Real Estate Agent · Louisville, KY · Member since 2016 · 183 posts · 188 votes
Great article on the prospects of the Louisville real estate market in 2019 and beyond. It's truly one of the best markets in the country due to its affordable housing, its combination of inflationary factors and its landlord-friendly laws. What are your thoughts on the market and its long-term prospects?
Curious what your thoughts are on how homogeneous this growth is between the west and east sides of Louisville?
The article looks at the city as one large area, but looking at the more granular data it seems that the east side is not getting the same growth as the west.
Data from the census bureau actually suggests that, for example, median home values have decreased in the eastern Louisville area, while in the west prices have gone from 175k to 216k over the past 8 years.
@Art Perkitny Great question! As with any market, there are areas that will experience greater appreciation than others. As you mentioned, the east end, on average, has experienced greater appreciation than the west end. However, east-end properties in areas such as the Highlands, Crescent Hill, St.Matthews etc. might not cash flow as well as properties in neighboring communities. Areas such as Smoketown, GermanTown and Shelby Park have gone through a revitalization in recent years and many investors have capitalized on opportunities in those sub markets to maximize their cash flow while still experiencing sizable appreciation. In the west end, opportunities in those sub markets offer the potential for higher cash flow and cash on cash return. For example, its not uncommon to see single family homes in some parts of the west end go for under $30,000. However, rents for a 3-bed 1 bath property range anywhere from $550 - $800+ per month. Having said that, vacancy rates in the area tend to be higher and the financial solvency of prospective tenants may not be as strong. It really depends on your overall investment strategy and whether you're after strong cash flow or a combination of appreciation and equity build up.
It's defiantly important to note the increased risk that an investor will take on when allocating into higher yield area such as west Louisville.
For anyone interested I have included resources below:
The 1st link below is to an map image showing the change in home values from 2010 to 2018 at the tract level.
The 2nd link shows what you had mention regarding yields, it shows the rent to price ratios for the same areas. Predictable the west side has higher ratios than the east side.
All data comes from the Census Bureau American Community Survey