The real estate market is showing signs it’s cooling off.
Realtors said the hot housing market is changing, but still strong. Rick Pannell, a real estate broker with Team Pannell Real Estate, said months of record-breaking home sales and low inventory may be changing.
According to the Lexington-Bluegrass Association of Realtors, July was the first time home sales have dropped since the pandemic began.
“It has had an eight percent decrease from the previous year, but it’s still the second highest July on record,” Pannell said.
Pannell said this time of year is usually slower.
“Normally the month of August is because people have taken their vacations, they’re preparing to go back to school, maybe college or high school,” he said.
He said he and his wife, Whitney, also a realtor, are seeing trends in Central Kentucky change slightly. They said sales are still strong.
“They’re slowing down a little bit but not a whole lot,” he said. “There’s still not a lot of inventory out there so that’s creating demand, so that creates that frenzy. Slowing down a bit, but by all means, still a seller’s market right now.”
The real estate boom started last year after a few months of quarantine, while people were feeling a lot of uncertainty.
“As a realtor, and being in the business, it’s been exciting, but it’s also been a little stressful, too,” Pannell said.
The Pannells said, instead of getting 12 to 15 offers for a property, they’re now seeing two to three in some neighborhoods.
“Things are going to stabilize a little bit as more inventory comes on the market, it’ll start to drop prices down a little bit” Rick Pannell said. “You won’t see those record sales and you won’t see people scrambling to make a full price offer with escalation clauses in it.”
Pannell said he’s seeing escalation clauses being used more often.
“In real estate, if a house is listed as say, $495,000, it could get multiple offers at that $495,000,” he said. “If you have an escalation clause built in, it could be at $1,000 more than asking, $2,000 or even $5,000, but if you have an escalation clause built in, it will raise the previous offer. So, if another offer comes in at $497,000, your escalation’s going to go up to $498,000, that offer keeps escalating up to where you have a cap.”
The Pannells added not as many people are building homes.
“The cost of lumber is really affecting new construction,” Rick Pannell said.
Whitney Pannell said she’s seeing some buyer fatigue. She said she prepares buyers to lose three to five houses before they find the right one. She said record low interest rates help balance the market.
Rick Pannell said the way the market’s looking, buyers will be a better position in the coming months.
“People are kind of afraid to put their foot in the market because they know where they want to be, they’ve got to kind of fight it out,” he said.
Pannell said an increasing inventory will help turn down the housing heat.
According to LBAR, both Jessamine and Scott County have a higher median home price than Fayette County.