$1,188 2Q 2024
5.1%
94.8% 2Q 2024
30 BASIS POINTS
865 [YTD: 1,568]
588 [YTD: 1,892]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
Net absorption in the first two quarters of 2024 reached 1,568 units, a 30% increase compared to the same period last year. Demand in the Louisville market is predominantly focused in the Southern Indiana submarket, which accounts for over one-third of the market’s 12-month net absorption. South Jefferson County is also a demand hotspot, representing an additional 22% of the market’s 12-month net absorption.
While deliveries in Louisville were elevated, they did not reach the record levels observed in the US and many regional peer markets. Approximately 3,000 units were added to the market over the past 12 months, marking a 50% increase compared to pre-pandemic levels. The Southern Indiana submarket saw the highest concentration of these deliveries, with 1,200 units added over the past year, accounting for 40% of the market wide total. Many of the largest projects in Southern Indiana are situated along I-65 in Jeffersonville, Clarksville, and Sellersburg.
Unlike the national multifamily market, Louisville has maintained a stable occupancy rate over the past 12 months, thanks to a relatively measured pace of additions to its rental housing supply. At the close of the second quarter of 2024, Louisville’s occupancy rate stood at 94.8%, comfortably surpassing the national benchmark of 92.8%. Despite expectations for increased annual deliveries in 2024, demand continues to keep pace, ensuring that occupancy remains balanced in the near term.
Several factors contribute to the sustained healthy demand for rental units in Louisville. The presence of numerous higher education institutions provides a steady flow of students and faculty requiring housing, stabilizing the market. Additionally, substantial investments from companies like Toyota and other advanced manufacturers are generating new job opportunities, which in turn boosts housing demand as new employees move to the area.
Entering the second half of 2024, Louisville’s rent growth is notably on the rise, reaching 5.1% by the end of the second quarter. This robust increase has positioned Louisville as the leading market for annual rent growth among the 50 largest multifamily markets in the U.S. This also marks five consecutive quarters of accelerating rent growth, rebounding from a low of 2.6% in the first quarter of 2023. The market’s affordability continues to drive demand, particularly for Class C and lower range Class B properties, which are especially appealing to renters grappling with rising costs and have consistently experienced positive absorption. This sustained demand enables owners and operators to continue pushing rents upward, reinforcing the metro’s robust rental market.
Average Monthly Mortgage Payment
Average Monthly Rent
As of mid-2024, the total value of individual conventional multifamily transactions in Louisville reached approximately $56.5 million, representing a 39% decrease compared to the same period in 2023. However, the number of transactions increased, with seven deals completed so far in 2024, up from three during the same period last year. While the total transaction volume decreased, the increased number of transactions in 2024 is encouraging, indicating a more active market. In contrast, 2023 saw two larger deals, each valued around $45 million, in the first half of the year that drove higher transaction volume.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
-0.2%
|
0.2%
|
-0.7%
|
-0.4%
|
0.9%
|
0.3%
|
-0.1%
|
The 65-74 age group is the fastest-growing renter demographic in the Saint Louis metro area, showing a notable 1.3% increase from 2019 to 2022. This upward trend highlights a rising demand for rental housing that caters to an aging population seeking proximity to parks, lifestyle amenities like golf courses, and accessible healthcare options.
In the coming years, rent growth in Louisville is projected to remain robust, with gains averaging between 3% and 5% annually, outpacing the national average. Several factors continue to underpin strong rental demand. The concentration of higher education institutions stabilizes the market by sustaining housing demand from students and faculty. Moreover, significant investments from companies like Toyota and other advanced manufacturers are bringing new jobs to the region, further fueling the need for housing as employees relocate. Additionally, Louisville’s affordability could draw prospective renters seeking more economical living compared to higher-cost markets.
