General Question: How would you say is the real estate market´s health in Louisville

10 Replies

@Pavel Reyes Valdes  

I have heard nothing but praise-worthy admiration of Louisville from my hip friends in the city. For instance: check out this video.

I do think that in the next 3-5 years we will see a great migration of Brooklyn-esque types who can no longer afford Brooklyn, and are closing in on their 3rd child. 

While this would not suggest that cap rates or rent/value ratios are in good shape, I would say Louisville is a good bet for young growth, and that often comes with appreciation and rising rent prices.

I don't make decisions based on 'Castles in the Sky' appreciation, but if it's an area I believe will grow vs. something that's stable alone, I go with the growth.

I was thinking about this the other day too.   I'd like to get some demographic growth (or loss) data on the population, aging, etc.   I believe the City Data site has this.  I'll try to look it up when I have a moment.  Of course, there will always be better and worse areas within any city.

@Pavel Reyes Valdes I grew up there, here is my take.

Louisville historically is an old manufacturing city. In its prime GE employed something like 50k people and today it's less then 5k. Fall city brewery, Phillip Morris, Colgate, etc filled in the rest of the jobs that made Louisville boom during the 50-60s. Today all of that is gone.

Just guessing the number one employer is probably Humana. After that maybe YUM brands or UPS. I know AT&T has a call center there as well. But none of this is even close to filling in the the jobs of the manufacturing era.

Pull up a job search engine and compare the number of jobs in various fields across Louisville compared to other cities and you will see a lack of opportunity and a lack of pay.

From time to time they try to revitalize areas, 4th street live for example, but that In my opinion isn't enough.

Of course if you find a deal take it... But if I'm looking for long term appreciation and cash flow, then the city need industries to move back in.

Just my 2 cents.

@Brian Faulkner  - just curious how long it's been since you've lived in Louisville (profile says CA)?

I moved to Louisville in 2009 and some of the areas that were very blighted at the time (NuLu, Old Louisville, Downtown) have completely transformed from where they were 6 years ago. Does this translate to huge appreciation? Yes, but only if you bought in those areas several years ago. The general tone of your response is that there's nothing exciting about Louisville and no jobs to spur any sort of growth. My counter then is what spurred all of the growth over the past 6 years (plus 1000's of units of new construction MFR and several major hotels coming online in the next 3-5 years)? There has been significant growth in jobs over the last couple years from several new fulfilment centers as well as a brand new outlet mall and UofL continues to expand.

Louisville isn't an appreciation play, it's a cash flow play and I expect it to stay that way for a long time.  If you're trying to compare it to Austin, San Fran or Portland, then you're barking up the wrong tree.  If you want to be able to buy cashflow today and keep it for a long time, then Louisville is a great city to invest in.

@Michael Seeker  Left in 2006, but I go back at least 2 times a year... all my friends, family still live and work in that area. 

"Louisville isn't an appreciation play"

This is really how I feel about the area. If my strategy is to buy and hold... then I want income today and appreciation tomorrow.  I don't want a bunch of 50-75K that I only get cash flow from. In the long run I'm not getting above average returns, and the lack of appreciation will possibly stifle my growth as an investor because I will have less leverage to use for future acquisitions. 

The career opportunities in that city are lack luster, as is the compensation. If i were in that area and investing I would look at Columbus or Indy.

Originally posted by @Brian Faulkner :

@Michael Siekerka Left in 2006, but I go back at least 2 times a year... all my friends, family still live and work in that area. 

"Louisville isn't an appreciation play"

This is really how I feel about the area. If my strategy is to buy and hold... then I want income today and appreciation tomorrow.  I don't want a bunch of 50-75K that I only get cash flow from. In the long run I'm not getting above average returns, and the lack of appreciation will possibly stifle my growth as an investor because I will have less leverage to use for future acquisitions. 

The career opportunities in that city are lack luster, as is the compensation. If i were in that area and investing I would look at Columbus or Indy.

I have to disagree, but can see how one could come to such a conclusion growing up in Louisville and not having lived there for the past 10 years or so.

If your strategy is truly to buy and hold, then you're looking for cash flow today and tomorrow and any appreciation is a bonus.  This is exactly what you get in Louisville or Indy or St. Louis or Columbus or...fill in any other midwest city you want.  If somebody is investing remotely, then I can't really argue as to why they should pick Louisville over any other midwest city (I don't think Indy or Columbus would be my top choices though).  But for somebody living in Louisville, there's absolutely no reason to start investing in Columbus or Indy in hopes of maybe getting a slightly higher rate of appreciation.  Since the original poster is from Louisville, the reasoning for investing in any other city would have to be pretty compelling.  Your argument of no jobs and low pay doesn't seem to be founded in anything other than your perception from an occasional visit and maybe what your friends/family are telling you...please let me know if I'm mistaken.

I'm curious what is so compelling about Columbus or Indy that makes you think that these cities are poised to appreciate significantly faster than Louisville and would make for better buy and hold purchases?

I agree with @Michael Seeker  .  It's all about cash flow today and appreciation is a bonus! It's also all about doing your due diligence, running the numbers, and finding the great deals based on your individual investment goals. 

@Pavel Reyes Valdes  Real estate health of Louisville and surrounding areas is strong, not as confident about Bullitt County, but Shelby and Oldham, are doing good too. 

Over the last couple of years Louisville has definitely improved. Ford invested 1.2 billion and G.E. 800 million in facilities, plus companies like, UPS National Air Hub, YUM! Brands, Humana, UofL Nucleus, Amazon, and Forbes rated Louisville high for housing stability. 

Multi-Family A, B, and C vacancies are down, CAP rates are generally higher than on the coasts.

Retail shopping centers have done better, many of the older ones have been improved, for example, if you go by Shelbyville Road Plaza, it is an old center that a company bought and revitalized for example. Paddock Shoppes (was called The Summit), Shoppes of the Bluegrass (brand new just outside of Louisville) the Mall St Matthews and Oxmoor, still maintain large anchor tenants. Older centers not taken care of have suffered. 

Industrial absorption is up, over 2,000,000 sq ft net was absorbed in 2013. 

Office for 2013 - 9.3% in suburbs, 14.7% downtown vacancy, 14.6% overall. 

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