Our industry specialist has reviewed and approved the final article. Also, some of the data presented here have been integrated into the Louisville real estate spreadsheet template.
Thinking of buying in Louisville? Get our financial spreadsheet tailored to this specific market.
Thinking about investing in Louisville real estate in 2025? You're on the right track.
Despite economic shifts, Louisville's property market shows promising stability, with demand and growth potential on the rise.
In this blog post, we will explore why investing in Louisville real estate is a wise decision for 2025.
We rely on solid, up-to-date data and statistics from multiple credible sources to support our analysis.
By the end, we will present our own conclusions based on a comprehensive review of the information. Enjoy the read!
How this content was produced 🔎📝
This article offers thoughtful insights and analysis based on reliable sources, but it should not be considered financial advice. We work hard to research, compile, and analyze data to give you a well-informed perspective. However, as you can guess, our analysis involves subjective choices, such as source selection and methods, and it cannot fully capture the market's complexity. Please, always do your own research, consult professionals, and make decisions based on your own judgment. Any financial risks or losses are your responsibility. Additionally, you should know that we have no affiliation with the sources mentioned, ensuring our analysis is completely impartial.
1) Louisville's "vacancy rate" is just 8.0%, showing it's a bustling and competitive market
Signal strength: strong
The vacancy rate in Louisville is currently at 8.0%, which is considered very low. This low vacancy rate indicates that the market is highly occupied and competitive, suggesting strong demand for rental properties.
When demand is high, it often means that properties are rented out quickly, reducing the risk of long vacancy periods for landlords. In Louisville, well-maintained single-family homes in areas like the Highlands are particularly sought after.
These types of properties tend to attract tenants looking for a suburban feel with access to city amenities. As an investor, this means you can expect consistent rental income and potentially higher returns on your investment.
If the vacancy rate were to rise above 10% or more, it might indicate a less favorable market for property investment.
Sources: NeighborhoodScout, DataUSA, USCensus
2) Louisville has a "livability score" of 66, indicating it's a pleasant place to live
Signal strength: moderate
The livability score of 66 in Louisville is considered good, indicating a favorable environment for residents. This score reflects the city's affordable cost of living, which is lower than the national average, making it attractive for potential homeowners and investors.
Additionally, Louisville boasts a strong sense of community, with numerous local events and festivals that foster a welcoming atmosphere. The city's rich cultural heritage, including its renowned bourbon and horse racing traditions, adds to its charm and appeal.
These factors contribute to a stable and growing real estate market, suggesting that buying property here could be a wise investment. However, if the livability score were to drop below 50, it might indicate underlying issues that could affect property values negatively.
Source: AreaVibes
We created this infographic to show how property prices in Louisville compare to other big cities in Kentucky. It shows the median price as well as the price per sqft, making it easy to see which places might offer the best value. We hope you find it helpful.
3) Louisville's infrastructure projects, like Beecher Terrace Phase IV and Waterfront Park Phase IV, are expected to increase real estate values by 2026
Signal strength: moderate
Several infrastructure development projects in Louisville, Kentucky, are poised to boost real estate values by 2026, making property investment in the area a promising opportunity.
One such project is the Beecher Terrace Phase IV, which involves the construction of 210 multi-family apartments and townhomes. Scheduled for completion by Fall 2025, this development is expected to revitalize the neighborhood around 1100 Fisk Street, potentially increasing property values due to improved housing options and community appeal.
Similarly, the Yard Apartments project, featuring 190 apartments and a 118-space garage, is set to be completed by Spring 2025. This addition is likely to boost the attractiveness of the area around 320 South Shelby Street, enhancing real estate values through increased demand for modern living spaces.
The Waterfront Park Phase IV expansion, with its 22-acre extension including green spaces and walking paths, is another key development. The first phase, PlayPort, is expected to open by Spring 2025, offering recreational amenities that can elevate the desirability of properties near 10th Street & Rowan Street.
Moreover, the Kentucky Exposition Center Renovation, featuring a new multi-purpose building and redeveloped facilities, is anticipated to be completed by the end of 2026. This project could significantly enhance the area's appeal, driving up real estate values around the Kentucky Exposition Center.
Sources: Louisville Downtown, Spectrum News, Go To Louisville
4) The population in the Louisville metro area is on the rise, increasing by "3.1%"
Signal strength: moderate
The Louisville metro area's population growth, marked by a projected 3.1% increase over the next five years, is a strong indicator of economic vitality and potential for property investment.
Population growth often correlates with increased demand for housing, as more people moving into an area typically need places to live. This demand can lead to rising property values, making real estate a potentially lucrative investment. As the population grows, the need for infrastructure, services, and amenities also increases, which can further enhance property values and attract more residents and businesses.
Moreover, a growing population can stimulate the local economy by boosting consumer spending and attracting new businesses, which in turn can create jobs and further drive demand for housing. This cycle of growth and development can make the Louisville metro area an attractive market for real estate investors looking for long-term gains.
While the city of Louisville itself has seen a slight decline in population, the broader metro area's consistent growth suggests a positive outlook for the region as a whole. This trend indicates that the surrounding areas may offer opportunities for investment, as people might be moving to suburban or neighboring areas within the metro region.
Sources: Macrotrends, Synergos Technologies, World Population Review, Kentucky State Data Center
Our team designed this infographic to show how competitive the real estate market in Louisville is vs. other major cities in Kentucky. It shows the percentage of sales above the list price, a key indicator of market competition.
5) Airbnb or "short-term rental" in Louisville offers a fairly appealing profitability rate of 5.0%
Signal strength: moderate
The cash-on-cash return of 5.0% in Louisville indicates that the income generated from renting out a property is relatively high compared to the initial investment. This percentage suggests that property owners can expect a moderate return on their investment, making it an attractive option for those looking to enter the real estate market.
Louisville attracts a variety of short-term tenants, including tourists visiting for the Kentucky Derby, which is a major annual event. Additionally, the city hosts numerous conventions and business travelers, contributing to a steady demand for short-term rentals throughout the year.
Families and individuals visiting for cultural and historical attractions also seek accommodations, further supporting the rental market. This diverse range of visitors ensures a consistent flow of potential renters, enhancing the appeal of investing in Louisville properties.
If the cash-on-cash return were to drop below 3.0%, it might indicate that the investment is less favorable, as the returns would not justify the initial costs.
Source: Mashvisor
6) A 5.0% "cash-on-cash return" for long-term rentals in Louisville is reasonably appealing
Signal strength: moderate
The cash-on-cash return of 5.0% in Louisville indicates a moderate level of profitability for real estate investments.
This percentage suggests that investors can expect a reasonable return on their initial cash investment compared to other markets. In Louisville, the rental market is supported by a diverse group of long-term tenants, including students from the University of Louisville and young professionals working in the city's growing industries.
Additionally, families looking for affordable housing options contribute to the steady demand for rental properties in the area. This consistent demand helps maintain occupancy rates, which is crucial for ensuring reliable rental income for property owners.
If the cash-on-cash return were to drop below 3.0%, it might indicate a less attractive investment opportunity in the Louisville real estate market.
Source: Mashvisor
This infographic we have made will show you how market values have changed during the last decade in Louisville vs other major places in Kentucky. Here, the percentage increase or decrease in market value will help you see long-term trends.
7) Louisville's median home price is significantly lower, at 31% less than the national average
Signal strength: minimal
The fact that Louisville's median home price is 31% below the national average suggests that there is room for growth in property values. This means that investors have the opportunity to buy properties at a lower cost compared to other markets, potentially leading to higher returns as the market catches up.
In Louisville, luxury homes in areas like Norton Commons are likely the most expensive due to their desirable location and amenities. On the other hand, smaller, older homes in neighborhoods such as Portland are probably the cheapest, offering a more affordable entry point for investors.
These lower-priced properties can be attractive for first-time investors looking to enter the real estate market without a significant financial burden. As the market grows, the value of these investments could increase, providing a solid return on investment.
If the median home price in Louisville were to rise to match or exceed the national average, it might indicate that the market is no longer undervalued, potentially reducing the attractiveness of investing there.
Source: Zillow
So, is investing in real estate in Louisville a solid option in 2025? Absolutely!
Investing in Louisville's real estate market in 2025 is a promising opportunity.
With a low vacancy rate of 8.0%, the market is bustling and competitive, ensuring properties are rented out quickly. This means consistent rental income and reduced risk of long vacancy periods for landlords. Additionally, the city's livability score of 66 highlights its appeal as a pleasant place to live, with an affordable cost of living and a strong sense of community.
Infrastructure projects like Beecher Terrace Phase IV and Waterfront Park Phase IV are set to boost real estate values by 2026, making now a great time to invest. The 3.1% population growth in the metro area further supports the demand for housing, driving up property values. Moreover, the cash-on-cash return of 5.0% is appealing, offering a reasonable return on investment.
Finally, with median home prices 31% below the national average, investors can enter the market at a lower cost, with potential for significant returns as the market grows. All these factors make Louisville a solid choice for real estate investment in 2025.
Related analyses:
- Here is why prices are going to climb in 2025 in Louisville