Confidence in Kentucky housing market waning

Published 1:18 pm Tuesday, August 23, 2022


A survey of Kentucky Realtors shows confidence in the state’s housing market is close to where it stood at the beginning of the COVID-19 pandemic.

The survey of real estate professionals conducted last month by HousingIQ found 73% expect sellers to reduce their asking prices. Worse, 89% anticipate houses will stay on the market longer.

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Vidur Dhanda, who authored the report, said higher interest rates combined with inflation and general economic unease are causing some buyers to think twice. In the survey, a quarter of the Realtors acknowledged they’ve had buyers cancel contracts. In addition, 47% said some of their clients cut their asking price by at least 5%.

For the fifth consecutive month, the HousingIQ/Kentucky Realtors Confidence Index fell to 27.2, 11 points lower than July 2021’s rating.

It’s also a nearly 50% fall from February’s score of 49.

Even with most Realtors believing prices will fall, that’s not expected to drive interest in Kentucky properties. Nearly 3-in-5 Realtors, 59%, believe they’ll see a drop in foot traffic. In July 2021, that figure was at just 15%.

“Although, the recent increase in inventory has offered buyers much-needed relief, the drop in new listings and a slowdown in new construction will continue to keep inventory tight and prevent drastic price drops,” Dhanda said. “Sellers, however, will need to be more flexible.”

Nearly two-thirds of the Realtors believe more homes will now sell below the asking price.

Based on the survey, a score of 100 indicates all Realtors surveyed expect market conditions to improve. A score of 50 indicates no change in current conditions.

The lower interest in buying a home may lead to an increase in renting. The survey found that 51% of Realtors said they’ve had buyers opt out of looking for a new home and choosing to rent instead. On the other side, 10% of Realtors said they’ve had homeowners take their homes off the market and focus on renting them out instead.

The Kentucky Realtor survey isn’t the only survey that shows a vulnerable market. Last week, Fannie Mae’s Home Purchase Sentiment Index dropped two points to 62.8 in July. With only 17% of consumers saying it’s a good time to buy a house, national consumer confidence is at its lowest since 2011.