The housing market was just racing along in Kentucky, home of one of horse racing's finest outings, and then the inevitable happened. Real estate sales slowed and prices followed. New home sales are taking a hit, and builders are fearing the worst. The credit crunch is squeezing Kentucky.
In Lexington home sales are down considerably as new builders offer more incentives to get qualified buyers to get off the fence. Home prices didn't race up in Lexington like in other places. They sort of ticked up slowly until they ceased to move much at all. The housing market in Lexington is projected to remain sluggish through 2009 and deflate a forecast 10.8% for the year as the market catches up with an excess of inventory.
In Louisville, where the Kentucky Derby is run, the weak performance of sales is turning into a trend as prices decline slowly. Louisville didn't experience the frenzy double-digit housing inflation elsewhere, which is bringing Kentuckians a softer landing. Nearly a third fewer homes are selling as financing is harder and harder to get.
But there are bright spots in the market. In downtown Louisville, a new condo development has nearly sold out ranging in price from under $100,000 to more than $3 million a unit. The development is an exception to the rule, which will bring sluggish sales through 2009 on forecast deflation of 9.7% in home values in Louisville.
 |
| City |
Forecast |
| Louisville |
− 9.7% |
| Lexington |
− 10.8% |
| Paducah |
− 1.2% |
| Bowling Green |
− 11.3% |
In Bowling Green job lay offs at the GM Corvette Plant have been hurting the local economy. The community had the strongest domestic output in the state until the credit crunch hit and now more job cuts are expected, which are acting to slow real estate sales. The shake out of the Big 3 auto deal and eroding consumer confidence has people worried in Bowling Green.
Bowling Green and other places in Kentucky, Illinois and Indiana supply car parts to auto makers and many suppliers are worried about the Big 3's future.
Higher foreclosures are just beginning to impact the marketplace in Bowling Green, which are expected to increase as economic conditions weaken in the current recessionary economy. The market is forecast to see average home values drop 11.3% in 2009.
In extreme Western Kentucky, the real estate market is an exception to the national fall out of the credit crisis. Homes are still selling at a relatively healthy pace. Local banks are making the loans to keep the Paducah housing market afloat. Prices have actually been appreciating in Paducah, not that it will last long into 2009.
Paducah borders Illinois and is a retail center for a dozen counties on the mighty Mississippi River. When gas prices dropped retailers reported higher sales and home sales improved pressuring the market higher. Housing Predictor forecasts home prices will deflate a minor 1.2% for the year in Paducah. Automobile sales and the sale of durable goods are already down in the area. Paducah saw home prices appreciate less than any other area in the region during the national real estate boom.
