LOUISVILLE.EDU The State of the Housing Market in the Greater Louisville Area Louisville Housing Market By: Jose M. Fernandez Assistant Professor of Economics University of Louisville

LOUISVILLE.EDU The Recession of Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Employment and Unemployment Louisville Housing Market – 2013 Recent Past, Present, and Future June ,325 Jobs Feb ,802 Jobs Jobs Recovered 45,144

LOUISVILLE.EDU Employment and Unemployment Louisville Housing Market – 2013 Recent Past, Present, and Future Nov Unemployment Rate, 4.6% Feb 2010 Unemployment Rate, 12.3% 7.9%

LOUISVILLE.EDU Changes in Louisville employment during 2012, via Brookings Institution Metro Monitor

LOUISVILLE.EDU Jobless Recovery? Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Historically Low Interest Rates Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Historically Low Interest Rates Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Historically Low Interest Rates Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Recovery Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Policies that fueled the buying Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Present Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Present Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Slow Price Recovery Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Slow Price Recovery Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Price and Quantity Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Mortgage Loan Origination in Southern Region of US Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Mortgage Loan Origination in Southern Region of US Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Year-to-Year change by County within Louisville MSA Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Year-to-Year change by County within Louisville MSA Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Percent. Foreclosures by Geographic Location Louisville Housing Market – 2013 Foreclosures

LOUISVILLE.EDU Louisville Housing Market – 2013 Foreclosures

LOUISVILLE.EDU Median Sale Prices: Typical vs. Foreclosure Louisville MSA Louisville Housing Market – 2013 Foreclosures

LOUISVILLE.EDU By Zip Code in Louisville MSA Louisville Housing Market – 2013 Foreclosures

LOUISVILLE.EDU Future: Interest Rates and Recovery Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Future: Interest Rates and Recovery Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Future: Interest Rates and Recovery What to look out for? Inflationary concerns (currently low, but keep an eye on the price of gold) The Law of Money MV = PY M = Money SupplyP = Price Level V = Velocity of MoneyY = Real GDP Student Loan Defaults Good Job Reports Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU The Persistence of Financial Illiteracy Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After 5 years, how much do you think you would have in the account if you left the money to grow? a. More than $102 b. Exactly $102 c. Less than $102 d. Do not know * Fewer than 1/3 of young adults in the US answered this question correctly! Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU The Persistence of Financial Illiteracy Annamaria Lusardi (Dartmouth) studies financial literacy The Wall Street Journal summarizes: In fact, Americans’ grasp of concepts such as investment risk and inflation has weakened since the recovery began in mid Research released last week shows that on a five-question test (take the test here), respondents did worse in 2012 than in The average number of correct answers fell to 2.9 in 2012 from 3.0 on the test in Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU The Persistence of Financial Illiteracy Annamaria Lusardi (Dartmouth) studies financial literacy Nearly 50% of observed income differences are due to financial illiteracy These “optimally ignorant” individuals include 67% of the dropouts, 47% of the high school graduates, and 33% of college graduates. The majority of Americans do not plan for predictable events such as retirement or children’s college education. Most importantly, people do not make provisions for unexpected events and emergencies, leaving themselves and the economy exposed to shocks. Louisville Housing Market – 2013 Recent Past, Present, and Future

LOUISVILLE.EDU Conclusion Recovery Financial Recovery – accomplished Employment Recovery – SLOW Expect interest rates to rise, but stay remain low Expect housing purchase to even out and prices to rise at decreasing rate Outlook is positive, but growth will not be strong. Expect continued re-finance applications Future Watch out for inflation Help make consumers more financially literate Louisville Housing Market – 2013 Recent Past, Present, and Future