Today’s track: Wondering Why — The Red Clay Strays
Louisville got a report card this week.
On Tuesday, NAR launched a brand-new quarterly index — the Commercial Real Estate Demand Index. It scores all 306 metro areas in the country on the stuff that drives commercial demand before it ever shows up in vacancy or rents: job growth for office, industrial, and retail, plus population and migration for multifamily. 100 is average. Above 100, you’re outpacing the pack. Below it, you’re trailing.
Louisville scored 94.5.
That’s 225th out of 306. Down 5.1 points from a year ago. Our strongest driver? Retail — at plus 0.3. Barely a pulse.
Look around the neighborhood and it stings a little more. Nashville: 114.9, sixteenth in the country. Lexington: 106.0, seventy-fifth. Cincinnati: 103.9. Even Indianapolis edged us at 96.3. The number one metro in America is St. George, Utah at 128 — and the strongest big metro is Raleigh at 121.4.
So Louisville is slow. The index says so.
Here’s what the index doesn’t say.
It measures momentum — jobs added, people moving in — relative to everyone else. It doesn’t measure whether the numbers on a deal actually work. Those are two different things. St. George scored a 128. Go try to find cashflow in St. George. Go find a duplex there where the rent covers the note. I’ll wait.
Louisville doesn’t score well on momentum. It never has. That’s the discount.
And here’s the thing about a scoreboard built on last quarter’s data: Tuesday morning — the same day NAR published our 94.5 — shovels went in the ground on Anthro Energy’s advanced battery materials plant. More than $40 million. 110 full-time jobs. The Governor standing right there. They’re calling it the first large-scale U.S.-owned advanced electrolyte production facility in the country. In the country. That’s not in the index yet. It will be.
The markets at the top of that list get priced like markets at the top of that list. The ones near the bottom are where a property can still pay you to own it. It’s the same reason the market everyone said was frozen kept closing deals all spring.
Same scoreboard. Different game.
The New York Fed released its Q2 household debt report. New foreclosures: 55,160 for the quarter. That’s five straight years of increases off the floor of 8,100 in Q2 2021, back when foreclosures were basically illegal. The headlines write themselves. Ballooning. Financial strain. Pick your favorite.
Now the frame. Q2 2019 — the before times, the boring, healthy market — had 65,920. We’re still 16% under that. Q2 2014 had 115,300. We’re at less than half. And the share of mortgages 90-plus days late? 0.99% — the exact same level as 2018 and 2019.
Same exact numbers. Different frame. And the frame is half the battle.
That’s not a wave building. That’s the moratorium hangover ending — the pipeline refilling to normal. If you’re waiting on 2008 prices, you’re going to be waiting a long time. If you’re a buyer, this is what opportunity coming back slowly looks like. Nobody rings a bell. You just have to be at the table.
And since I had all this data out anyway — the local scoreboard is telling the same story, if you read the right line.
June was a good month in Greater Louisville. 1,638 closings, up 10.5% over last year. New listings up 12.3%. Year to date, sales up 6.1%. Inventory up 35.4%, months’ supply from 2.5 to 3.3. If you stopped reading there, you’d think we were rolling.
Then July happened.
Closed sales: 1,612 — up 3.2%. The growth rate fell by two-thirds in thirty days.
Pending sales: 1,126. Down 24.3%. In June, pendings were up 5.8%. That’s a thirty-point swing in one month.
Pendings matter more than closings and almost nobody reports them. A closing is a deal that got written back in May. A pending got written last week. One is a photograph of the past. The other is the windshield.
My own weekly count agrees with the windshield. August 9 through 15 last year: 347 sales. Same week this year: 277. Down 20%.
Meanwhile the shelves keep filling. Inventory climbed to 4,480 in July — months’ supply at 3.5, the most we’ve carried since around 2016. This year we’ve listed 17,317 homes and sold 10,020. Last year that gap was 5,487. Now it’s 7,297. Call it 1,800 more houses piling up than a year ago.
And sellers are still getting 98.4% of list. Prices haven’t broken. Something else has.
Here’s the part I haven’t seen anybody write about. Jefferson County showings last month, by price:
Under $200,000 — down 24.5%. $200,000 to $350,000 — up 3%. $350,000 to $600,000 — up 15.4%. $600,000 and up — up 41.5%.
Read it again. The cheap houses are getting ignored and the expensive ones are getting mobbed. That’s backwards from what everybody assumes a cooling market looks like.
The affordability index explains it: 110 — the lowest reading on a chart that starts in 2007. The entry-level buyer isn’t negotiating. They’re disqualified. The $600,000 buyer has equity and doesn’t much care what the rate is.
We don’t have a slow market. We have two markets pointed in opposite directions.
So, practically. Selling under $250K? You’re competing on payment, not price — a rate buydown moves that buyer, a $5,000 price cut does not. Selling over $500K? Best foot traffic in years; don’t panic-price off a national headline. Buying? Median’s $310,000, up 5.1%. Prices haven’t broken — leverage has. Ask for terms, not discounts.
Health Update
I had a CT scan yesterday to see how we are doing. Results came back glowing, is that a pun? I don’t exactly know how CT scans work, relative to the PET scan. Anyway, thank you for your thought’s, prayers, and curiosity! I feel happy, very whole-complete, and fulfilled right now. This time with the cancer and the chemo has been some of the best of my life. Never felt so sure of myself. What a feature the experience has been!
One more thing before I let you go.
Sometime this week, the number of people who open this newsletter every morning passed the Courier Journal.
If you’re not from here: the Courier Journal is Louisville’s newspaper. Not a newspaper. The one. Founded in 1868, a wall full of Pulitzers, the city’s front page for going on 160 years.
Here’s the part I can’t get over. I stopped following the Courier Journal this week. Not for the symmetry. I stopped following because I was getting the privilege of being advertised at. I don’t care to hear the McRib is back. I never cared it left.
Nobody left the Courier Journal because the writing got worse. The writing is good. People left because the way they get information changed, and the paper kept charging for the old way.
That’s the MLS.
The MLS was a great product for a world where the only way to find a house was to ask somebody who had the list. That world is over. The list is on everybody’s phone. What’s scarce now isn’t the listing — it’s the deal that never gets listed.
Same story. Different scoreboard.
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You don’t pay me a dime. You just show up and let me think out loud at you.
I appreciate every one of you taking the time to follow along with whatever my brain is chewing on that morning. Thank you.
📊 Yesterday’s poll: No poll yesterday — that one’s on me. The streak restarts today.
Would you ever buy a foreclosure?
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: Inventory watch: Jefferson County actives hit 2,305 in July, up from 1,719 back in February. The shelves are restocking. Are you a buyer or seller this fall? Looks like a great day for Jay’s if you ask me.
PSS: I’m sure you already read about my neat relationship with The Red Clay Strays.
PSSS: Create something this weekend and tell me about it on Monday.