When considering Kentucky real estate, a few things might come to mind. Kentucky has certainly had its influence on American culture. Our country has a strong association between bourbon and the Kentucky heartland. Bardstown, Kentucky is the self-proclaimed “Bourbon Capital of the World.” The state proudly promotes its Kentucky Bourbon Trail that includes stops at renowned distilleries like Wild Turkey, Maker’s Mark, and Woodford Reserve. But Kentucky’s most popular contribution is that it hosts the world’s most famous 2-minute horse race. The state’s Bluegrass Region houses around 500 thoroughbred horse farms, which make it the perfect setting for the annual Kentucky Derby at the mecca of horse tracks, Churchill Downs. And the state is also one of only two places on the planet where one can witness a moon bow, which is a lunar rainbow. This phenomenon can only be witnessed in Corbin, Kentucky and Zimbabwe, Africa.
But aside from liquor, horse racing, and meteorological events, the Kentucky housing market has more to boast about when it comes to home and land values. The state’s Southern Lakes region has become a popular destination for tourists, vacationers, and retirees. All the lakes in the region are man-made from the damming of the Tennessee, Ohio, Mississippi, and Cumberland Rivers. The 63,000 acres of water provide sailing, swimming, and fishing activities. The area has remained relatively affordable, and to increase economic development artists are being offered free lots to build a home or studio in the region’s cities art districts. Artists looking for existing space can find 100% financing for their purchase or rehabilitation space. This makes the area appealing to tourists, and young professionals.
Much of the 2015 housing market for Kentucky looks to remain affordable. The state’s per capita income is $28,513, lower than the national average of $34,586. For this reason the home prices are lower than the home price averages across the country. Folks looking to move to Kentucky will likely sacrifice some kind of loss in terms of income. But, real estate in Kentucky is on the lower end which tends to even the balance. People interested in investing can find some great deals, especially in the Southern Lakes region and in the state’s popular cities. And for people visiting, rental prices are relatively cheap. According to Zillow, VRBO, and Craigslist Kentucky has some of the nations lower rental costs. For vacation goers, the region offers some great sights to see without breaking the bank. Kentucky real estate continues to grow slowly but steady. If you want, you can compare this year’s market to the 2014 Kentucky Housing Market.
Influencing Factors for the 2015 Kentucky Real Estate Market
According to Zillow the Median home value in Kentucky is $125,500. This is up .4% in the past year and Zillow housing market predictions have this number rising 3.2% this upcoming year. This means that the home appreciation trends are following closely with the national average.
- The median list price is $149,000 and the median sale price is $138,000 (as of February 2015). Market trends have seen this number rising since February but exact current data is not accessible. At the moment Kentucky real estate is still considered to be a buyers market.
- Real Estate in Kentucky spends an average of 107 days on the market. This number has been falling since early this year (119 days as of February).
- Median rent in the state is $875. This is lower than the national average making it easier for younger people to move into the state, or for others looking for temporary housing while they search for a permanent residence.
- In Kentucky .5 homes (per 1,000) are foreclosed. This is well below the national average of 3.5. Those purchasing homes in Kentucky are buying what they can afford. The low foreclosure rate in the state also means that there are fewer vacancies. Vacant properties lead to drops in surrounding home values.
- As with foreclosures, Kentucky is also well below the national average in mortgage delinquencies with 3.9% (U.S. average is 6%).
Best Places to Live in Kentucky
In the heart of the Bluegrass Region, the city of Lexington accounts for a large portion of the healthy Kentucky real estate. Home value medians in the city hover around $145,700. These values have gone up 1.4% in the past year and experts feel this number will rise another 3.1% this next year. Rental prices are slightly higher than the state average at $925. This reflects that Lexington KY real estate is a desirable market, at least for the short term. Perhaps most surprising is that the number of foreclosures is actually lower than the already low state average. Only .2 homes per 1,000 are foreclosed in Lexington. The percentages of delinquent mortgages and homeowners underwater on their mortgages in the city are 2.3% and 14%, respectively. Both are lower than their state average counterparts.
Part of the reason for the strength of the Lexington housing market is the strength of the job sector. Lexington’s unemployment rate is 4% – this is down 2% from last year and nearly 2% better than the national average. The city’s local economy is a large contributor to high dividends to both real estate investors and homeowners in the area. According to Trulia two of the area’s hottest neighborhoods are Liberty Area and Beaumont Residential with average listings of $221,231 and $498, 953, respectively.
In terms of higher value and physical size in the Northern Kentucky real estate market, Lexington holds the top spot. But according to Zillow Louisville KY is a market to watch. Louisville is the most populated city in the state with a population of just over 1 million people. Home values in the Louisville KY real estate market average around $95,000. This is around $50,000 less than both the state average and the Lexington market values. Median rent in the Louisville market is only $795. Because of the lower cost of living Louisville housing market predictions are the highest in the state with an expected 3.8% growth for the next year. We can see this reflected in market trends. As of February of this year the average list price for homes was $109,000 but the average sale price was $123,000. Because of competition among buyers, sellers are actually getting more than their asking prices. The 3 neighborhoods in Louisville that have experienced the most appreciation in the past year have been Bashford Manor (+13.4%), Old Louisville (+12.4%), and Tyler Park (+9%).
In the Southern Region Bowling Green KY real estate has seen a large increase in recent months. Data for the past 5 years shows Bowling Green as having an annual appreciation rate lower than 60% of the other cities in the state. However, in just the last quarter the city has seen a 1.43% increase in home appreciation, which puts it as some of the fastest growing home values in state. At this rate Bowling Green is looking at a 5.86% increase by years end, although at this point it really is too early to predict that this appreciation rate will hold. Bowling Green is the third largest community in Kentucky and has a median house value of $135,424.
Bowling Green is home to a lot of college students and provides many services and amenities that come with being a college town. The city also retains many of their graduates which creates a large demographic of young and educated people. This creates more opportunities and incentives for single professionals looking to relocate. Because of the younger population the city consists primarily of single-family homes and large apartment complexes/high rises.
Owensboro is located in Central Kentucky and ranks behind Bowling Green in terms of size. Owensboro KY real estate has seen a steady increase in home appreciation in recent years compared to the rest of the state. Like Bowling Green, Owensboro has also seen a larger-than-normal home appreciation increase in just the past few months. With a median home value of $106,340 Owensboro is quite affordable. Single-family homes make up about 70% of the market and a majority of the population are homeowners rather than renters.
But one issue that plagues the Owensboro housing market is vacant buildings. About 10% of the housing market is classified as vacant. This can potentially drag down the real estate market. The home appreciation rates for Owensboro show that this has not been a major issue as of now, but it’s definitely something to keep an eye on when shopping for housing in the area. One possible contributing factor could be that 40% of the housing dates back to the 1940’s – 1960’s. While some prefer older homes for character, others might be deterred by older homes and the potential for renovation and repair work.