National averages don't reflect strength of local market

Louisville is akin to other local markets throughout the country that while not setting huge rates of appreciation it is also not likely to fall victim to bursting bubbles.

This was most recently reiterated by Lawrence Yun the chief economist for the National Association of Realtors"A national picture of the real estate market is just about as valuable as giving a national high temperature for the day".

The following is an example featuring the Kansas City real estate market which in many rfespects mirrors the Louisville market.

Although the Realtors report that the national median price declined 2 percent during the third quarter compared with a year earlier, the price in the Kansas City area declined just 0.7 percent, to $157,000.

That difference speaks to the fundamental fact that Kansas City historically has not been a particularly volatile housing market. Although we didn't soar as high during the recent housing boom, we are equally unlikely to suffer as much as the national average during the correction.Now, consider this little nugget that often goes unnoticed amid the nationwide hand-wringing over housing.

Ninety-three of 150 metropolitan markets tracked by the Realtors actually posted median home price gains during the year ending in the third quarter. Although Kansas City wasn't among them, most of those gainers are midsized markets in the country's vast middle section akin to ours.

The focus on recent declines in nationwide housing values also tends to ignore the previous - and, admittedly, unsustainable - run-up in values.Despite the recent 2 percent dip in median home prices nationwide, the Realtors report that the typical seller posted a 38.8 percent increase in value over the past six years.

Now, none of this is intended to downplay the housing market correction that is under way both here and across the country. It's as real as the "reduced" sign down the street.Clearly, it's a buyer's market, with 15,788 existing homes available for sale in the metropolitan area, according to the latest report from the Kansas City Regional Association of Realtors.

That's eight months of supply at the current sales rate, which is more than the six-month supply typically considered to be a balanced market. And that's the main reason the sales price has slipped a bit over the past year.But at this point it's hardly a disaster.

The local housing market is simply undergoing a needed, if painful for some sellers, market correction. Prices are coming down some to clear a backlog of accumulated inventory, and include a recent increase in foreclosure properties. But mortgage rates also are drifting lower for qualified buyers, which should help demand. And assuming the broader economy doesn't slip into recession, the local housing market will turn the corner sometime next year.

Bottom line: It's a great time for buyers, and a tough time for sellers. Markets adjust.