Kentucky Housing Market Starts Cooling Off
Higher mortgage rates discourage buyers as sellers rush to beat the slowdown.
Sixty-nine percent of Kentucky REALTORS® expect sellers to drop their asking price, while eighty-five percent expect houses to stay on the market for longer, according to the June 2022 edition of the HousingIQ Survey of Kentucky REALTORS®.
“Although, mortgage rates have fallen about a quarter point in the last couple weeks, they are still significantly higher than a year ago. The typical home mortgage payment is approximately 35% higher. 66% of the survey respondents said some of their buyers had dropped out of the market because of higher rates,” said Vidur Dhanda, survey author. “Sellers will have to reset their expectations. The days of immediate sales and contingency-free offers are likely over. 55% of the survey respondents expect more houses to sell below the asking price.”
In the latest Home Purchase Sentiment Index issue, which tabulates national consumer sentiment, Fannie Mae reported that a survey-high 81% of respondents believe the economy is on the ‘wrong track’. Only 20% said it’s a good time to buy a home.
The Mortgage Bankers Association reported that the national weekly Purchase Index was 17 percent lower than a year ago.
Dhanda continued: “We have been reporting increased investor activity for the last several months. In the latest survey, 29% reported a decrease in investor interest while 28% reported a decrease in all-cash offers. Concerns about the economy appear to be dampening investor enthusiasm as well.”
COMPARED TO A YEAR AGO »
- 39% expect house prices to fall—a 20-point increase
- 85% expect houses to stay on the market for longer—a 40-point increase
- 69% expect greater price-cutting by home sellers—a 33-point increase
- 54% anticipate a decrease in foot traffic—a 34-point increase
Based on the monthly survey data, the HousingIQ/Kentucky REALTORS® Confidence Index provides a composite measure of expectations for the Kentucky housing market over the next year.
The HousingIQ/Kentucky REALTORS® Confidence Index continued its 4-month decline to close at 28. Compared to a year ago, the headline index is 16 points lower and close to its reading at the start of the pandemic. A value of 100 corresponds to all respondents agreeing that market conditions will improve. In contrast, 50 corresponds to respondents anticipating no change in market conditions.
The Price Expectation sub-index also continued its 4-month decline and is 19 points lower from a year ago, reflecting expectations of home price decreases. The Buyer Power sub-index gained 7 points and is 33 points higher than last year, indicating the shift towards a buyer’s market. The Homeowner Stress sub-index increased 3 points and is 2 points higher than a year ago.
The survey results are available here.