Confidence, Inventory or Lifestyle

Jackson and frog
Is it time to JUMP??

According to the Wall Street Journal article this past summer, the U. S. homeownership rate is at the lowest level in more than 50 years. That’s quite a shocking number and honestly very puzzling when you look at a world where the home mortgage interest rate is and has been hovering in the 3-5% range for several years now. If someone had told me when I started my career in the real estate industry back in the mid 90’s I’d say that’s crazy. And back when I bought my first home (in the early 80s) the home mortgage rate was 18%! Yes- you heard me right- 18%!!
So what is holding everyone back from jumping into the market and buying right away? I’d say Confidence, Inventory, and Lifestyle.
A lot of what we are hearing from recent college graduates, first- time home occupiers and millennials is that the jobs are not as plentiful as they thought they would be after graduation and their focus is upon landing a quality job in an area that they would want to stay in for longer than a year or two. Therefore- some first time home buyers are delaying the purchase of their first home. Here’s the good news for these buyers; since Kentucky is lucky enough to be served by KHC (Kentucky Housing Corporation) they have lots of low interest and special loan programs for first time homebuyer. Also the Rural Housing Service offers 100% financing for buyers is the rural cities and towns in Kentucky. Unfortunately the RHS loans are not available in the larger cities and counties. Check with your lender often to keep track of which loans work for you. The terms and benefits of many of these special programs should boost the confidence of the buyers just entering the market since many of them are tailored to help “home-starters”.
One of the factors contributing to the low rate of homeownership is the inventory or availability of homes for sale in the area. The availability of homes for sale has fallen drastically since the foreclosure crises either shut down or slowed the builders in the area. The flow of money into development of builders’ lots and building of new homes on speculation has slowed as a result of new lending regulations and caution in the area of new construction. At this point- something’s gotta give.
The supply and demand philosophy tells us that the inflation rate should be rising exponentially, but thankfully the moderate salaries in the area have helped keep down the inflation rate simply based on affordability. If inventory is keeping you out of the game- that’s when you find a partner! A REALTOR® whose job every day is to find the houses- shake the bushes, know the builders and their plans and have real time and accurate access to new listings as soon as they hit the market.
Finally- there is a significant block of people whose lifestyle does not include home maintenance, lawn mowing, and a car drive to the market. Maybe urban apartment living is more your style. Maybe a
neighborhood of patio homes, townhouses and/or condos sound like it fits the bill for what you’re
looking for. Millennials on the move and empty nesters looking to slow down or travel more and
simplify their lives- listen to me! You can still use real estate to build wealth, generate income without
the lifestyle compromise! Be an investor! Think outside the box. Buy a couple of small homes as rental
property. Buy a commercial building for the income and an upstairs for potential living space.
Commercial to residential conversions or combinations are becoming more popular and not so unusual.
Find a good REALTOR® with experience with commercial dealings and connections. Check with an
accountant about getting a good return on investment (ROI) and how to calculate a good deal. Once
you have made some good real estate investment decisions- then you should be able to generate some
“lazy income” through rent or resale of a wisely purchased property.
Whatever the reason for not being a real estate property owner yet- I hope you’ll keep the word “yet” in
the conversation. Real estate remains one of the best and most reliable investments there is. Don’t
miss the chance to take advantage of a good buying climate.
Peggy R. Smith is the Association Executive for the Old KY Home Board of REALTORS®. The Old
Kentucky Home Board of REALTORS® owns and operates the MLS for the Nelson, Washington,
Marion, Larue and Hart Counties in Kentucky and has over 50 years serving our local area.
Member of Kentucky Association of REALTORS® and National Association of REALTORS®


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