Kentucky Housing Market At Tipping Point
Economic concerns and rising rates weigh on buyers.
Thirty-eight percent of Kentucky REALTORS® expect house prices to fall, while seventy-seven percent expect houses to stay on the market for longer, according to the May 2022 edition of the HousingIQ Survey of Kentucky REALTORS®.
“The market is at a tipping point. Homebuyers face three challenges—higher house prices, higher mortgage rates, and concerns about the economy. 50% of the survey respondents said some of their buyers had dropped out of the market because of higher mortgage rates while 41% expect a decrease in foot traffic,” said Vidur Dhanda, survey author. “Sellers are trying to get in front of the market slowdown with 61% of the respondents expecting increased price cutting by sellers. However, that might not be enough for some buyers.”
In the latest Home Purchase Sentiment Index issue, which tabulates national consumer sentiment, Fannie Mae reported that a survey-high 79% of respondents said it’s a “bad time to buy” a home, as the headline index inched nearer to its April 2020 low.
The Mortgage Bankers Association reported that the national weekly Purchase Index was 21 percent lower than a year ago.
Dhanda continued: “We have been reporting increased investor activity for the last several months. 38% of the survey respondents said that investor activity had picked up in the last three months and 43% expected increased sales to investors. As buyers get priced out, investors will strategically add to their portfolios as long as the rental market stays strong.”
COMPARED TO A YEAR AGO »
- 38% expect house prices to fall—a 26-point increase
- 77% expect houses to stay on the market for longer—a 50-point increase
- 61% expect greater price-cutting by home sellers—a 35-point increase
- 41% anticipate a decrease in foot traffic—a 32-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 dropped 5 points from last month to close at 33. Compared to a year ago, the headline index is 19 points lower. 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 dropped 5 points from last month and is 24 points lower from a year ago, reflecting a continued slowing down in price growth. The Buyer Power sub-index gained 11 points and is 34 points higher than last year, indicating the increasing leverage buyers are getting in the market. The Homeowner Stress sub-index was mostly unchanged and is 2 points lower than a year ago.
The survey results are available here.