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.
1) Louisville's "vacancy rate" of 8.0% shows a bustling and competitive market with most spaces filled
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
Thinking of buying in Louisville?
We have a real estate spreadsheet fully tailored to this market. Get it now.
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
How much cash flow can you generate in Louisville?
Get a clear view of your next investment, with all the metrics explained and reviewed accurately.
5) The "cash-on-cash return" for Airbnb in Louisville, at 5.0%, is fairly appealing
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) The "cash-on-cash return" of 5.0% in Louisville is fairly 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
Get our spreadsheet tailored to Louisville!
Our tool covers everything: NOI, COC, Cap Rate, Gross Yield, Net Yield, LTV, ROI, and numerous other metrics and charts.
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 it worth buying property in Louisville? Absolutely!
Investing in Louisville's real estate market is a smart move. The city's low vacancy rate of 8.0% indicates a bustling market with high demand, ensuring properties are rented out quickly and consistently.
With a livability score of 66, Louisville offers a pleasant living environment, bolstered by its affordable cost of living and strong community spirit. This makes it an attractive place for both residents and investors, promising a stable and growing real estate market.
Upcoming infrastructure projects, like Beecher Terrace Phase IV and Waterfront Park Phase IV, are set to boost property values by 2026. Coupled with a 3.1% population growth in the metro area, these developments signal a thriving economic landscape.
The cash-on-cash return of 5.0% for Airbnb properties highlights the profitability of short-term rentals, driven by a steady influx of tourists and business travelers. Additionally, Louisville's median home price is 31% below the national average, offering investors a cost-effective entry point with potential for significant returns.