February 2020

Kentucky Housing Market Vitality

forecast

Underperform

Kentucky metro area house prices are forecasted to underperform the national market. Current local conditions support an estimated 5.5% increase in the next twelve months. Kentucky’s housing market vitality, based on the nine metro housing markets which comprise it, is weaker than that of the overall U.S. and currently ranks the state as thirty seventh in the nation. Recent changes in local conditions suggest the possibility of moderation in short-term performance.

Housing Market Vitality

Housing Market Vitality summarizes the impact of economic conditions on future house prices. A value of 100 corresponds to conditions supporting current prices; values less than 100 correspond to a dampening effect; and values greater than 100 indicate a positive effect on house prices.  A housing market vitality value can be interpreted as a forecasted growth rate. Hence, a reading of 105.8 can be interpreted as a forecasted 5.8% annualized increase in house prices.

Market Pulse

Sales Tracker Feb 2020 12-month change
Closed Sales Count 3,384 +8.9%
Distressed Sales Count 79 -24.8%
Median Sales Price 168K +5.1%
Median Days on Market 149 +8.0%
Months of Inventory 5.3 -17.9%
2020 is off to a great start with home sales jumping 18.5% over January of 2019. Closing figures reached a record high for the month at 3,153 homes sold, compared to 2,661 in January of 2019. Sales volume was up significantly in January. A 21% increase in volume means the figure reached $11.15 million, compared to $9.9 million in January of 2019. Homes available for sale remain under the ideal level of a 6-month supply. The January figure of 4.4 months of inventory is down 13% from last year’s figure of 5.1 months. This market condition is expected to persist through 2020.

Kentucky Metro Housing Markets

Kentucky is comprised of nine metro housing markets that account for nearly 58% of the state’s population. The markets are unique in their demographics and local economies and exhibit trends that are distinct from the national or state narrative. Each metro market presents its own unique opportunity.

METRO AREA FORECAST US METRO RANK (/402)
Bowling Green, KY Underperform 232
Cincinnati, OH-KY-IN Track 236
Clarksville, TN-KY Outperform 68
Elizabethtown-Fort Knox, KY Underperform 387
Evansville, IN-KY Underperform 329
Huntington-Ashland, WV-KY-OH Underperform 241
Lexington-Fayette, KY Underperform 286
Louisville/Jefferson County, KY-IN Track 105
Owensboro, KY Underperform 153

Industry Specialization

Kentucky’s state economy is specialized in Manufacturing and Other svcs. Mining, Information, and Pro Bus svcs industry sectors are less important to the state economy compared to the national economy.

Industry specialization helps explain the differing impact of industry trends on local economies in contrast to industry composition which describes the structure of the economy. A Specialization Index value greater than 100 corresponds to the sector having a greater share of the state economy than it does of the national economy. Sectors with a Specialization Index greater than 120 characterize the local economy.

Demographics

Compared to the U.S., there is a higher incidence of poverty amongst Bluegrass State residents and they have greater purchasing power. There are more high school graduates and a smaller proportion of the population is college educated. Kentucky’s population is comparatively less diverse than the overall U.S. population.

A Demographics Index value greater than 100 corresponds to the factor being more intense in the state versus the national average. Characteristics of the local population is a longer-term factor that influences the housing market.