Not all real estate is created equally and some is more liquid than others. In this case I'm focusing on nice, attractive, well-built, houses coveted by the successful in the $300,000 and up price range.
I have analyzed several developments and areas, 15 to be precise, with special consideration to three primary indicators of market strength. These indicators, when combined, paint a telling portrait of supply and demand, and market health.
My key indicators are as follows- "Days on market" refers to the number of days it takes to sell a home. The lower the better. "Inventory" refers to the supply of houses and I prefer to consider it in terms of how many months supply there is based on sales in the past quarter and the past year. Finally, the "x factor" accounts for all the listings that expired or were canceled. I consider this my "struggle" factor. As a general rule, an "x factor" under about 1.5 is good with 2.0 or above bad. The lower the better.
One of my favorite locals historically for ‘liquid’ real estate is the Indian Hills area. It sits just north of Brownsboro Road (Hwy 42) just inside the Watterson Expressway (I-264). These aren’t cheap seats either. In 2009 the median home price was $437,500. In prior years these houses sold in 65 days or less and from 2003 to 2006 they sold in less than 50 days typically. Now under stress, the typical marketing time rocketed to 158 days in '09 but it's back down to 119 days so far this year. The "x" factor has remained respectably below 1.5 during the entire time and now sits at just 1.2.
A little farther out, near anchorage, sits Owl Creek just south of Old Lagrange Rd. and north of Middletown (Shelbyville Rd.). With a median price of $325,000 this subdivision was a strong performer in 2009 and only has a 4 month supply of homes on the market, the lowest of the 16 subdivision and areas I sampled for this piece. It's "x" factor was the second lowest at an even 1.0. It took just over 100 days to sell a house there in '09 but otherwise performance was very good.
Turning back towards town I found a rock star performer- Crescent Hill. It's epicenter is Hillcrest Ave. & Frankfort Ave. It's the cheapest subdivision analyzed with a median price of just $247,000. It's high mark? It took the typical home just 50 days to sell with a respectable "x factor" of 1.2. It is doubtful if this trend will continue as strongly in the near future because it has a relatively high inventory of about 10 months supply.
For good measure I thought I'd throw in a high profile Oldham County subdivision. I'm including it for name recognition, not for it's performance, or lack of. Hillcrest, which lies on the north side of Hwy 42 between Prospect and Goshen gets a "weak" rating in my analysis. It has a median price of $502,450 which is the highest of the developments I analyzed. Typically, it took 152 days to sell a house in this pearl of Oldham. While it's "x factor" remained just inside the safe mark of 1.4 it has an 11 month supply of houses on the market. If you have to sell, this would not be a nice place to live.
The poor performer award goes to... Locust Creek. With a median price of $492,500 and the momentum of the 2008 Homeramma in its favor, I only wonder how a development could do a bigger belly-flop. If you live here and you want to move, sit down for the next line. The typical marketing time is 254 days and there is a full one year supply of houses on the market already. The "x factor" is 2.1 which ranks poor and my heretofore undisclosed "strength indicator" (more on this perhaps in another post) identifies it as the worst performer by a significant margin. This is a real Wizard of Oz development at the moment because it will make you want to tap you shoes and "go home"- to somewhere else.
Subdivision Strength Ranking (click here for chart)
Subdivision Strength Ranking (click here for chart)
Finally, for perspective, the typical marketing time in Jefferson County is 132 days with a baseline ‘x’ factor of 1.2. When you consider the median sale price in the county is $133,900 over the same period as my other examples it is evident that there are some neighborhoods in Louisville where you can sink a substantial amount of money into a house yet enjoy the liquidity usually afforded only to less expensive properties.
