KENTUCKY - The Kentucky real estate market is slowing down, and values are leveling off. The state is home to many attractions, including horse racing, bluegrass music, bourbon, and lush forests. It also has the longest cave in the world, Mammoth Cave, which has hosted tours since 1816. Major cities include Louisville, Bowling Green, and Frankfurt.
Zillow Predicts A 14.9% Increase In Home Prices In 2023
Zillow, a leading real estate research company, has predicted home prices will rise in Kentucky by 14.9% next year. According to the firm, home prices are likely to grow 7.8% nationwide in the coming year, with only five markets showing a decline. That's a healthy increase for home prices.
However, the housing market has seen some swings in the past year. While home values increased more than 20% in January, they have since been cooling down. The median price of a new home is now $350,300, which is only 0.3% higher than it was at the end of the first half of 2021. According to Zillow, the median price of a new home in Kentucky will hit $390,546 in 2023.
Despite these challenges, the Kentucky housing market is still predicted to grow by 14.9% by 2023. In August, home values fell 0.8%, making it the second month in a row that home values dropped. This is the first decrease since 2012. In the meantime, home prices are 14.1% higher than last year and 40% higher than before the housing pandemic hit the region. The decline in home prices is likely due to rising mortgage rates, which drive out buyers and reduce competition.
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The demand for apartment living is booming. According to Kia Crooms, area vice president of Morgan Properties' Midwestern region, the number of tenants moving into multifamily buildings is increasing steadily.
The Kentucky real estate market is slowing down due to lower values and longer market times. While the state is known for horse racing, bluegrass music, and bourbon, it also offers a large network of state parks and lush forests. Its longest cave, Mammoth Cave, has been hosting tours since 1816. It also features several major cities, including Louisville, Bowling Green, and Frankfurt.
Rents in Louisville, KY, average $1,450 per month for a three-bedroom home. The rent is up 12% year-over-year. Renters occupy about 40% of the housing units in Louisville. Louisville's most affordable neighborhoods are Park Duvalle, Germantown, and Southside. The most expensive neighborhoods are Deer Park and Audubon.
Housing Market Transition
While there is a general sense that the market is in transition, the housing market in Kentucky isn't quite there yet. According to Fannie Mae, home prices will continue to increase at double-digit rates through the middle of the year, but prices will fall back to a modest 5% rate by the end of 2023. This could be a concern for investors. After all, in 2021, the Kentucky housing market experienced record low inventories, a huge boom in sales, and bidding wars where buyers were willing to pay far above the asking price. According to Fannie Mae, home sales are at their highest annual pace in four decades.
According to Goldman Sachs, there is still some room for housing price declines in 2023. The company predicts an 8% decline in new home sales by 2023 and a 14% drop in existing home sales. However, Goldman Sachs doesn't see a big decline in home prices, and it expects the market to bounce back in 2024.