In good times or bad, the familiar cry of the real estate agent is “There’s never been a better time to buy.” Now, after some lean years in the central Kentucky real estate market, conditions for buyers and sellers alike are indeed improving.
“We’re very encouraged and optimistic that the market seems to be on a major comeback,” said Al Blevins, president of the Lexington Bluegrass Area Realtors. LBAR represents more than 1,900 Realtors in Fayette County and also Anderson, Bourbon, Clark, Franklin, Jessamine, Montgomery, Nicholas, Powell, Scott and Woodford counties.
Blevins is also broker manager for Caswell Prewitt Realty in Mt. Sterling, Ky.
Blevins said that comparing 2011 to 2012, last year showed a 17 percent increase in overall residential sales. More recently, comparing January 2013 with January 2012, residential sales climbed 28 percent. Partial figures comparing last February with this February showed a 14 percent improvement.
“The price of homes is increasing modestly. Average days on the market are decreasing some, so prices are going up. It’s looking pretty encouraging,” said Blevins.
How bad was the bottom of the local market?
“One thing we say in real estate is that it’s all local, like the weather,” said Blevins. We’re somewhat insulated from the real estate issues you find on the East and West coasts and in other cities. It got pretty low here as far as activity was concerned, but we’re overcoming that now.”
LBAR says housing inventory, which was quite high, is shrinking a bit, so some popular types of homes may soon be gone. Fayette County, from January 2012 to January 2013, showed a decrease in inventory of 42 percent.
Inventory is calculated in months. In January 2012, it was 13 months. In January 2013, it was 7.6 months. Blevins explained if you take the number of listings you have today and divide it by the previous month’s sales, you’ll get the listing inventory in months. Theoretically, if you stopped adding any new listings, this is how many months it would take to sell out the inventory at that rate of sales. It’s an industry measurement.
The last quarter of 2012 was especially good, a sign the recession had loosened its grip in the region. Spring and summer, the best sales months, are approaching. “Brokers and Realtors are out, and some are getting multiple offers on homes. We’re encouraging people who’ve been holding back to get out now and start looking,” Blevins added.
Blevins thinks the region is inching closer to becoming a seller’s market. The average sales price for all homes in the 11-county area in 2011 was $164,000; in 2012 it was $171,000, an increase of about four percent.
“The inventory level is still higher than you would want to see in a stable market,” commented Anthony de Movellan, broker and owner of Prudential A.S. de Movellan Real Estate.
De Movellan said there is a lot of psychology involved in how and when people attempt to buy or sell residential real estate. You’ve got to believe that for you personally, now is the right time to act.
“That’s an individual decision everyone has to make. Three years ago, we all questioned the economy in a significant way. Maybe people had jobs and qualified to buy homes, but were worried about the stability of that job. As time went on, people waited on the sidelines, and now there’s more of a comfort level. The stock market was just at an all-time high.”
De Movellan continued: “As we get through the inventory, we’ll see higher housing prices. Maybe we’re on the upside of the bottom, which would mean now is a good time to purchase a home.”
There’s that familiar real-estate pitch again.
De Movellan also noted that mortgage interest rates are low.
“If they went up, they’d still be low,” he said. He also sees homebuilders getting busy again. It’s always about supply and demand for them, he said, so most cut back on inventory in the lean years.
“They’re capable of doing that more easily than the real estate market,” he said. “You just can’t tell a thousand people to take their homes off the market to control inventory. On the building side, they can just stop building.”
Unfortunately for Realtors, it’s getting harder for people to qualify for mortgages; requirements tightened up in the wake of the national housing meltdown of a few years ago. Blevins agreed, but countered that interest rates could remain in the four percent range for the rest of this year and possibly into the next.
“There are some down-payment assistance programs coming to the market, especially to help first-time homebuyers,” he said. In addition, some young people who graduated from college in recent years, and who may have been living in apartments or with their parents, are getting into the market.
Finally, Blevins said economists believe housing is a major tailwind for our nation’s economic recovery. He said that every home purchased pumps about $60,000 into the economy for furniture, appliances, home improvements, transportation and more.