Will winter bring a cooling off of what has been a red-hot and record-setting Warren County residential real estate market?
Numbers indicate the traditional slowing of homebuying activity during the winter may carry over into the new year and alter a market that has favored sellers for the past couple years.
The county’s growth, coupled with inexpensive borrowing, created a homebuying market that veteran Realtors like Alan Read of Crye-Leike Executive Realty had never seen.
“This has been a phenomenal couple of years,” Read said. “We have gone through the strongest seller’s market people can remember around here.”
Statistics bear that out. The number of homes sold by Realtors in Warren County has skyrocketed from 1,300 in 2014 to a record 1,637 last year, and that record could be eclipsed if 70 or so homes move before New Year’s Day.
That record demand has driven up prices, with the average selling price of homes in the county swelling from $160,000 in 2009 to $219,000 this year.
Such hyperactivity cut into the inventory of homes, further inflating prices. Jeremy Dawson of Coldwell Banker Legacy Real Estate pointed out that in early 2015 the county’s Realtors had 435 homes listed. That number has dropped to close to 300 at times during the past couple of years.
“I never thought we’d see the number (of homes on the market) that low,” said Dawson, who has been in the real estate business for nearly 20 years.
Inventory that low translated into sellers getting close to 98 percent of their asking price during many recent months. But such off-the-charts numbers gave rise to another trend that promises to stabilize the market.
Homebuilding, which had slumped in the wake of the 2008-09 recession, has rebounded at a frenzied pace. Figures provided by the City-County Planning Commission of Warren County show that the number of single-family lots approved exploded from 47 in 2012 to 1,121 in 2017. Multifamily unit approvals grew from 457 to 2,212 in the same period.
The final numbers aren’t in for 2018, but planning commission Executive Director Ben Peterson said in an email: “I believe it will be another record year for total activity, especially construction. We definitely saw more single-family and less multifamily than in 2017.”
As a result, the inventory of homes is growing. According to the Realtors Association of Southern Kentucky, Warren County had 614 homes listed for sale Nov. 30, a big increase from the 451 homes listed on the same date in 2017.
Much of that growth is due to the building boom, says Realtor Ron Cummings of Century 21 Premier Realty. He pointed out that 183 of the homes are classified as new construction.
Those are primarily higher-end homes, driving the average price of active listings up to its current figure of $320,797.
Those homes aren’t moving as quickly as they have been in recent months. The current average days on market of 138 is up from 111 a year ago. Coupled with that is a slight decrease in the list-to-sale ratio. Homes in Warren County fetched 97.8 percent of their asking price in November 2017. That figure was down to 96.68 percent last month.
Such incremental trends aren’t lost on real estate pros like Cummings, who said: “It has been a seller’s market for 18 to 20 months. Right now it’s probably neutral, but it’s leaning toward a buyer’s market.”
That would be in step with national trends. The National Association of Realtors is projecting that sales of existing homes will decline 3.1 percent this year and continue to decline in 2019. The group also forecasts home prices will fall 2.5 percent next year.
Those trends could translate to a slowdown in the Warren County housing market, but Read doesn’t expect a dramatic change.
“Along about July you could see it shifting some as the Federal Reserve raised interest rates a little bit,” he said. “You started seeing people waiting a little more as they saw how much prices had gone up.”
But that sort of slight cooling-off in a market that has been going full bore may not mean an immediate shift to a buyer’s market, Read reasons.
“Instead of going 100 miles an hour,” he said, “maybe it will slow down to 80.”