LEXINGTON, Ky. (LEX 18) — Tracking your home value of late looks a lot like a broken slot machine that keeps paying out. It just keeps going up. Fourteen percent was the average price increase in Lexington. In Jessamine County, prices were up an average of 16%. In Scott County, they rose by a whopping 28%. And that was in February alone, before the true start of the busy season which the experts call “realtor spring.”
So what gives?
“We need more homes,” said Meredith Lane of Sotheby’s International Realty in Lexington.
Inventory (supply) is down across the board, and buyers (demand) are flooding the market in search of good value given the low interest rates that remain in place. That’s the simple economics lesson. But what’s the reason for the dearth of inventory?
“I really can’t answer that because the people I’ve talked to are still doing the same things, and moving for all the same reasons,” Lane said.
Lane added that it comes down to many deciding to sit tight, because they are concerned they won’t have anywhere to go given the lack of options. What’s the point of having all of that money from the sale proceeds if you’ve got nowhere to go, or simply don’t want to be inconvenienced by the process.
“It comes down to how uncomfortable you’re willing to be for a short period of time, either having two mortgages, or renting for a few months, or living with family,” she explained. Lane also said people could borrow against the equity on their current home in order to finance the new purchase.
John Wemble and his wife are looking to move from Richmond to Lexington, and they are getting first-hand experience with how challenging the home buying experience has become in this climate.
“Got that feeling of what it was like to have your heart broken when the offer got turned down.” Wemble said.
John said he’s only made one offer, and considered making a second.
“I think it was last Wednesday my realtor showed it to me, my wife was going to look at it the next morning and it was already pending,” he said.
Lane explained how that has become a very common scenario in this market.
“(I) put it (a home) on last night, seven o’clock, and I have twenty-something showings today. Got two offers on it and we have more showings until 8:30 tonight,” she said of a home her team at Sotheby’s recently listed.
That kind of competition is causing the spike in prices, but Lane cautions against driving your own asking price too high, or encouraging a bidding war to the point where offers exceed the asking price. Because if the appraisal comes back lower than what’s been offered, or without any loan to value cushion, that buyer will have to come up with some additional cash to satisfy the lender, or you’d have to come down on the agreed upon sale price.
“Most sellers that are seeing these numbers are really happy with what they’re seeing,” Lane said.
But most buyers are growing really frustrated with the lack of what they’re seeing.
“It is true in housing that if this one doesn’t work out, it wasn’t a good fit and we’re going to find one that’s better,” Lane said with years of experience guiding that thought process.
“I’ve had clients tell me, ‘you were right’ about that,” she said.
John and his wife will continue to wait for the same adage to come true for them.
“We like our apartment, so that’s not a problem. We just think the time is right for us.”
They just – like many buyers – need more homes to become available.