Kentucky Housing Market Hits The Brakes
Sellers to cut prices as houses stay on the market for longer
Sixty percent of Kentucky REALTORS® expect houses to stay on the market for longer over the next twelve months, according to the July 2021 edition of the HousingIQ Survey of Kentucky REALTORS®. Forty-nine percent of the 292 REALTORS® from across Kentucky expect greater price-cutting by sellers over the next twelve months.
The headline HousingIQ/Kentucky REALTORS® Confidence Index dropped six points to 38.4. A value of 100 corresponds to all respondents agreeing that market conditions will improve, while a value of 50 corresponds to respondents anticipating no change in market conditions. The Price Expectation sub-index decreased 2.6 points on top of last month’s over ten-point drop. The Buyer Power sub-index jumped 11.8 on top of last month’s thirteen-point increase.
Since February of this year, the headline index has steadily dropped from 57 to the current month’s 38.4. During the same period, the Buyer Power sub-index has gained from 34.6 to 66.8.
“The data point to a seller’s market that has run its course,” explained Vidur Dhanda, author of the survey. “We are seeing an increase in new listings, and as inventory increases, homeowners will be further motivated to list their properties. As builders’ supply issues resolve, new construction will also pick up. Prices are bound to stabilize. Additionally, buyers are increasingly unable to bid up prices. The recent price growth is not sustainable.”
In the latest issue of the Home Purchase Sentiment Index, which reflects national consumer sentiment, Fannie Mae reported that 66 percent of the respondents said it’s a bad time to buy a home, while 75 percent said it’s a good time to sell.
The rapid spread of COVID-19 since mid-July has so far failed to dampen market enthusiasm. Eighty-nine percent of the respondents said their clients were not holding back because of fears about the Delta variant.
“When the pandemic hit over eighteen months ago, as an industry, we adapted and innovated. We appreciate the confidence Kentuckians have in REALTORS® ability to serve them in a healthy and safe manner,” said Kentucky REALTORS® Communications Director, Paul Del Rio.
“Many Kentuckians have had to sit this market out since prices surged so quickly over the past 12 months”, said Kentucky REALTORS® CEO, Steve Stevens. “I think we are seeing the light at the end of the tunnel here, and folks who have been saving up should soon have both the inventory to choose from and a price tag they can afford.”
- 36% expect house prices to increase
- 49% expect greater price-cutting
- 46% expect an increase in sales volume
- 60% expect houses to stay on the market longer
- 40% anticipate an increase in the pace of new construction
- 51% expect an increase in new listings with the expiration of the foreclosure moratorium
“More listings are coming to market, and prices are stabilizing,” said Charles Hinckley, President of Kentucky REALTORS®. “Homeowners on the fence about selling should consult their local REALTOR® and get a clearer sense of the opportunities.”
The full report is available here.