Best of the MLS & Louisville RE Market Watch 6-1-18
Today's Best of the MLS
1 New Vacant Property (since yesterday)
3 New Multi-Family - one is a newer 12 unit for ~$60k per door (3 bedroom units in Shelby Park)
Top 3 Cash Sale Zip Codes in Louisville, KY
Cash sales in Jefferson county haven't changed drastically over the past year despite the tighter inventory. For perspective over the past several years there are typically 2 to 4 cash sales a day in Louisville, KY. The hottest area for cash buyers in the first quarter of 2018 was the 40215 zip code. Taking second & third place was 40216 and 40207 respectively, and 40211 earns an honorable mention. In order, the numbers were 182, 160, 146, and 140 cash transactions.
Hot Flip Areas -
What makes a hot flip area? Big margins! The hottest locations are where you can sell for the biggest returns. No brainer right? Maybe. I picked two winners for The Hottest Remodeling Area in Louisville. Let me explain. The area that offered the highest percentage return isn't necessarily the best market for several reasons. Sometimes absolute dollar returns make more sense than percentage returns. First place on a potential percentage return basis is zip code 40211 with a whopping 81% difference between the purchase price and the ARV (After Repair Value). Ahem. That amounts to only a $57,000 difference between the buy and sell side. When you consider how worn-out the low end properties are in this market the huge percentage return belies the reality that you will struggle to put $20,000 in your pocket. First place for the highest potential dollar return basis is zip code 40222. The typical worn out property in this area sold for $230,000. The upper end of this market is retailing much higher at $378,000 or $148,000 higher! That's a 39% spread between the low-end worn out property and the fixed-up remodeled end of the market. If you are wondering about my methodology it can't be described as 'rigorous' but it's one an appraiser might use. I picked the median size house (gross living area) in a zip code as a starting point and used houses +/- 10% the size of the median house and 1 years of sales data. I limited yard sizes to make sure properties with big yards or acreage weren't inflating my numbers and I threw out some outliers here and there. It is a fast and dirty analysis.
Contrary to perception the number of REO properties increased in Jefferson Co. by 5.5% in the first quarter of 2018 compared to the same period last year. It's no surprise that prices are up but just slightly at 1.3% (median price) in this segment. For perspective, prices for residential properties overall in the county are up 5.5%. That's not a typo. The number of REO properties is up 5.5% and coincidentally single-family residential prices are up 5.5% too.