Kentucky Housing Market Cooling Off
Sellers reducing prices amidst concerns about COVID-19 resurgence and priced out buyers exiting market
Thirty-four percent of Kentucky REALTORS® said their sellers were reducing prices to attract buyers, according to the October 2020 edition of the HousingIQ Survey of Kentucky REALTORS®. Twenty-eight percent of the 324 REALTORS®, from across Kentucky, said renewed fears of COVID-19 were dampening buyer interest.
“Surging house prices are increasingly breaking the economics of buying a home for many families. With the resurgence of COVID-19 and uncertainty about the economic recovery, demand is bound to slow down,” explained Vidur Dhanda, author of the survey. “The uptick in sellers resorting to price-cutting foretells a moderating pace of price appreciation.”
The headline HousingIQ/Kentucky REALTORS® Confidence Index dropped over three points to 47. 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 sharp, nearly eight-point, decline in the Price Expectation sub-index and nearly three-point increase in the Homeowner Stress sub-index, describe a housing market that is cooling off.
With less than half the respondents expecting home prices to increase in the next twelve months and nearly two out of three respondents expecting an increase in distressed sales in the next twelve months, Kentucky REALTORS®are collectively anticipating a slowing market.
Forty percent of the respondents reported increased interest from out-of-state buyers with Northeasterners being the largest group. “By creating such actionable insights, KYR equips its membership with the knowledge to better serve customers, said KYR Communications Director, Paul Del Rio. “Northeasterners have different tastes and preferences than buyers from the West. REALTORS® can proactively partner with other service providers in educating out-of-state buyers and making a long-distance transaction more convenient”.
More than half – fifty-one percent – of the respondents expect increased sales to investors. “With the market showing signs of slowing and an anticipated increase in distressed sales, Kentucky’s REALTORS®, can facilitate transactions that are profitable for investors and respectful of the communities the real estate professionals serve and are a part of,” said KYR CEO, Steve Stevens.
- 45% of respondents expect an increase in sales volume
- 28% anticipate increased foot traffic
- 27% expect houses to stay on market for fewer days
- 40% expect increased sales to first-time buyers
- 73% of respondents anticipate an increase in delinquencies
- 24% expect more houses to sell below asking price
- 51% expect increased sales to investors
“As the late summer sales uptick settles down and the surge in house prices moderates, now is the time for potential sellers to consult with a local market expert and explore how to take advantage of the robust climate,” added KYR President, Lester Sanders.
The full report is available here.