Confidence in Kentucky housing market waning
Published 1:18 pm Tuesday, August 23, 2022
THE CENTER SQUARE
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.
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.