Kentucky mortgage bankers won the tentative backing of Gov. Ernie Fletcher in their ongoing campaign to update the state’s lending laws to better protect consumers, the Lexington Herald-Leader reports.
After a slow start, the Kentucky real estate market will “pick up steam in the spring,” the president of The Market Edge, a Knoxville housing research firm, told the Home Builders Association of Lexington on Tuesday.
Dale Akins predicted that building permits will be down by about 10 percent nationally in 2007, but only 5 percent in Lexington, Louisville and other Southeast cities where his firm collects building permit data.
The biggest threat is psychological.
The media, Akins observes, generalizes as if there is one national housing market that behaves uniformly, when in reality there is actually a diverse collection of local markets.
“I’m concerned that the media will get it wrong and cause home buyers to get stage fright,” Akins told the home builders. “The picture in most markets is not nearly as gloomy as they make it out to be.”
Earlier Tuesday, the National Association of Realtors said home sales of existing properties rose by 3 percent in January, the largest gain in two years, raising hopes that the worst of the slump might be over.
The national median home price, however, fell for a sixth straight month as home mortgage loan demand continued to lessen nationally. The median price dropped to $210,600, a decline of 3.1 percent from the figure of a year ago.
Akins said the slump in the Lexington market is hard to understand because job growth continued and Kentucky mortgage rates remained low in 2006 even as building permits declined by 30.1 percent in Fayette County - and by similar amounts in several nearby Bluegrass counties.
Permit totals generally move in the same direction as jobs.
“My concern for Lexington is that politically, the powers that be don’t realize how much we as an industry impact the housing market or, worse, maybe don’t care,” said Akins, who is also a real estate developer.
“The markets that are doing well have one thing in common,” he said. “The politicians support growth and realize that we don’t destroy communities, we create them.”
The five hottest areas of Lexington for home mortgage activity, based on 2006 residential permit values, are Hayes Boulevard off Richmond Road, Man o’ War Boulevard and Interstate 75, the Todds Road/Man o’ War area, and the Clays Mill-Boston Road area along Man o’ War.
SOURCE: Lexington Herald-Leader
Snowmen lined Lexington’s streets in past winters.
This year, the Herald-Leader reports, it’s For Sale signs.
The signs have been multiplying since last summer when the national housing slump arrived in the Bluegrass State, and even the optimistic forecasters say this unwanted visitor is unlikely to leave before next summer.
So what’s the problem? Kentucky mortgage rates are low. The economy is strong. But there’s too much inventory for the market to recover for at least another six months. After that, it’s anyone’s guess.
“Everything I am reading says the second and third quarter should really look up,” says Becky Murphy, president of the Lexington-Bluegrass Association of Realtors.
Others aren’t as sure.
“The best indicator … is probably the housing futures market, and it is showing price declines (and sluggish demand) for at least a year to a year and a half,” said Brent Ambrose, a Pennsylvania State University economist who previously headed the Center for Real Estate Studies at the University of Kentucky.
Falling home prices and weak demand can be good news for buyers in a tepid Kentucky housing market, but sellers, on the other hand, are starting down more long delays and financial stress.
“You just have to wait and see what you get. I think a well-priced house will sell, even in this market,” said Katie Blair of the local Realtors association.
“With [mortgage rates] that have dropped… a little bit, and the weather, hopefully, will get better, I’m feeling pretty optimistic,” she said. “We have the time to wait.”
On Bay Colony Lane in Masterson Station, Eric and Kristy Little “put the ‘for sale’ sign in the yard on the first of October.”
The listing price was about $217,000. Today it’s $205,000.
They have had only a few expressions of interest. No offers.
“I’m still optimistic,” Kristy Little says. “You just have to be patient. I knew going into it that October wasn’t the best time to sell.”
Now, rather than continuing the for sale by owner approach, the couple is looking into getting a Realtor. Kristy Little is hoping that with good weather and tax refunds in their pockets, buyers will come out to look.
“It’s just really frustrating,” she said. “Because I know this is a really good location and the area appreciates so quickly. I just think this is a great deal.”
Many other homeowners in the Kentucky housing market and all around the country are feeling the same frustrations as the Littles.
Existing home sales declined in 40 states and in half the United States’ metro areas during the last three months of 2006, and home prices have followed suit, the National Association of Realtors reported last week.
Meanwhile, the Commerce Department said new housing starts plunged 14.3 percent in January to the lowest level since August 1997.
Why are sales slow?
The selection of new and existing houses is the highest in years and prices are beginning to fall. The economy is strong and employment is strong, so why are home sales so sluggish?
“I think they (buyers) are sitting on the sidelines waiting to see if prices maybe aren’t going to go down a little bit,” Blair said.
“The good side of that is once people wait and see, we are going to have a lot of additional people buying and that will be good for the industry.”
The Realtors’ association says sales of houses, town houses and condominium apartments in the Lexington area were down 3.2 percent in 2006 after five consecutive years of record sales.
The average sales price was up 1.8 percent compared with 2005, but the area’s average days on market came in 10 longer than in 2005.
Sales in the first half of 2006 paralleled the record-breaking pace of 2005, but slowed in the second half of the year.
In December, 5 percent fewer houses, town houses and condominiums were sold than in December 2005, and prices were down nearly 6 percent as home loans became too expensive for many residents.
It also took 20 days longer to sell a house in December, and the inventory of unsold properties was 48 percent higher than a year earlier.
“The past year (2006) was still our third-best year ever,” Murphy said.
ARTICLE AND PHOTO SOURCE: Lexington Herald-Leader
Permits for residential remodeling hit a three-year high in 2006, according to BuildEx, according to the Community Press, which cites the Home Builders Association of Northern Kentucky’s permit tracking service.
A surge in home improvement loan activity helped spark a total of 1,197 permits for home remodeling projects were issued last year in the region, for a dollar volume of $37.6 million.
In 2006, Boone County issued 444 permits, followed by Kenton County with 415 permits, Campbell County with a total of 265 permits and Grant County with 73 permits.
A total of 1,095 permits were issued in the Northern Kentucky housing market throughout 2005, while 947 permits were issued in 2004.
Last year’s dollar volume of $37.6 million was 43.5 percent higher than the dollar volume of $26.2 million registered in 2005, when Kentucky mortgage demand was at its peak, along with most of the U.S. The total came in 56 percent higher than 2004’s dollar volume of $24.1 million.
Boone County’s 444 remodeling permits last year were off slightly from the 451 issued in 2005. The 415 housing permits issued in Kenton County last year were up dramatically from the 320 issued in 2005. Campbell County’s 264 permits issued in 2005, were only one less than the 265 issued in 2006.
The association attributes the increase in remodeling to a combination of factors, including a growing percent of homeowners who prefer to make changes in their existing space to accommodate a changing lifestyle.
In addition, experts believe a number of homeowners have opted to remodel rather than move, due to the slowdown in existing home sales.
The long run of home sales records in Greater Cincinnati slammed into a solid foundation wall last year as the number of home sales in 2006 declined by 4.5 percent compared to the record year of 2005.
According to the Kentucky Post, year-end sales statistics released Thursday in Cincinnati and Northern Kentucky showed that 32,023 homes changed hands last year in transactions that totaled about $5.6 billion.
The decline throughout the region wasn’t nearly as severe as what was experienced nationally, where home loan costs forced many out of the market and sales fell by 8.4 percent. Sales declined by about 5.7 percent in Cincinnati, its Ohio suburbs and a sliver of southeast Indiana, where a total of 25,204 homes were sold.
The Northern Kentucky Association of Realtors said 6,819 homes - or 2.4 percent fewer than 2005 - sold during 2006.
Cincinnati and its suburbs had reported record sales for six consecutive years, through 2005, as the residential real estate market throughout the country boomed - due in large part to low Ohio mortgage and Kentucky mortgage rates, a strong economy and low unemployment.
Home sales in Cincinnati and Northern Kentucky set four consecutive annual records from 2002 to 2005, when the total value of transactions topped $1 billion for the first time. But a saturated market and rising interest rates resulted in a slowdown in sales.
Although the number of sales declined in 2006 throughout the Midwest, Northern Kentucky topped the billion dollar mark again, as area home buyers paid nearly $1.07 billion for Northern Kentucky homes last year.
“We’re pretty excited that we broke the one billion dollar mark again and had our second best year ever,” said Janie Wilson, associate manager of the Sibcy Cline office in Ft. Mitchell, who added that she thinks sales have picked up during the first month of the new year.
The average asking price in Cincinnati last year was $178,298, which represented, roughly the same as in 2005. The average price in Northern Kentucky was $153,152, up $510 over the average for all of 2005.
Tom Steele, president of the Cincinnati area board of realtors, found some solace in the fact that the Cincinnati numbers - including those in the northern portions of the Kentucky housing market - were better than the national average.
“Considering the downward trend of home sales across the nation in ‘06, Cincinnati didn’t perform too badly,” Steele said in a statement. “First-time buyers last year fared pretty well. It was some move-up buyers who had difficulty, since most of the buyers sell their home before buying their next one.”
The cooling housing market got a little chillier in November for Greater Cincinnati and Northern Kentucky.
“Mortgage rates are attractive, there is an ample supply of homes for sale and the job market is good,” said Dave Otto, president of the Cincinnati Area Board of Realtors. “We’ll just have to see if the market resumes its normal upward trend in January.”
In November, the Cincinnati area saw 1,708 home closings, compared to 1,975 in November 2005, a 13.5 percent drop. The average sale price fell to $173,593 from $183,212, and gross volume was down 18 percent, to $296.5 million from $361.8 million.
Year to date, 23,526 homes have been sold, versus 24,781 in the year-ago period. Potential buyers are waiting for prices to fall before they commit to an Ohio mortgage it appears.
In the Northern Kentucky housing market, 494 homes were sold during the month, compared to 507 in November 2005. The average price rose to $158,910 from $151,507 a year ago, and the total volume jumped to $78.5 million from $76.8 million.
Year to date, 6,300 houses were sold, versus 6,470 for the first 11 months of 2005. The average price rose slightly, to $156,478 from $155,248, but total volume fell over the period, to $985.8 million from $1 billion.
Home prices in Louisville, Ky., have continued to increase in the last few months, standing in the face of a national trend that saw a record drop in the price of U.S. homes last month, the Louisville Courier-Journal says.
“The median price of an existing home in this area was $138,000 through the first nine months of the year,” said Lisa Stevenson, executive V.P. of the Greater Louisville Association of Realtors. “That’s a 1.1 percent increase over the $136,500 figure through September of last year.”
That’s down from a 2.4 percent increase reported earlier in the year by the Office of Federal Housing Enterprise Oversight (OFHEO).
In light of the numbers released yesterday by the National Association of Realtors, however, the Kentucky housing market is doing well.
As mortgage rates have risen since the peak of the housing boom a year ago, sales of existing homes have fallen by 1.9 percent to a seasonally adjusted pace of 6.18 million units as of September. It was the sixth straight drop in that statistic and the slowest sales rate since January 2004.
Louisville sales are flat so far this year.
The national price of a single-family home fell to $219,800 last month, a drop of 2.5 percent from September 2005. Regionally, median prices were down 1.6 percent in the South, 2.3 percent in the Midwest, 4.3 percent out West and 5.1 percent in the Northeast.
Housing, which had set sales records for both new and existing homes for five consecutive years, has been losing altitude in a hurry this year, as consumers were battered by rising home mortgage loan costs, soaring energy prices and a generally slower economy.
Joe Simms, president of the Greater Louisville Association of Realtors, said that national numbers are skewed by plunging real estate values in volatile markets such as California that don’t necessarily apply to Louisville.
Like Tennessee mortgage demand, Kentucky is still seeing strong activity and moderate home buying patterns. Certain Louisville areas may be seeing modest value declines, Simms said, but overall the market has seen prices fall only once — in 1982, when mortgage interest rates reached 17 percent.
Simms called Louisville a buyer’s market, a term Realtors usually try to avoid, even in this period of uncertain mortgages and stagnant sales. He thinks would-be owners have been scared off by the national reports, contributing to the local market’s sluggishness.
The Louisville market “is not going to plummet; it never does that,” Simms said. But “when in doubt, it’s human nature to say no.”