LEXINGTON, Ky. — Thirty-eight percent of Kentucky Realtors expect house prices to fall, while seventy-seven percent expect houses to stay on the market for longer, according to the May 2022 edition of the HousingIQ Survey of Kentucky Realtors.
“The market is at a tipping point. Homebuyers face three challenges—higher house prices, higher mortgage rates, and concerns about the economy. 50% of the survey respondents said some of their buyers had dropped out of the market because of higher mortgage rates while 41% expect a decrease in foot traffic,” said Vidur Dhanda, survey author. “Sellers are trying to get in front of the market slowdown with 61% of the respondents expecting increased price-cutting by sellers. However, that might not be enough for some buyers.”
In the latest Home Purchase Sentiment Index issue, which tabulates national consumer sentiment, Fannie Mae reported that a survey-high 79% of respondents said it’s a “bad time to buy” a home, as the headline index inched nearer to its April 2020 low.
The Mortgage Bankers Association reported that the national weekly Purchase Index was 21% lower than a year ago.
Dhanda continued: “We have been reporting increased investor activity for the last several months. 38% of the survey respondents said that investor activity had picked up in the last three months and 43% expected increased sales to investors. As buyers get priced out, investors will strategically add to their portfolios as long as the rental market stays strong.”
COMPARED TO A YEAR AGO
- 38% expect house prices to fall—a 26-point increase
- 77% expect houses to stay on the market for longer—a 50-point increase
- 61% expect greater price-cutting by home sellers—a 35-point increase
- 41% anticipate a decrease in foot traffic—a 32-point increase
Based on the monthly survey data, the HousingIQ/Kentucky Realtors Confidence Index provides a composite measure of expectations for the Kentucky housing market over the next year.
The HousingIQ/Kentucky Realtors Confidence Index dropped 5 points from last month to close at 33. Compared to a year ago, the headline index is 19 points lower. A value of 100 corresponds to all respondents agreeing that market conditions will improve. In contrast, 50 corresponds to respondents anticipating no change in market conditions.
The Price Expectation sub-index dropped 5 points from last month and is 24 points lower from a year ago, reflecting a continued slowing down in price growth. The Buyer Power sub-index gained 11 points and is 34 points higher than last year, indicating the increasing leverage buyers are getting in the market. The Homeowner Stress sub-index was mostly unchanged and is 2 points lower than a year ago.
The survey results are available here.
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