Kentucky Home Price Growth To Moderate
Buyers getting priced out of the market, and sellers pulling back because of economic concerns
Forty-two percent of Kentucky REALTORS® said that rising prices had forced their buyers out of the market, according to the November 2020 edition of the HousingIQ Survey of Kentucky REALTORS®. Forty-nine percent of the 261 REALTORS® from across Kentucky said that their sellers had pulled back because of economic uncertainty.
“Sellers were already impeded by the difficulty in finding another house. The economic uncertainty creates additional disincentives for sellers, which further tightens the already low inventory, and pushes prices higher. However, buyers’ budgets cannot keep up. Higher prices increase both the down payment and monthly payments,” explained Vidur Dhanda, author of the survey. “The benefit of low mortgage rates has eroded, and lack of affordability now strains the market.”
The headline HousingIQ/Kentucky REALTORS® Confidence Index was nearly flat at 46.4. 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 three-point increase in the Price Expectation sub-index and over four-point increase in the Buyer Power sub-index reflects the interplay of low inventory supporting price gains and affordability challenges capping price growth.
With less than half the respondents expecting higher sales volume, over one-third anticipating houses to stay on the market for longer, and nearly two out of three respondents expecting an increase in distressed sales in the next twelve months, Kentucky REALTORS®are collectively anticipating home price appreciation to moderate.
Over thirty percent of the respondents reported increased interest from distressed property investors. “Serving distressed property investors, who are typically more experienced, requires a different approach than helping first-time buyers,” said KYR Communications Director, Paul Del Rio. “By creating such actionable insights, KYR equips its members with the knowledge to anticipate their customers’ needs and better serve them.”
More than a third of the respondents ranked buyers looking to upgrade as one of their top three customer segments. “Finding the right new home in the current environment of tight inventories, competition from investors, and steep price gains requires deep local knowledge and creativity,” said KYR CEO, Steve Stevens. “Working with a REALTOR®is the most effective way to get into the right new home.”
- 48% of respondents expect an increase in sales volume
- 33% anticipate increased foot traffic
- 34% expect houses to stay on the market for fewer days
- 39% expect increased sales to first-time buyers
- 74% of respondents anticipate an increase in delinquencies
- 28% expect more houses to sell above the asking price
- 49% expect increased sales to investors
“Before giving up on finding a new home, buyers should consult with a local market expert. Historic low mortgage rates and the flexibility provided by work-from-home arrangements present a unique opportunity,” added KYR President, Lester Sanders. “A REALTOR® can help brainstorm options.”
The full report is available here.