Today’s track: The Weight — The Band (take a load off — the payment kind)
6.65%.
That’s the 30-year fixed as of Freddie Mac’s Thursday survey — down from 6.67%, second straight week of declines. Not a headline number. But small numbers move big ones, so Friday I sat down and ran the actual math on the actual median Louisville home.
Median sale price in July: $287,750. Put 20% down and finance $230,200 at 6.65%, and the principal-and-interest payment comes to about $1,478 a month. Add Jefferson County taxes and insurance — call it roughly $400 — and you’re near $1,880, all in. (Ten percent down instead? About $1,662 P&I plus PMI. FHA at 3.5%? About $1,782 plus the fees. The point survives every down payment.)
This is where Louisville stops being a local story.
NAHB and Wells Fargo publish a Cost of Housing Index every quarter — what share of income the typical American family spends on the mortgage for a median-priced home. The Q2 number: 34% for a new home, 36% for an existing one. A family earning the national median income of $106,800, spending more than a third of everything they make on the house.
Run Louisville through the same machine. That same $106,800 family buying our $287,750 median home at 6.65%? All-in payment lands around 21% of income.
21 versus 36. Same country. Same rates. Same year.
Put the gap in dollars, because percentages are easy to nod at and hard to feel. Fifteen points of a $106,800 income is $16,020 a year. That’s $1,335 a month a Louisville household keeps and a coastal household hands to a lender. Over the seven years the average American stays in a house, it’s north of $110,000 — a college fund, a paid-off rental, or just the ability to say yes when your kid asks about the trip.
That’s not a rounding error. That’s a different life. That’s the gap between “we can afford the house” and “the house is why we can’t afford anything else.” And it’s the quiet engine underneath everything I showed you Monday — why 31% more inventory hasn’t dented the median, why I keep saying prices here have a floor. A market this affordable, in a country 1.2 million homes short, doesn’t stay undiscovered.
The people moving here from the coasts already did this math. They walk into a $287,750 house and their calculator thinks it’s broken.
Now let me argue against myself, because somebody is going to. That 21% runs the national median income against our prices. Louisville’s own median household income is closer to $66,849. Put our $1,880 payment against that and you land near 34% — basically the national burden.
So which number is real? Both. They answer different questions, and you should know which one applies to you before you let either one make you feel good or bad.
The 21% is the relocation number. It’s what a remote worker on a national or coastal salary experiences the day they land here, and it’s why transplants keep showing up and why our prices have a floor under them. The 34% is the local number. It’s what a median Louisville household actually feels buying a median Louisville house today — and it’s why I spend so much of this newsletter on four-bedrooms under $250,000, house hacks, duplexes, and seller financing instead of just telling you the market is cheap.
Louisville isn’t cheap because our incomes are high. It’s cheap because our prices are low. Those are two different advantages, and only one of them travels with you.
One more number worth carrying around, since rates are the variable everybody watches and nobody controls. On our $230,200 loan, every quarter point is worth about $38 a month. At 6.15% the payment is $1,402. At 6.40%, $1,440. At 6.65% — today — $1,478. At 6.90%, $1,516.
A full point down from here — back to 5.65% — takes it to $1,329. That’s $149 a month, about $1,790 a year, riding on something no one can promise you. Which is the whole argument for buying on a payment you can carry today and refinancing if the gift shows up, instead of waiting for a number. Every quarter point you wait on is also a quarter point the next buyer gets to bid against you with.
So what do you do with a 21% city? If you’re buying, stop shopping the sticker and start shopping the payment. Two houses at the same price can sit $150 a month apart once you account for taxes by neighborhood and what the seller will do on the rate. Ask for the buydown before you ask for the discount.
If you’re selling, understand what you’re actually sitting on. Your buyer pool includes people whose calculator says 21% — and those people are not haggling over $3,000. Price to reach them and you find them faster than you’d think.
And if you’re investing, this is the number the spreadsheet people on the coasts are staring at right now. Cheap payments relative to national income is what makes a rental market work. It’s why capital keeps finding Louisville, and it’s why I’d rather own here than almost anywhere I can name.
Want your own version of this math — your income, your price range, your neighborhood’s tax rate? That’s a thirty-minute conversation and one of my favorite ones to have. Grab a time with me here.
So Monday was the argument, Tuesday was the leverage, and today is the foundation: whatever the market does quarter to quarter, Louisville remains one of the last major American cities where the median family comfortably affords the median home. I plan to keep saying that until it stops being true. Based on the math, I’ll be saying it for a while.
📊 Yesterday’s poll:
New here? Every morning I screen the whole Louisville MLS and rank the five best deals and five lowball plays. Readers get it by replying “FIVE.” Zero cost, zero pitch — I just like sending people good numbers.
With Enthusiasm,
Rob Bergeron
Owner–Realtor at Award-Winning Winner Realty
Winner Realty | OffMarket.deals | Property Partner Data Company
Schedule time to discuss your goals, bottlenecks, or whatever’s on your mind — book me here.
PS: 123 4 bedroom properties under $250,000. Quads and Apartments under $400,000. 22 land deals offering seller financing. The amazing options at Winner Realty!
PSS: We are hiring! We are looking for associate brokers for Kentucky and Southern Indiana. Hit me up! It’ll be fun, I promise! You need some excitement in your life!