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Kentucky
Slowed by the credit crunch the real estate down turn hasn’t left Kentucky out even though the state has comparatively fewer foreclosures. The subprime euphoria gone a wry has landed in the Blue Grass State and it’s not letting go any time soon.
In housing markets in Kentucky where lower consistent appreciation has been the hallmark, loose lending guidelines and subprime loans artificially helped boost the markets, and now real estate sales are beginning to hit the brakes.
In Lexington consistent low appreciation has run hand in hand with steady growth for nearly a quarter of a century. But the credit crunch has changed all that, producing an over abundance of homes listed for sale and over financed properties.
New home sales are down, and builders are beginning to offer incentives to capture buyers, fearing the worst is still ahead. Lexington will see a further slow down in home sales in 2008, according to the Housing Predictor forecast and average home prices will deflate 5.2%.
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| City |
Forecast |
| Louisville |
− 4.1% |
| Lexington |
− 5.2% |
| Paducah |
− 3.2% |
| Bowling Green |
− 2.7% |
Home sales are already down considerably in Louisville, where the inventory has only marginally increased. But the homes coming on the market for sale are expected to increase as more home owners facing resets in adjustable rate mortgages list their homes. Foreclosures haven’t yet had a major impact in Kentucky, where there was less 100% financing than in the majority of states.
The slow down in home sales is projected to increase through 2008 in Louisville by Housing Predictor, which forecasts a slight drop in home values for the area at 4.1%.
However, it’s different all together in Bowling Green, where home sales have been maintaining there movement, despite a slight slip in prices from the markets peak. Bowling Green may have the single strongest local economy in the state as gross domestic output by businesses increased 10% last year.
Home sales are only slightly off, but are forecast to slow more with moderate deflation of 2.7%.
Paducah has already seen changes in its market slow things down drastically with increasing foreclosures. But the area saw home prices increase less than many other more urban areas of the state and as a consequence will see less deflation at only 3.2% for the year.
The slow down should last well into the year, and could not improve much until 2010 with additional fall out from the credit crisis.
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