Two and a half years ago I wrote an article about investing in Germantown real estate. I spoke about the sub $75,000 price tags on 2 and 3 bedroom bungalows and shotgun homes in the 40217 zip code, and how it would be a great idea to purchase these, fix them up, and make a serious profit. I’m sure that you all listened to me, and you’ve now successfully made tons of cash by investing in Germantown real estate. Those low prices don’t exist much anymore in Germantown. Louisville’s real estate market has exploded over the last 3 years and this is especially true for the Germantown area. Let’s look at the numbers, the how, and the future of Germantown real estate.
NUMBERS
The Louisville real estate numbers are way up across the board, but the Germantown numbers have catapulted into a different dimension when compared to the rest of the city. Looking at the chart below just keep in mind that these are only single family homes; no multi-family or condos were included. All the numbers tell a pretty incredible story, however there are a few specifics I want to draw your attention to.
- Total Sales – The total number of single family homes sold in Louisville’s 40217 zip code jumped by 33% from 2011 to 2015. People caught on and saw that there were bargains to be had in Germantown.
- Median Sale – The median sale price in Germantown has increased by an astounding 28% since 2011. That’s more than 5.5% per year, which is certainly outpacing the rest of the city.
- Days on Market – This is absolutely huge. The average time that a home sits on the market in Germantown has gone from 93 days to 28 days in the last 5 years. Currently, there are only two zip codes in Louisville that average 28 days or less on the market: 40242 and 40217.
One must also wonder about the fact that the highest sale price this year is the same as last year. Is Germantown leveling off? Does this mean that the potential for return on investment is dwindling in Germantown? I would say yes and no. The fact remains that the 40217 zip code is large, and there are still plenty of homes that need to be updated and/or completely renovated. So, while the potential to make a significant return still exists, I do believe that the margins will be less than they were in 2014 and 2015. Looking at the low price can be deceiving. There are and will be foreclosure homes selling at incredibly low prices all across the city. The number of them have decreased, which is a good thing for the economy.
If you look a little harder at the Germantown home sales during 2011 you find that 71 out of the 166 sales were below $100,000. That’s 43% of all 2011 Germantown home sales were less than $100,000. Digging into the 2016 numbers a bit more, only 31 of the 210 homes sales were below $100,000. That’s a little less than 15% of the total Germantown home sales this year. You can see the shift here.
HOW?
Curious as to how Germantown did it? Think about this: What makes a great neighborhood great? I would say that there’s a whole bunch of stuff, most of which can be easily condensed into 2 categories:
- Proximity – Location is key. Everyone knows that. So, how close is your neighborhood to things that matter? Germantown is close to the main University of Louisville campus, downtown Louisville, and the Highlands. U of L has more than 22,000 students, and they definitely don’t all live on campus. The Highlands is not only a popular, thriving neighborhood, but it has one of the most steady housing markets in the region. Germantown can certainly reap the benefits of being next door neighbors with such a place. Proximity to downtown is always a great thing. It’s being close to the Ohio River, major Louisville employers, and an increasingly popular dining and event scene. Germantown is central to all these things.
- Amenities – What can you do in your neighborhood without having to go to another area of Louisville? If you can walk, eat, shop, and enjoy activities in your neighborhood without leaving, people will pay money for that. Over the last 3 years Germantown has seen revitalization from all angles. Boarded and beat up businesses have been restored to new glory. The Post and Monnik are two that come to mind immediately, but the shear number of restaurants has increased tremendously. The Germantown Mill Lofts transformed a historic warehouse into hip apartments. New coffee shops, and pubs mark the streets, and for a bonus, the Germantown Kroger has some of the best prices in the city.
There are 3 key signs that your neighborhood is becoming the next hot spot: 1) New businesses are moving in. This includes restaurants, boutiques, coffee shops, and pubs. 2) Homes that are listed for sale are selling faster and faster. 3) Homes are being renovated with modern details. Sounds like the last 5 years in Germantown.
WHAT DOES THIS ALL MEAN?
In plain English, Germantown is smoking hot. If you invested a few years ago, you should be able to realize a nice profit when you go to sell your home. If you’re thinking about investing now, it’s possible, but much more difficult than it was. Instead, try looking for the next big thing (Hint: it will be near Germantown). The bottom line is that real estate investing is all about buying the home properly. You need to know the numbers, which means you need a good Realtor. If you have ever wanted to invest in real estate, whether it’s flipping homes or holding rentals, I would be happy to speak with you about the possibilities. There are a lot of opportunities in the city of Louisville, you just need to know where to look!
Justin Thomas – The Thomas Group at Keller Williams Louisville East – 502.417.1255 – justin@metrolouisvillemls.net
Highlands Home Place 