HousingIQ Survey of Kentucky REALTORS® – September 2020

Kentucky Housing Market Showing Early Signs Of Cooling
Houses anticipated to stay on market for longer as fewer houses expected to sell above asking price

Twenty-nine percent of Kentucky REALTORS® reported that tightening mortgage standards were discouraging their buyers, according to the September 2020 edition of the HousingIQ Survey of Kentucky REALTORS®. Twenty-eight percent of the 204 REALTORS®, across Kentucky, expect an increase in the number of price reductions.

“House price appreciation has outstripped the benefit of record-low mortgage rates,” explained Vidur Dhanda, author of the survey. “Low inventory can sustain price growth up to a point before financial concerns about affordability become an issue. We are beginning to see that with the tightening mortgage standards.”

The headline Confidence Index was nearly unchanged at 50.1. 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 improvements in the Price Expectation (+2.5) and Homeowner Stress (-1.7) sub-indices reflect a market that has thus far weathered the pandemic. With fifty-eight percent of the respondents expecting an increase in distressed sales in the next twelve months, there remain potential headwinds as pandemic-related financial pressures take their toll on homeowners. The seven-point jump in the Buyer Power Index foretells a seller’s market that is slowing down to more sustainable levels.

Affordability issues and low inventories continue to present an opportunity for single-family rental investors and 49% of the respondents expect increased sales to investors. 73% of respondents reported an increase in the number of offers received by sellers with 37% reporting an increase in the number of all-cash offers. This presents an opportunity for real estate professionals to leverage their market insights and network and help buyers with pre-approval, pricing, and putting forward winning offers. With nearly half of the respondents ranking buyers looking to upgrade as a top-three customer segment, and the tight inventories impeding home buying, there is continued opportunity for remodeling contractors and financial planners to bundle services.

“A minuscule 3% of the Kentucky REALTORS®reported their clients as expressing buyer’s remorse compared to the 55% national numbers reported elsewhere in the media,” said Kentucky REALTORS® Communication Director Paul Del Rio. “This shows how local market experts provide the high touch, consultative expertise that guides beyond the transaction.”

In the next twelve months:

  • 50% of respondents expect an increase in sales volume
    • 39% anticipate increased foot traffic
    • 30% expect houses to stay on market for fewer days
    • 43% expect increased sales to first-time buyers
  • 66% of respondents anticipate an increase in delinquencies
    • 35% expect more houses to sell above asking price
    • 49% expect increased sales to investors

“The survey results identify younger, more affluent, first-time buyers as an important market segment in the next twelve months,” said Kentucky REALTORS® C.E.O. Steve Stevens. “By generating such actionable insights, we help our industry plan and better serve clients .”

The report is available here.

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