A survey of real estate agents in Kentucky shows that 69% expect sellers to drop their asking price, and 85% predict that houses will stay on the market in the next year.
That’s according to the June 2022 edition of the HousingIQ Survey of Kentucky Realtors, which suggests that the housing market in the state could be cooling after more than two years of low inventory, high prices, and short lengths of time in which houses were listed for sale.
Uncertainty in the economy and increased mortgage rates are playing a role, the Kentucky Realtors organization said.
“Although, mortgage rates have fallen about a quarter point in the last couple weeks, they are still significantly higher than a year ago. The typical home mortgage payment is approximately 35% higher. 66% of the survey respondents said some of their buyers had dropped out of the market because of higher rates,” said Vidur Dhanda, of Wainstreet and the survey author. “Sellers will have to reset their expectations. The days of immediate sales and contingency-free offers are likely over. 55% of the survey respondents expect more houses to sell below the asking price.”
The survey’s news release cites the latest Home Purchase Sentiment Index issue which tabulates national consumer sentiment and shows that Fannie Mae, the Federal National Mortgage Association, reported that 81% of respondents believe that the economy is on the wrong track while only 20% said that now is a good time to buy a home.
The Mortgage Bankers Association, the news release said, reported that the national weekly Purchase Index was 17 percent lower than a year ago.
“We have been reporting increased investor activity for the last several months,” Dhanda said. “In the latest survey, 29% reported a decrease in investor interest while 28% reported a decrease in all-cash offers. Concerns about the economy appear to be dampening investor enthusiasm as well.”
Local sales figures in Northern Kentucky appear to support the results of the survey in at least one case, the number of home sales.
According to the Northern Kentucky Association of Realtors (NKAR) and the Northern Kentucky Multiple Listing Service, Inc. (MLS), home sales in May were 8.36% lower than in the same month of 2021. However, the average sale price is on the rise, by 12.37% in May 2022 over May 2021, the organizations’ June report indicated.
There were 647 residential units sold in May of this year, compared to 706 a year ago. The average sale price, however, was $296,883 in May, up from $264,211 a year prior.
The average sale price is up at this point in the year compared to the same point last year in Northern Kentucky. The average sale price so far in 2022 has been $286,709 compared to $248,612 at this time last year.
Days that a listing remains on the market has also dropped year over year in May, from 19 last year to 15 this year.
You can see the HousingIQ survey here.