Louisville real estate market picking up

• In sought-after neighborhoods home sellers are getting immediate response to listing.
• Snow and freezing temperatures brought the real estate market to a crawl in January and February
• The shortage is a result of "seller reluctance," said Zillow.com's Svenja Gudell.

On a recent Friday, Tim Lawson listed his Highlands bungalow for sale. Two offers and one nibble followed Sunday's open house. By Monday he accepted a bid for his asking price of $259,000.

"I obviously priced it right because it went very quickly. The market is better," said Lawson, 47, who plans to downsize from his 2,200 square-foot Strathmoor home near Assumption High School to smaller digs near downtown. "I am keeping my fingers crossed that I will find something."

After a slow start caused by a brutal winter, 2014 is shaping up as a seller's market in select Louisville neighborhoods, with experts describing the current real estate market as a boomlet in such neighborhoods as the Highlands, St. Matthews, Indian Hills and Crescent Hill.

"The market has really come back, and Louisville has come back better than we ever hoped for. We've dealt with six or seven years of just poor home sales," said Bob Sokoler, a Realtor with WeSellLouisville.com, of Re/Max Properties East.

It's a market driven by financially secure buyers competing for scarce homes, because many potential sellers, burned by the housing crisis, are staying put, instead of moving up and out. Sokoler and others say that in a spate of recent warm weekends, buyers have been on the hunt, creating bidding contests that in some instances result in offers at or slightly above asking price.

In years past, real estate agents were accustomed to an inventory of at least 7,000 homes for sale this time of year, Sokoler said, adding that now, "supply is tight because sellers are slow to put their home on the market."

There's a for-sale sign in the yard in only 6,000 single family homes as of late last week (4/17) in Louisville, according to the Greater Louisville Association of Realtors, a steep drop from 7,414 homes on the market this time last year. Homes for sale are also down 24 percent since the 2011 peak when the market was flooded by foreclosures, short sales and homeowners selling to ease hard times, according to an analysis of the Louisville metropolitan area by Zillow.com, the national real estate website headquartered in Seattle, Washington.

The shortage is a result of "seller reluctance," said Svenja Gudell, Zillow.com's director of economic research. "Negative equity locks people into their homes."

Because of the recent economic crisis, one in six Louisville metropolitan area homeowners, or 15.6 percent, still owe more than their house is worth, she said. Metro Louisville's portion of so-called "underwater" homeowners stands below the national average of 19.4 percent of homes, but still eats up enough of the market to restrict supply.

So, "inventory is rather tight" in the Louisville area, Gudell said, creating a "supply-demand imbalance" that is good for sellers.

In Southern Indiana, the home selling pace - and prices - show signs of upward creep from January through March. Average time on the market has declined to 117 days from 120, while the median sales price has risen to $115,000 from $110,000, according to the website of the 550-member Southern Indiana Realtors Association.

As on the Louisville side, inventory is low, said Glenda Gasparine, chief executive officer of the trade group also known as SIRA. Herself in the market as a recent transplant from Wheeling, W.Va., Gasparine said other buyers snapped up two homes she wished to make an offer on.

"We hesitated. We took a weekend to think about it," Gasparine said of one home for sale she toured recently on a Friday near Charlestown, Ind. "We rode out there on Monday and it had a pending sign."

Extended winter weather has affected the real estate market nationwide, with 12 of 20 cities studied reporting housing price declines in January compared to December, according to the Case-Shiller Home Price Index. Nonetheless, home prices are expected to gain ground this year, according to a Case-Shiller report released in late March.

"The housing recovery may have taken a breather due to the cold weather," said David M. Blizter a chief analyst for Dow Jones, add home prices overall have risen 23 percent since their bottom in 2012.

The effects of a tight market have already driven the median Louisville metro home value one percent higher overall, to just under $130,000, compared to this time last year, according to Zillow.

Now, while consumer confidence grows among some buyers, mortgage applications are increasing as a result, particularly from two-income families who feel secure in their jobs, said Nick Ellis, branch manager of Benchmark Mortgage.

Money remains cheap, with interest rates for a 30-year fixed mortgage staying in the 4.5 percent range. And the market "is warming," Ellis said. "From 2009 until the beginning of 2012, the buyer had all the leverage. Now that excess inventory is gone, the sellers have the upper hand."

Higher-than-average snowfalls and freezing temperatures brought the local real estate market to a crawl in January and February, real estate agents say. Plus, it can take months to repair a home, find a Realtor, list it for sale and prepare for mortgage approval to buy another.

Keller Williams Realtor Shamus Greene said he worked part time selling real estate until recently, when the market has become more steady.

"People are still lethargic and they are not educated that this is a good time to sell. Homes that are priced and presented well don't last," Greene said. "We are coming off the edge of the recession. Sellers who take that leap of faith right now are being rewarded."

So in many instances, local sellers are just now ready to sell, and those who began preparing in advance could profit from tight supply, said Ellis, who suggests that potential sellers "hurry up. ... "You want to beat the people who are doing the same thing as you."

He predicts that by mid to late year, the Louisville housing market could return to a balance not experienced since 2004.

"I am hoping that we are hitting the equilibrium point in 2014 where we see a return to normalcy where neither the buyer nor the seller has the major upper hand, where you list your home and get within five percentage points and sell within a reasonable time period of 60 days to get it under contract," he said.

Meanwhile, in sought-after neighborhoods like St. Matthews, the Highlands, Crescent Hill, lower Brownsboro Road, and Indian Hills, home sellers are getting immediate response to listing, said Trevor Clines, co-owner of The Closing Group, a local, privately-owned firm that facilitates real estate transactions.

"It seems like if you put a sign in your yard, you will get some bites," Clines said. "It's the complete opposite of a year and a half ago. The best way to explain it is supply and demand."

Jere Downs can be reached at (502) 582-4669, Jere Downs on Facebook, and Jeredowns on Twitter.