2011 ANNUAL REPORT 2010 REAL ESTATE IN REVIEW Written by Tony Lindauer Jefferson County PVA and Donna Hunt, Chief Deputy March March 15, 15, 2011 2011 Jefferson County PVA

Residential Real Estate WHAT HAPPENED TO THE REAL ESTATE MARKET? WHERE WAS THE MARKET IN 2010? WHAT IS THE FUTURE OF LOUISVILLE METRO HOUSING MARKET? WHERE HAVE WE BEEN? We started this Roller Coaster Ride of Home Values in 2008 2010 represents 39% of the total amount of foreclosures between 2008-2010 Number of Foreclosures in Jefferson County 1998 through 2010 Source: Jefferson County Circuit Court, Commissioner's Office

5,076 Sales Scheduled 4,382 Sales Held Investor-Owned Foreclosure 3,089 2,620 2,508 2,710 2,161 1,262 674 444 768 904

946 511 685 2,599 2,094 2,093 1,933 1,542 195 1,991 2,004 1,706

932 657 3,264 155 233 283 468 244 431 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1997-2010 Appreciation 2nd and

4th Quarters The graph depicts changes starting in 2008 fourth quarter until the end of 2010 4 th quarter. Appreciation was relatively flat for the year. Four-Quarter Percent Change in FHFA MSA-Level House Price Indexes (All Transactions Index, 2 nd & 4th Quarters, 1997 - 2010) 25 Louisville 20 15 10 5 5.7 5.0 4.9 5.3 4.9 4.7 4.7 4.8

4.6 4.3 4.0 4.1 3.3 3.6 3.7 4.6 5.3 3.7 2.7 2.8 2.6 2.1 1.7 -0.2 0 -0.1 -0.8 -1.0

-2.1 2010Q4 2010Q2 2009Q4 2009Q2 2008Q4 2008Q2 2007Q4 2007Q2 2006Q4 2006Q2

2005Q4 2005Q2 2004Q4 2004Q2 2003Q4 2003Q2 2002Q4 2002Q2 2001Q4 2001Q2

2000Q4 2000Q2 1999Q4 1999Q2 1998Q4 1998Q2 1997Q4 1997Q2 -5 4th Quarter 2010

2010 Appreciation Louisville Metro lost a small percentage of appreciation in the past year, but values in Louisville Metro and the surrounding MSA area is far better than the majority of comparative cities. This graph depicts 4th quarter of 2010. Four-Quarter Percent Change in FHFA MSA-Level House Price Indexes (All-Transactions Index, 2010 Q4) 3 Naples 1.9 2 1 Cincinnati 0.09 0 -1

Louisville Indianapolis -0.2 Knoxville -0.11 -0.65 Dayton -1.13 Austin -0.74 -2 Memphis -2.42 -3 -4 -5 Nashville St. Louis

-0.55 -0.43 Atlanta -4.34 Bakersfield -3.92 1997-2010 Appreciation 2nd and 4th Quarters In comparison to more volatile markets, Louisville is relatively stable. We are back to the 2008 level before the recession began. Four-Quarter Percent Change in FHFA MSA-Level House Price Indexes (All Transactions Index, 2 nd & 4th Quarters, 1997 - 2010) 50

Louisville 40 Las Vegas Naples 30 20 10 0 -10 -20 -30 2010Q4 2010Q2 2009Q4 2009Q2

2008Q4 2008Q2 2007Q4 2007Q2 2006Q4 2006Q2 2005Q4 2005Q2 2004Q4 2004Q2

2003Q4 2003Q2 -40 New Housing In Jefferson County Louisville/Jefferson County Metro 2010 Building Permits Single Family 639 Condos/Patio Homes 36 Multi-Family 18 4 New Subdivisions Recorded In 2010

Trotters Meadow Chism Trail Urton Woods Creek View Commercial Real Estate Even with the current economic downturn, several new projects were completed in Louisville during the year. The Skywalk was built to connect the Galt House hotel and Waterfront Plaza with the Yum Center. A Skywalk Garage with 860 parking spaces was completed near the the arena. American Urgent Care Holdings LLC built a 3 story building on Roy Wilkins Avenue. Patrick OSheas Public House was built on Main Street. Jefferson Community & Technical College built a 4 story instructional building for allied health programs.

for Louisville Metro Housing Authority built a Community Center Liberty Green. Commercial Real Estate New projects Continued: Sons of the Revolution renovated the NSSAR Genealogical Research Library on West Main Street. Parking Authority of River City constructed the Yum Center Garage with 760 parking spaces. Smith Investment Group II LLC renovated the Independence Building on Muhammad Ali Boulevard. TARC built a Maintenance Annex. U of L constructed a parking garage with 1,711 spaces near the Health Sciences campus. U of L renovated the Cardiovascular Innovation Institute. U of L constructed the U of L Boat House at Waterfront Park. The KFC YUM! Center Area

The area around the new KFC Yum Center is creating a lot of redevelopment for living areas, restaurants, and entertainment. Further development is underway and the planned renovation/building of Whiskey Row will certainly add to the excitement that has been generated by the arena. Manufacturing The latest industry statistics indicate the Louisville/Jefferson County area lost over 31,000 manufacturing jobs in the last decade. New development is slow. Financial markets are more strict requiring additional equity investments, however increased

production at the Louisville Ford Assembly Plant as well as General Electric are very encouraging signs for our manufacturing industry. Retail Retail continues to struggle, however; there are several areas that have some new retail. Westport Village, and Shelbyville Road Plaza are two of the newest small retail centers that are attracting new stores after major renovations. The regional malls of Oxmoor Center, Mall St Mathews and Jefferson Mall are continuing to attract new stores and vacancy rates are low. Small strip centers continue to struggle to attract new retail. Several hometown businesses have expanded to new areas. WHAT DOES THE FUTURE HOLD

for the METRO LOUISVILLE HOUSING MARKET? Future of our market depends on creating and maintaining jobs, or as Mayor Fischer would say Jobs..JobsJobs We want also to add Education..Education.Educat ion Advanced Technical Training or Interest rates willCollege probably Degree continue to edge up. As of the writing of this report current interest rates hover around 5% for a 30 year fixed loan. Most banks are requiring a 20% down payment. There are fewer homeowners in the market place. In 2000 64.9% owned Homes in Louisville. Homeownership went as high as 66.5% in 2007 and at the end of 2009, that number had dropped

to 63.6% according to the US Census Bureau. A lot of former homeowners went back to renting. Homeownership is not for everyone. Job Growth More expensive homes are still not selling for prices they were 36 months ago. Therefore, it appears the Louisville market is overbuilt for more expensive homes. This price level will continue to be a buyers market for quite some time. As the job market improves, interest rates remain relatively low, and the stock market continues to rise, confidence levels of buyers will increase and we hope 2011 will be a much better year for Metro Louisville Real Estate. The Middle East is wreaking havoc with gas prices that holds us hostage and that could delay economic recovery. We also dont know how the effect the disasters in Japan will affect our recovery.

Kentucky Realtor Association president says it's an 'ideal environment' for buyers These are only estimates of where the Property Valuation Office sees the market for the next year. As we all know, there are many variables at play in the Real Estate Market. Written by Tony Lindauer, PVA And Donna Hunt, Chief Deputy March 11, 2010 Contributions by:

Paul Coomes, Ph.D. Professor of Economics at University of Louisville Greater Louisville Association of Realtors Homebuilders Association of Louisville Metro Dept of Inspections, Permits, and Licenses Master Commissioner of Jefferson County Graphs, Charts, Maps produced by Jefferson County PVA Internal Technology Department Jefferson County PVA 502-574-6380 www.jeffersonpva.ky.gov. Jefferson County PVA

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