LEXINGTON, Ky. (WKYT) – Buying a home is part of the American Dream, but experts continue to say that right now in Lexington, realizing that dream can be harder — particularly for first-time home buyers who find themselves in a competitive market with rising prices.
“Things are a little tougher for first-time home buyers right now,” said Susie Basham, agent at The Agency, “because they’re competing with a lot of other first-time home buyers and investors. ”
As home prices rise, analysts say investor demand is strong, allowing them to charge higher rents or sell renovated homes at higher prices.
Investors bought more than 18 percent of U.S. homes purchased in the fourth quarter of 2021, according to Redfin, another real estate broker. Their analysis found that the proportion of investor purchases in 40 major US metro areas ranged from 6% in Providence, Rhode Island, to 32.7% in Atlanta.
Using Redfin’s methodology – which defines an investor as any buyer whose name contains at least one of the following keywords: LLC, Inc, Trust, Corp, Homes – a WKYT Investigates analysis of two and a half years of home sales in Fayette County online show records published that investor demand in Lexington remains strong.
The percentage of homes purchased by investors in the fourth quarter of 2021 was about 30%, which would put Lexington at the top of the metropolitan areas analyzed by Redfin. A similar proportion was also carried over into the first quarter of 2022.
(Note: This is an approximate calculation as this method does not take into account Individuals who buy real estate as an LLC for financial, legal or personal protection or for other purposes, such as B. Parents helping their children buy their first home.)
Basham says the great investor demand here in Lexington stems from the city itself, its proximity to other major cities, and the quality of life here.
“It makes the housing market a little bit more competitive, a little bit harder for someone to get into their first home,” Basham said of the impact, “but if you have a strong credit record, you’re working with a lender, you’re working with a broker.” , you can fight that.”
Sales here flattened out in April, according to the Lexington-Bluegrass Association of Realtors. Analysts believe some buyers are marginalized again amid rising home prices and interest rates. LBAR says the average home price rose to $245,000 — up 16% from a year ago.
However, all these factors affect not only the buyers, but also the tenants. In the midst of months of rent increases, renting is still not getting any easier, according to experts.
“What has struck us here at the Community Action Council is that housing is becoming less affordable and increasingly difficult to find,” said Patrice Muhammad, communications manager at the Community Action Council, “particularly for those on low- and ultra-low-incomes.”
Fewer vacancies and too few offers make the search more difficult and take longer, explained Muhammad. She said they’ve also seen that landlords right now have the luxury of being more selective, perhaps raising the rent or charging more income to qualify.
According to Apartment List rent estimates, Lexington saw the largest monthly rent increase in the country in May — an increase of almost 18%.
Community Action Council efforts are currently focused on housing stabilization – helping people stay in current homes by paying overdue rents and a few months into the future. It’s a mission that may be more important than ever given the current market.
“Because as we know, it doesn’t get any better if you have to leave your current place of residence,” Muhammad said. “You will have to look for another apartment, hopefully comparable area, comparable rent; it is almost impossible to find.”
Proponents continue to say the city needs more housing and more affordable housing, especially as inflation drives up the prices of almost everything. (Rental costs make up about a third of the consumer price index, which is used to measure inflation.)
Real estate agents say new construction hasn’t been able to keep up with demand, and despite a 3% increase in the number of homes listed compared to the same time last year (per the LBAR report), there aren’t enough existing homes to keep things up to keep affordable, Basham said.
Interest rates are rising, but experts believe that demand in Lexington will exceed supply — particularly in the affordable housing space.
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