Kentucky REALTOR® News
One of the most important jobs we do as an organization is to represent you, our members, on issues and concerns affecting your businesses. We ask you to please open the survey and spend the few minutes it will take to complete it to provide us with valuable input.
One of Kentucky REALTORS’ top priorities in 2017 is tax reform. During the 2017 State of the Commonwealth Address, Governor Matt Bevin indicated that he plans to call a special session later this year to reform Kentucky’s tax code. In a recent interview, Governor Bevin stated:
“I think people will be surprised at what I am going to be proposing when we have a special session later this year to address taxes and pensions. I mean I do think that we can have overall tax rates come down while effectively gathering more revenue by not exempting so many things. We have so many tax loopholes in this state. We’ve got to move to stopping the production tax where we’re suffocating those that produce the wealth of this state…We should be moving to more of a consumption-based tax."
It is our understanding the Governor hopes to begin unveiling his plan in the next couple months to gain support from stakeholders prior to the special session being called. Current indications are this will take place sometime in September. In order to ensure we understand what tax-related issues are important to you and your business, while also having an opportunity to get in front of the key decision-makers in the Executive Branch and Legislature, we would appreciate you completing the following survey. Your input will be used to establish our Legislative Priorities for the Special Session.
Your input is invaluable to us and our organization's leadership will be using the data and input you provide us to guide them in determining our Legislative Priorities and the strategies we will use to be involved in them.
Thank you in advance for being an engaged member and doing your part to ensure we are the most effective business advocacy organization in the Commonwealth.
Coming off a strong 2016, Kentucky real estate continued its momentum in 2017 as January saw home sales break the 3,000-unit mark, a new high for the month. The 9 percent gain (3,047 in 2017 versus 2,637 in 2016) follows the national trend where housing increased at its fastest pace in almost a decade.
The median price rose 2.5 percent in January to $116,946, up from $114,123 a year prior. In Kentucky, median home prices have increased monthly, year-over-year, in 54 of the previous 61 months. Nationally, prices rose considerably in January as it marked the 59th consecutive month of year-over-year gains.
“Kentucky is still seeing a shortage of inventory, and if the economy continues to improve, more buyers are going to be in the market as the spring selling season approaches,” stated Mike Becker, 2017 president of Kentucky REALTORS®. “Affordability in the state makes it easier to purchase a home, however, there just aren’t enough properties available to meet the current demand, especially for the first-time buyer.”
Inventory levels were down over 30 percent in January compared to the same period a year earlier and days on market were down 14 percent. The housing market continues to struggle with available homes even as consumer confidence soared to its highest level in the history of NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey.
Lawrence Yun, chief economist for the National Association of REALTORS, said “the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate.” He continued by saying “competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower and mid-market price range."
With the recent spike in consumer confidence and the number of households that believe now is a good time to buy a home, competition in the housing market may, in fact, remain strong for several months. The recent decision for the Federal Reserve to raise its key interest rate and the indication that two additional increases are likely to occur later in 2017, buyers may be even more eager to jump into the market before the spring season ends. Mortgage rates have inched up over the previous months in anticipation of the Fed increase, averaging over 4 percent in February from a near record low of under 3.5 percent last summer.
“Buyers who are qualified to purchase may want to consider getting into the market sooner rather than later as financing conditions may change going forward,” stated Becker. “Inventory shortages aren’t going to significantly improve which means buyers may also have to search longer than expected to find a home that suits their needs.”
Kentucky REALTORS® is one of the largest and most influential associations in Kentucky. Founded in 1922, Kentucky REALTORS® represents more than 10,300 REALTORS® who are involved in all aspects of real estate, including residential and commercial real estate brokers, sales agents, developers, builders, property managers, office managers, appraisers and auctioneers.
To view housing statistics for the state, as reported to Kentucky REALTORS®, visit housingstats.kyrealtors.com.
A recent report on housing demand for Fayette County forecasts overall demand for 22,780 new housing units by 2025 including 15,160 new single family residential units, 6,275 units within multi-family structures, and 1,345 units classified as condominiums or "other” units.
The Fayette County Housing Demand Study, sponsored by a consortium of Lexington stakeholders and governmental officials, cited statistics from the Kentucky State Data Center that suggests Lexington will continue to grow at a rate of 1.2% annually thru 2025, yielding a projected Fayette County population of 354,000.
According to Lexington Bluegrass Association of Realtors (LBAR) 2017 President Ty Brown, "The association wants to make sure citizens’ needs are met by accommodating the expected population growth of the community, and this report sets out the very real challenges in the Fayette County housing market moving forward. Fayette residential sales are strong currently, and have been so for a relatively long time. It is a very tight market locally. And the lack of inventory is increasingly concerning.”
Declining inventory, fueled by projected Fayette population growth, will lead to upward pressure on home prices, diminishing housing affordability. A by-product of this increased demand will be that market-rate housing will be less affordable to middle income earners and out of reach to lower-income earners.
Shrinking inventory is creating a market where buyers are scrambling for houses which leads to sellers who are hesitant to sell. Sellers are concerned they won’t have a place to go which feeds into the continued decline of inventory.
Further, the report identifies clearly the effects of the currently unmet housing demand within Fayette County, which is forcing people to travel farther to and from their job into adjacent communities where they reside. Fayette County was home to 164,251 jobs in 2002, and in 2014 the number of jobs swelled to 191,977, equivalent to a growth rate 16.9%.
However, Fayette County jobs are increasingly filled by commuters from outside the county. In 2014, 49.1% of all Fayette jobs were filled by Fayette residents, down from 61.1% in 2002. Despite the growth of 28,000 jobs, the total number of jobs filled by county residents decreased from 100,431 in 2002 to 94,338 in 2014.
Job growth and economic opportunity drives the housing industry. A home is where each job goes at night. When communities fail to meet their demand for housing, housing prices rise, people commute further, and the community’s quality of life suffers, as does its infrastructure and environment.
The report also projects that homeownership in Lexington will remain low relative to its historical average, with homeownership only expected to increase to 52.75% in 2025 from its 2015 level of 51.5%. Also, the population continues to trend older with over half of anticipated householders from 2015 to 2025 to be age 65 years or older.
Unemployment rates fell in 90 Kentucky counties between January 2016 and January 2017, rose in 23 and stayed the same in seven counties, according to the Kentucky Office of Employment and Training, an agency of the Kentucky Education and Workforce Development Cabinet.
Woodford County recorded the lowest jobless rate in the commonwealth at 3.6 percent. It was followed by Oldham County (3.9), Fayette County (4.0), Shelby County, (4.1), Scott County, (4.4), Jessamine and Spencer counties, (4.5) and Boone, Campbell and Warren counties (4.6).
Magoffin County recorded the state’s highest unemployment rate at 17.9 percent. It was followed by Elliott County (14.0) Carter County (12.7), Wolfe County (12.1), Leslie County, (11.8), Lawrence County (11.7), Menifee County, (11.5), Harlan County, (11.4), Lewis County, (11.3) and Clay County (10.9).
In contrast to the monthly national and state data, unemployment statistics for counties are not seasonally adjusted. The comparable, unadjusted unemployment rate for the state was 5.8 percent for January 2017, and 5.1 percent for the nation.
Unemployment statistics are based on estimates and are compiled to measure trends rather than actually to count people working. Civilian labor force statistics include non-military workers and unemployed Kentuckians who are actively seeking work. They do not include unemployed Kentuckians who have not looked for employment within the past four weeks. The statistics in this news release are not seasonally adjusted because of the small sample size for each county. The data should only be compared to the same month in previous years.
Landlords now held liable when a tenant’s dog bites someone would receive some relief under a bill that advanced today in the Kentucky House.
House Bill 112, sponsored by Rep. Stan Lee, R-Lexington, would effectively remove landlords from liability for their tenants’ dogs under the state’s dog bite laws by redefining a dog owner as someone who both keeps and cares for a dog on property that the person both occupies and owns or leases. Current law does not specifically include tenants under the definition of dog owner.
Lee said the bill, which passed the House by a vote of 87-9, would give landlords the same protection they enjoyed under Kentucky’s dog bite laws prior to 2012 when the Kentucky Supreme Court ruled in the case of Benningfield v. Zinsmeister. The landlord in that case was found responsible “despite the fact that landlord had made an effort to go to his leased tenant and say ‘please remove that dog,’” said Lee.
Rep. Jeff Greer, D-Brandenburg, an insurance agent, said he supports HB 112. Greer said he has had clients who own rental property struggle with the current law even in cases where tenants agreed in writing that they would not have a dog.
“If they get a dog later, what bothers me is my insureds … are held accountable. I don’t think that’s fair,” he said.
Among those voting against the bill was Rep. Angie Hatton, D-Whitesburg. Hatton said there is no protection for dog bite victims under the legislation.
“If six pit bulls were trained to kill and let run loose by a tenant, there’s no liability. There’s no protection under this legislation for any person who’s injured by a dog…” she said.
HB 112 now goes to the Senate for its consideration.
To view the bill, click here.
The Kentucky REALTORS® recently awarded the Jess and Carolyn Kinman Award to Representative David Osborne of Prospect. Representative Osborne is a true champion of the real estate industry, lending his support to HB 149 in 2015 that increased education for new real estate licensees which promotes a higher level of professionalism in the industry. In the past, he co-sponsored HB 533 that prohibited private transfer fees in real estate transactions and, in 2009, supported the Small Business Tax Credit and New Home Tax Credit to help slow the decline of the housing market during the Great Recession.
“It is a great honor to have been selected by my fellow REALTORS® for this prestigious award,” stated Osborne. “Jess Kinman was a wonderful individual who made tremendous contributions to the real estate profession. To receive an award in his memory is indeed humbling.”
Representative Osborne, serving District 59 which includes part of Oldham County, is a REALTOR® with Barry Smith Realty in Shelbyville and serves the House as Speaker Pro-Tempore. His civic engagements include Oldham County Chamber of Commerce, Kentucky Equine Education Project (KEEP) and the Thoroughbred Club of America. He graduated from the University of Kentucky with a Bachelor’s of Science degree.
As part of the award, First Federal Savings Bank of Frankfort makes a charitable donation in the name of the award recipient. This year, Representative Osborne selected the Hope Health Clinic in LaGrange, Kentucky.
The award is named in honor of Jess, a former Kentucky REALTORS® president and REALTOR® of the Year who passed away in 2007, and his wife Carolyn, who worked for many years at the Legislative Research Commission and General Assembly.
The Kinman Award is presented to an outstanding Kentuckian whose involvement in the legislative and political arenas have left an indelible mark on all those who have known or worked with him or her.
Inventory could be an issue in 2017
After a record breaking year in 2015, Kentucky’s number of homes sold set new highs in 2016. Total home sales were the highest ever recorded in the state at 52,123, an 8 percent increase over the 48,259 sold in 2015. The Kentucky Association of REALTORS® (KAR) reported that over the past five years, home sales increased monthly, year-over-year, in all but seven months.
In both November and December, homes sales hit a new record, surpassing the 4,000 unit threshold with 4,088 and 4,131 homes sold respectively. These figures represent a 26.9 percent increase over the 3,222 homes sold in November 2015 and a 9.2 percent increase over the 3,782 homes sold in December 2015.
Home prices in the state increased to a median of $122,125 for the year, the highest annual median price recorded in the state, exceeding the record of $119,091 for 2015 by 2.5 percent. Even with back to back record years, the increase in price for Kentucky was far below (just over 55 percent) the national median home price of $221,500. In December, Kentucky’s median home price climbed to $120,910, another record for the state.
Total volume of all homes sold in Kentucky broke the $9 billion mark for the first time with $9.17 billion in sales. This surpasses the $8.21 billion sold in 2015.
“2016 was a unique year for real estate in Kentucky,” stated Mike Becker, 2017 president of KAR. “Low inventory was an issue in just about every region of the state, but with low interest rates and a continuous demand from qualified buyers, homes didn’t stay on the market long if they were priced appropriately.”
At the end of the year, housing inventory across Kentucky was down 25 percent from 2015. Having 4.6 months of inventory to close out 2016 (compared to 6.1 months in 2015) puts the state into what is characteristically a seller’s market, but consumers are seeing affordable prices on the buying side. Days on market (DOM), an indicator that shows housing demand, dipped 5.7 percent to 131.9 days in 2016. In larger metro areas in Kentucky such as Lexington and Louisville, days on market are down into the range of two to three months.
Even though official figures aren’t yet available for 2017, local associations across Kentucky are remaining optimistic for another banner year. Reports are showing a strong economy, lower unemployment rates and the federal interest rate was left unchanged at its last meeting.
“Kentucky’s economy remains stable and that is always a good thing for real estate,” says Becker. “Our low cost of living compared to most of the country and the momentum carried over from an active 2016 is the foundation needed to sustain a healthy real estate market throughout the year.”
On the national level, as it was echoed throughout many Kentucky regions, inventory is the biggest variable on how 2017 shapes up for real estate. New construction seems to be the main factor related to inventory. Lawrence Yun, chief economist for the National Association of REALTORS® (NAR) said, “Housing options for both buying and renting remains a pressing concern because of another year of insufficient home construction. Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production.” In fact, nationally, total housing inventory was at the lowest level since NAR began tracking the supply 18 years ago.
“We are at a time where, in most areas, well priced homes are moving fast due to low inventories. It has become a low supply versus high demand issue and buyers who want to get in the market have to move quickly to secure a home,” continued Becker. “Boosting home construction should give buyers more options and help sellers feel more comfortable putting their homes on the market. Home building may ramp up going forward but if you need to sell now, the market seems primed.”
The Kentucky Association of REALTORS® is one of the largest and most influential associations in Kentucky. Founded in 1922, KAR represents more than 10,300 REALTORS® who are involved in all aspects of real estate, including residential and commercial real estate brokers, sales agents, developers, builders, property managers, office managers, appraisers and auctioneers.
To view housing statistics for the state, as reported to KAR, visit housingstats.kar.com.
The Kentucky Economic Development Finance Authority has given preliminary approval to Amazon to invest $1.494 billion in a centralized hub at the Cincinnati/Northern Kentucky International Airport that could eventually create more than 2,700 jobs.
The $1.494 billion investment is believed to be the largest project in state history.
The hub, which would be located in a new facility, would serve Amazon’s growing fleet of Prime Air cargo planes.
Amazon, which would invest $1,032,400,000 on equipment and $461,600,000 on building and improvements, would initially hire 100, with a goal of adding an additional 100 jobs per year, to 600 jobs within six years, at an average salary of $26.50, including employee benefits.
Amazon has been approved for $40 million in tax incentives over 10 years.
Overall, more than 10,000 full-time employees already work at 11 sites in Kentucky. Read More
Kentucky’s seasonally adjusted preliminary unemployment rate was unchanged from November 2016 to December 2016 at 4.8 percent, according to the Office of Employment and Training (OET), an agency of the Kentucky Education and Workforce Development Cabinet.
The preliminary December 2016 jobless rate was 0.9 percentage points lower than the 5.7 percent rate recorded for the state in December 2015.
The U.S. seasonally adjusted jobless rate for December 2016 was 4.7 percent, according to the U.S. Department of Labor. Read More
Kentucky’s seasonally adjusted preliminary unemployment rate for November 2016 was 4.8 percent from a revised 5.1 percent in October 2016, according to the Office of Employment and Training (OET), an agency of the Kentucky Education and Workforce Development Cabinet.
The preliminary November 2016 jobless rate was 0.8 percentage points lower than the 5.6 percent rate recorded for the state in November 2015.
The U.S. seasonally adjusted jobless rate for November 2016 was 4.6 percent, according to the U.S. Department of Labor.
Labor force statistics, including the unemployment rate, are based on estimates from the Current Population Survey of households. It is designed to measure trends rather than to count the actual number of people working. It includes jobs in agriculture and those classified as self-employed.
In November 2016, Kentucky’s civilian labor force was 2,004,568, an increase of 7,365 individuals compared to the previous month. Employment was up by 12,437, and the number of unemployed decreased by 5,072.
“In November, our labor force increased by .4 percent,” said Kentucky Labor Market Information Director Kate Shirley Akers, Ph.D. “Over the last year, Kentucky has seen growth in both the labor force and the number of employed, with the labor force growing by 2.8 percent and employment increasing by 3.7 percent.” Read More