

On my next article, I will look at how long Louisville homes for sale are staying on the market, and those three measurements, when taken together, will give you a really good idea of how the local market is behaving.  I think we can all guess a bit, but I will try my best to remain optimistic and wait until next week to burst my bubble!

The most interesting point to take away from the graph above is just how high recent levels of homes for sale in Louisville have been recently.  While it is true that the last few weekly measurements of how many single family homes are for sale in Louisville have been decreasing, it is interesting to see just how much higher the measurement is today than it was in the beginning of 2009.  Looking at the gold line above, which shows the rolling trend line, the latest measurement was 4,500 units, down from 4,800 units in May.  But if we check back to the beginning of 2009 in Louisville, we will see that there were only 3,800 homes for sale, way less than today.  Yes, we have fewer homes on the market today, but a bunch more than 18 months ago.

The same trend seems to hold true for the amount of time homes for sale in Louisville are staying on the market.  For instance, just as inventory levels above, the latest measurements are down from where they were just a few weeks or months ago.  But when compared to recorded levels for the local market, we are seeing much higher numbers today, even after recent drops, than we saw 18 months ago.  To use real numbers, the average home in Louisville was staying on the market about 90 days in the spring of 2009.  But today, that number has climbed to 160, which is down from 180 days, which we saw in this past spring

This graph has a sine shape to it, which is not unusual in itself, for real estate activity in Louisville, or most any other market.  The seasons have a habit of influencing our local market, and prices will follow along with the demand, or lack thereof.  As you can clearly see from the graph, the median asking price of Louisville homes seems to be at it’s lowest in the winter time, or the very beginning of the year.  Again, not very surprising.  But by adding a few months to this graph that I don’t normally include, it is helpful to see where we stand at this point in the year, compared to last year.  Even though the past few weeks have seen small decreases in the the asking price of homes for sale, we are still higher today, than we were last year.  But looking forward a few weeks, we can see that we will need to have some serious increases in order to keep saying that, otherwise our homes for sale in 2010 will be asking less than the same homes were asking last year in Louisville.

Price alone doesn’t determine if we are in a hot market, or a depressed market, even though that is what most people focus on.  To help determine the health of the Louisville real estate environment, we should also look at length of time on the market, inventory levels, and a few other factors.  If we put all those factors together, we can use that measurement to keep track of Louisville homes and compare it to weeks and months gone by.  We call that measurement the Median Market Action Index, in which a value of 30 signifies a neutral market in Louisville, below 30 is a buyer’s market, and above 30 is a seller’s market.  Clearly, homes for sale in Louisville are not witnessing a seller’s market!  For all of the ups and downs over the past 18 months or so, we are just about exactly where we were in January of 2009.

But what if you notice that all of the homes on your street are selling?  And maybe they are even getting the prices they were hoping for?  In that situation, we would expect to see new listings start asking more than before, and maybe even catch up to what the existing homes for sale are asking.  And that’s exactly what we have seen in the past month or so.  The median price of homes for sale has just about equalized for both groups of homes.