Rising prices, few vacancies keep Lexington housing competitive, and rental markets competitive

Lexington, Kentucky (WKYT) – Buying a home is part of the American dream, but experts continue to say it could be an even harder dream to achieve now in Lexington – especially for first-time homebuyers who find themselves in a competitive market with rising prices.

“It’s a little bit more difficult for first-time home buyers right now, because they are competing with a lot of other first-time homebuyers, as well as investors,” said Susie Basham, a realtor with the agency.

With home prices rising, analysts say investor demand is strong, allowing them to charge higher rents or sell higher-priced homes they’ve renovated.

Investors bought more than 18 percent of US homes purchased in the last quarter of 2021, according to another real estate brokerage, Redfin. Their analysis found that the share of investor purchases in 40 large metropolitan areas in the United States ranged from 6% in Providence, Rhode Island, to 32.7% in Atlanta.

Using the Redfin methodology — which identifies an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes — WKYT is investigating an analysis of a two-and-a-half year sale of a Fayette County home. Online records show that Investor demand remains strong in Lexington.

The share of homes bought by investors in the last quarter of 2021 was about 30%, which would place Lexington near the top of the metro analyzed by Redfin. A similar share has also been carried over to the first quarter of 2022.

(Note: This is an approximate calculation, as this methodology does not take into account Individuals who buy real estate as a limited liability company For financial, legal or personal protection or for other purposes such as helping parents for their children to buy their first home.)

Basham says the great investor demand here in Lexington stems from the city itself, its proximity to other big cities and the quality of life here.

“It makes the housing market a little bit more competitive, and it makes it a little more difficult for someone to get into their home for the first time,” Basham said of the effect, “but if you have a strong credit rating, you work with a lender, you work with a realtor, you can fight that.” .

Sales stabilized here in April, according to the Lexington-Bluegrass Association of Realtors. Analysts believe some buyers are back on the sidelines as home prices and interest rates rise. LBAR says the median home price has risen to $245,000 — up 16% from last year.

But all of these factors have an impact not only on those looking to buy, but also on those who rent. Amidst rising rents over months, experts say rents are still hard to come by.

“What we have noticed here at the Community Action Council is that housing is becoming less expensive, and more difficult to find,” said Patrice Muhammed, Director of Communications for the Community Action Council, especially for those on low and very low incomes. -Revenues.”

Mohamed explained that the lack of vacancies and the lack of supply makes the search more difficult and takes longer. She said they also saw landlords now have the luxury of being more selective, perhaps raising the rent or asking for more income to qualify.

Lexington had the largest month-to-month rent increase in the country in May, according to apartment listings rent estimates — a jump of nearly 18%.

The Community Action Council’s efforts at the moment are focused on housing stability – helping people stay in their current homes by paying rent late and a few months from now on. It’s important, given the current market, it may be more important than ever.

“Because, as we know, if you have to leave your current place of residence, the situation will not improve,” Mohammed said. “You will have to find another place, hopefully a similar place, and a similar rental; it is almost impossible to find.”

Advocates continue to argue that the city needs more affordable housing and housing, especially as inflation raises prices on just about everything. (Rental costs make up about a third of the CPI used to measure inflation.)

Realtors say new construction hasn’t been able to keep up with demand, and despite a 3% increase in the number of listed homes compared to the same period last year (according to the LBAR report), there aren’t enough existing homes to hold things, Besham said.

Interest rates are rising, but experts say they still expect demand to outpace supply in Lexington – especially on the affordable housing front.

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