Several design trends for 2012 can be seen in this photo: smaller rooms, energy efficient windows and bringing more of the outside in.

Although there are some that believe that the housing recession has passed, it has had a major affect upon real estate throughout the country.  The purpose of this article is to see how the down market is changing home design trends going forward, in particular 2012.

#1 Home Size Is Decreasing

As a Realtor, my focus is on Louisville real estate, but Louisville, like most of the nation, is seeing fewer new construction homes being built. It's not just that fewer homes are being built, it's the size of homes being built that's noteworthy.

Families who are opting for new construction are choosing to build smaller, more efficient homes.  This is a trend that has continued since 2007 when the national average was 2,521 square feet. Just three years later that number was down to 2,392, and I expect the 2011 average to be even lower.

With our economic future uncertain, you can bet home sizes will continue to decrease in 2012.

#2 Green Building Components

Green building materials continues to be a high priority for many Americans. From easily renewable ingredients like bamboo in flooring to high-quality components to reduce energy usage, this trend shall continue well into the foreseeable future.

A related concept is utilizing repurposed materials. What's greener than recycling?!? From finding an antique door or charming moldings from half-a-century ago, designers thrive on locating those hidden gems then reusing them again in a modern design.

#3 Reducing Home Maintenance

Maintenance-free living is going to be a major factor for home design as the largest portion of the American population continues to shift to older age groups. Choosing composite building materials instead of wood reduces the need for painting in the future. Aluminum flashing, cement and vinyl siding all improve the longevity of exterior finishes.

Even indoors, people are selecting higher quality mechanicals in the hopes that simple, routine maintenance will put off the need for major repairs down the road.

#4 Flexible, Accessible  Layouts

Layout decisions such as multi-purpose rooms give homeowners flexibility in planning activities in the home. Larger eat-in kitchens are replacing many formal dining rooms, as they earn far more use by family members and improve functionality of the daily meals.

Accessiblity is also a new home design trend. People are living longer and the cost of senior care has increased, so people are working hard to make their current homes as accessible as possible with features like wider door frames, lower sinks/counter and grab bars in bathroom.

Homes with single-level living will garner a higher price per square foot than their multi-level counterparts and also be the recipients of more interested buyers.

#5 Bringing the Outside In

With an emphasis on smaller indoor spaces (see Trend #1), there's a related desire to bring as much of the outdoors into the home as possible. Architects and designers are working overtime to find ways to not only maximize the outdoor space (decks, patios, etc.) but are also working hard to balance a large number of windows and glass doors with the need for functional room design.

#6 Smart Storage Solutions

Even though the home's footprint has decreased, every family has a need for storage, preferably the more, the better.  Large, functional closets are a must and additional storage is a major plus. Home buyers continue to appreciate storage designed for today's living.

#7 Long-Term Living

The most recent report I read was that the average family moves every 6.5 years. A decade earlier the number was higher but it had steadily been dropping as Americans became more mobile.  It's now my belief that this number will start to level off and possible move higher as concerns about the economy force more families to emphasize their home as an investment.

I work very hard to bring the home buyers and sellers of Louisville unbiased and useful information here at LouisvilleHomesBlog.com. At the same time, I make a concerted effort to not promote myself on this site like so many real estate agents. Today's post is the exception to that rule. Recently, I received a phone call from a national writer asking my opinion about neighborhoods and real estate. Frankly, I was honored! It shows that my hard work on this site and others was found to be valuable. It's rare in the business to received compliments for my online work but that's exactly what this was and I'm quite grateful. So, if you're interested in reading this article—10 neighborhood homebuyer magnets—by all means, have at it. If you're so inclined, let me know what you think. I'm always happy to get your feedback. Happy New Year!

I don't think I've re-blogged anything on Active Rain before but this one is worth. Very solid piece by Rebekah with tons of ideas on ways you can help activate your social media efforts!

Last year at this time, the median home price of homes sold in Louisville, KY was $131,500. For October 2011, it was $129,900. Not a big drop by the looks of it.

But that's why pictures communicate so much better than mere numbers.

The 12-month trend line has been steadily sliding since last December. The trend line is important because it takes out some of the volatility and gives a more accurate image of how house prices have truly moved. For a city where 4% annual appreciation is as expected as a horse race on the first Saturday in May, these dropping home values have shocked many homeowners.

Yes, the foreclosure crisis has even hit us here in the Derby City.

What's important to realize is that even if your home has none of the short sale or foreclosure attributes, those nearby that do are hurting your home's value nonetheless.

On the flip side, it's great for home buyers (especially anyone still renting) to take advantage of these lower prices. Don't we all shop the sales for Christmas? Why should purchasing a home at a discount not be just as enticing?

I think that some Louisvillians have finally woken up to this reality as home sales in Louisville is up over the previous year for the fourth consecutive month. There were just 551 homes sold in Jefferson County in October, 2010 compared to 638 in October, 2011, about a 16-percent increase. These improvements in the real estate market are a welcome change but 2011 still trails the previous year by a large margin. There will need to be more than 1266 homes sold in November and December in order for 2011 to best the previous year, which isn't likely.

For specific data about your MLS area, visit the LHB Housing Reports.

Study's are done all the time. They can be frivolous, somewhat worthwhile or ground-breaking. On a scale of 1-to-10, I'll give this one a 6.5.

If the question is, "When should I list my Louisville home?" The answer would be on a Friday!

According to Redfin, a Seattle-based real estate company, after analyzing 1.2 million listings, homes listed on a Friday were 12 percent more likely to sell within 90 days.

"Our theory is that since homebuyers tend to tour homes on the weekends (Saturday and Sunday have 2.5 times more tours per day than weekdays), homes listed on Fridays are the freshest in buyers' minds when they're making their weekend plans."

Not only that homes listed on a Thursday or Friday sold closer to their list price.

Who says data can't be our friend?

 

All we hear from news sources these days is the horrible condition of the housing market. They're not wrong. The number of homes sold so far this year is acres behind 2010 and likely to arrive at 2009 levels.

Because of this, I find the need to balance all the negativity with positive insights. I recently wrote that for Louisville renters, now is an amazing time to purchase their first home because of the historically low interest rates. I've also highlighted the fact that Louisville home values have trounced the national average. I thought I had covered all the positive topics until I read an article today.

Tara-Nicholle Nelson writes for Inman which covers real estate on a national level. Her story, 5 bright spots in real estate recession, caught my eye and I thought that she would hit the same points I've been making here and on InsiderLouisville.com. Boy, was I wrong. In her thoughtful piece, Nelson identified some of the less obvious but likely more powerfulresults of our suffering housing market.

I do recommend you read the entire article but there are her five points.

1. People now buy for the long term.
2. Dysfunctional properties are being weeded out and creatively reused.
3. American housing stock is getting an energy-efficient upgrade.
4. People are making more responsible mortgage decisions, and building financial good habits in the process.
5. Our feelings about debt and equity have been reformed.

The negative financial effects of this recession are creating healthier mental outlooks, especially as it pertains to selecting and purchasing their next home. There was a time when debt was considered evil. During the growth decades of the 80's and 90's that concept was put on its ear. Now, people are realizing the Biblical proverb that the debtor is slave to the lender is true! Almost 3,000,000 foreclosures in 2010 alone.

Going forward, people are already buying smaller homes, contributing a larger down payment and choosing smarter components. That's progress! If you say my glass is half full, you'd be right.

Homeowners who owe more money than their home is worth are considered to be under water or upside down. But data does indicate that the number of distressed properties is shrinking for the first time since the housing recession began. 

It's been widely reported that shady lending practices, greedy borrowers and a general lack of wisdom (if not sneaky partisan policies) coming from our elected officials is what brought the housing crisis upon us. A more apt metaphor may be "down around our ears." Since that time, what has been done to improve the system? Have we finally passed the point of increased foreclosures or is the worst yet to come? Many say that recent legislation is a positive step in that direction.

Fellow InsiderLouisville.com Editor Terry Boyd likes to poke fun at my reliance upon data. I reply, "Numbers don't lie. Some people just like to hide the damning data." Why don't we just present the numbers at let you decide? We're complimenting your intellect that way, right? Back in May, MSNBC wrote a piece titled, Foreclosure flood may not have crested yet. While I borrowed their catchy title theme, they discredit their own premise with this excerpt.

The good news on distressed sales is that they may have peaked, according to the National Association of Realtors. Home prices continued to fall in April, and the median home price was 5 percent lower than a year ago. But the share of distressed sales shrank a bit -from 40 percent in March to 37 percent in April. (Emphasis mine)

Of course foreclosures won't stop immediately, but isn't it of primary importance that there were less in April than the month before? I would think so. Every distressed property (a home that's under water financially) is a drain on every other non-distressed property. If you are current on your mortgage payments, that short sale down the street is still adversely affecting your home's value. Wouldn't it be great that this time next year there were only one or two in your neighborhood instead of the 10 or 12 that are there now?

I think you get the picture. Here in Louisville, the number of distressed properties is much lower than in other parts of the country. Even still, CoreLogic asserts that in Louisville home prices dropped about 1 percent from July 2010 to July 2011 not including distressed sales. Including them, the number rises to 1.9 percent. Not good, but could be much worse.

Where do we go from here?

That's anyone's guess but jobs are a major concern. Inman published yesterday that Unemployment rate drops in nearly 7 of 10 U.S. metros. That's solid. Not so great is that Louisville unemployment didn't decline but held at 9.5 percent for the 3rd straight month. Until the economic outlook (including jobs) becomes more sunny, I think we'll have to endure these turbulent waters a bit longer.

I wrote a piece a couple weeks back called, Did Your Louisville Home Actually Drop in Value? In the piece, I pointed to data that showed while the National home value average dropped about 25% since the housing decline, Louisville homes actually gained 1.5%. I think it's important that people know the truth about their home's value.

Now, this doesn't mean everyone's home gained value, many did in fact lose value. Every market is a fluid situation where people, and their emotional decisions, ultimately dictate what something is worth. When you fall in love with a home, sometimes you overpay. On the flip side, job transfers and other reasons force certain homeowners to sell their home below its true value.

Why this caught my attention was because I read this interesting piece in the Wall St. Journal that claims:

More than half of homeowners are paying too much in property taxes, says Jim Kane, Chicago-based managing director of True Partners Consulting, a tax advisory firm.

Surprised? I was! Not because the government wants to appropriate money from We the People every chance they can but because the the gargantuan size of their greed. More than half?!? That's outrageous.

So what can you do? After all, Jefferson County Kentucky ranks 539th for property taxes out of 796 countiess. That's great! Our property taxes are quite low. (Another reason to sell your out-of-state friends to relocate to Louisville.)

But if you do want to get to the bottom of things, the Wall St. Journal story put a cute cartoon outlining the steps involved. Simply stated, 1) learn what value the tax assessor is assigning to your property, 2) find out what its current market value us. Then, if it's lower than the tax assessor believes, prove it to them.

The catch might be, as it is in many Louisville homes, the tax assessor values your home lower than it's true worth. The last thing you want to do is draw attention to increased value in your property. Then it would be a simple task for the tax assessor to increase your tax. But depending on your situation, you may be able to save some considerable money.

Here are a couple of examples of families that dramatically reduced their property taxes.

So there you go. A trustworthy Realtor can help you determine your homes current market value.

Yesterday, Freddie Mac issued a press release called August 2011 U. S. Economic and Housing Market Outlook. I've excerpted primary message below.

MCLEAN, Va., Aug. 16, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) released today its U.S. Economic and Housing Market Outlook for August showing that despite the recent ups and downs in the capital markets the likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market's recovery as it continues to struggle.

Outlook Highlights

• Employment was up 117,000, the best showing since April, and the unemployment rate edged down a tenth to 9.1 percent.
• Over the first half of 2011, growth was figured to be about 0.8 percent at an annual rate, far too weak to generate enough jobs to keep pace with labor force growth.
• Compared with the first quarter of 2008, borrowers are paying about $130 billion less in mortgage interest today, at an annual rate.
• The likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market's recovery.
• Interest rates on 15-year fixed-rate loans – always popular for borrowers considering to refinance – reached about 3.5 percent in early August, assuring the refinance boom continues.
• Freddie Mac House Price Index(SM) for the U.S. shows that prices are down 25 percent, on average, as of June 2011 compared with their peak obtained five years ago.

©2011 PR Newswire. All Rights Reserved.

They are predicting a reasonable time frame into the future where interest rates will stay in their current range. This is great. They also confirm what LouisvilleHomesBlog.com posted last week, that nationally home values have dropped about 25% since their high. This while Louisville actually gained 1.5%. What I especially liked was seeing that employment is moving up, even if it's only slightly. I believe that this (along with consumer confidence) need to improve in order for the housing market to truly rebound. Bottom line is that what's good for the country is also good for Louisville, KY but to a lesser degree. At this point, we should welcome all the good news we can.

I'm sure you've heard the phrase, "perception is reality". Take the value of brands, for example. People's perception of Tylenol as a safe, pain reducing medicine prior to 1982 was sky high. It was the world's top seller, for crying out loud. Then reports surfaced that a woman died from cyanide poisoning from taking Tylenol. It turns out the medicine was tampered with after the product shipped and was on the shelves but that didn't stop a massive drop in world-wide sales. The perception was that this brand was potentially dangerous and human activity adjusted accordingly.

Louisville Home Values Hold Steady, National Values Drop

Now you might be asking why a real estate blog would be talking about brand image and perception. Here's the question, "Did your home drop in value?" I mean, other than a 100-year-old tree falling on your house (this happened to my parent's home, by the way, thankfully no one was injured and the repairs will be far less than they could have been) and truly destroying a part of your home, it's actually perception (along-side supply and demand) that drives what someone will pay for it. Let's look at a super cool chart that AOL has on their site. The blue line is for average sales price in Louisville, KY while the gray is the average estimated National value.

It's not difficult to notice that the National average is far higher, right?

 

When we move forward in time we see that Louisville home values have remained roughly the same. (It would be nice if they updated their data more regularly but what can you do when you're the Internet's most famous, dying mega-brand.)

 

The change in that time frame amounts to a modest 1.5% increase. As I've said for years, Louisville real estate would be a boring roller coaster. Contrast this change to what's happened nationally.

 

So does what happens in other parts of the country affect us here in Louisville? Certain non-local events truly make an impact, even sharply at times. But most merely "factor in" on certain people's perceptions while other people discountthem and are unfazed.

Data Disclaimer

Housing data can be derived from many sources; published vs. non-published, including foreclosures or not, even different government agencies report different numbers for the same time period. Much like mortgage rates, you should speak with a full-time, local professional to learn about your home's value. At the end of the day, I remember what my father taught me when I was a kid, "Something is only worth what someone will pay you for it."