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Moles, Marathons, and Groundhogs – Central Kentucky Real Estate Market Update

October 27, 2011

By Mike Wheatley

If you’ve ever been to King’s Island or practically any carnival, there’s always a game on the midway called Whack-a-Mole. The goal of the game is to take an oversized mallet and whack a mechanical mole as they pop out of a hole at various locations on a flat board. The mole pops up for a split second, so it’s a great test of eye-hand coordination and your reflex speed. If you’re really good, you are able to whack dozens of moles and walk away with a giant stuffed animal. If you’re only average, you get the little 4” stuffed animal from under the counter. We are living in a Whack-a-Mole world when it comes to the delivery of economic news, both good and bad. During the same day or even same hour, we will have good retail sales numbers pop up through one hole and before we’ve had time to enjoy the good news, another “mole” pops up with bad employment news, or manufacturing news, or any of the dozens of other economic indicators that are tracked.

Growing up in the late 60’s and early 70’s, we received our news once a day from Walter Cronkite, and usually received a once a month update on how the economy was doing. The information age has created this flood of instant data, and we wonder why buyers can’t seem to make a decision in our market. Just when they think it might be safe to enter the market, there’s a new report of impending economic doom. The availability of information doesn’t create the challenging market we are in, but it sure makes it more difficult to pull out of it.

Central Kentucky Real Estate Market Update

How’s the market? I get that question every day from friends and strangers alike. There is no doubt that this is the most challenging market of my 18 years in the business and I hear the same thing from agents who have been in the business much longer than me. My new answer is it’s like a marathon. Kentucky market statistics show that we are in the middle of a marathon, but we don’t know where the finish line is. Some days it’s raining and cold, some days we’re running uphill, some days we’re running downhill, and some days we are running in perfect conditions. We are only at mile 5 or 6 in a 26 mile race, so we can’t really be concerned about the finish line at this point. We have to keep doing the things that will get us to the finish…keep hydrated, take in energy, and maintain our form and pace regardless of what’s going on around us. We have put in years of training for this race; otherwise we wouldn’t still be in the race. The truth is I don’t know where the finish line is for this current market, but I do know I won’t be around to see the finish line if I don’t continue to take care of the basics.

Bluegrass homes

What we can’t do is become groundhogs. When times become challenging, it can be instinctive for us to retreat to our bunkers and wait for better days. However, if we occasionally stick our heads out of our holes to check on conditions, at some point the market is going to blow right by us and in the meantime we become fat and lazy lounging around in our groundhog holes. This applies whether you’re a real estate agent, a buyer, or a seller. This market will pass you by if you go into groundhog mode. We all have to be more diligent than ever in order to be successful. Even in this market, there are success stories being written every day (locally, we will close nearly 1 Billion dollars’ worth of residential real estate this year). As a buyer or seller, now more than ever is the time you need a professional on your side. As a Realtor, you have to keep working, keep training, keep informed of what’s happening in your market, and be the expert. None of these things will happen if you go into groundhog mode.

With the end of the calendar year approaching, there have been several signs (almost trends) that are encouraging. Number one is our supply of Bluegrass homes. The peak supply this year was lower than last year, and we have seen a steady decline in the number of homes on the market. While the supply is still almost double where we would like it to be, the trend is encouraging. Secondly, we have had several months in a row where we have outperformed the previous year in both closed sales and pending sales. Overall, we will finish this year with numbers very close to last year, but again the trend is encouraging.

Dusting off the crystal ball, I see more of the same for next year. Gradual improvements should continue, but the market will continue to be held back from full recovery mode by restrictive lending practices and the oversupply of foreclosures, bank owned properties, and short sales. Our marathon will continue, but with training and focus, we will eventually cross that finish line, and we will all be stronger for enduring the race.

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Central Kentucky Market Statistics: The Recovery Part 13

May 18, 2011

By Mike Wheatley

Welcome to the May edition of the Recovery series, formally known as the Hangover. The Kentucky Bluegrass is growing at a record rate with the spring rains, and the real estate market for Central Kentucky houses continues to gain momentum as well. Our official monthly market report for April 2011 has been released by the Lexington Bluegrass Association of Realtors®, and here is my take on the numbers, what they mean, and where we are headed.

The three main categories I focus on are pending sales, total inventory numbers, and average sales price. Pending sales for the month of April came in at 664 representing a slight increase over February numbers and 4 consecutive months of increased pending sales! Pending sales numbers look horrible when compared to the same month last year, which was the deadline month for the Federal Tax Credit. The Tax Credit artificially inflated sales and sales prices. From this point forward, we will be looking at historical numbers not artificially influenced by the tax credits. Inventory numbers, while still very high, are up 4% from both the previous month and the same month last year. We still have an 11 month supply of homes which is about triple what we would like to see in a balanced market. Inventory levels will continue to rise throughout the year until around September, when they typically begin dropping off again. Average sales price for the month was down about 3% from March 2011 and April of last year. I don’t see the 2 to 3% bounce in average price as significant and in fact indicates we have reached a plateau of stability in our local market values. The ratio of final sales price vs. list price remained basically unchanged when compared to the previous month, and when compared to the same month last year.

Most of the trends I’m seeing indicate a “glass half full” outlook for our market. There is one cloud on the horizon that I’ve noticed in the past few months. As the number of bank owned sales and short sales continue to increase, they are forming a much broader base of comparable sales for our market. When I look at closed sales for the past 3 to 6 months in any particular neighborhood, it’s not uncommon in some areas to see these “distressed sales” comprising 50% of the data available. What does this mean? Appraisers use historical sold data to justify sales prices for lenders so if this trend continues, property values will be impacted at some point. This something I will be watching closely in the months to come.

The market in a nutshell: values are steady, supply is high, great homes priced right will sell quickly. If you bought a home during the peak of the market (2005-2006) and you have to sell now, it could be worth less than you paid.

Below is a summary of some of the key indicators for our local market:

Kentucky Market Statistics

As always, my goal is to provide accurate, timely information on our local market. Feel free to call or email with any questions or comments. Should you have friends or family in need of a real estate pro, please pass my name on to them.

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Featured Property – 753 Wyndham Hills Dr Lexington, KY 40514

May 17, 2011

By John Day

We’ve got a treat for your today! Mike Wheatley recently listed a gorgeous ranch on a basement in Willow Bend subdivision. He sat down and gave us some extra details about this Featured Property at 753 Wyndham Hills Dr in Lexington, Kentucky.

753 Wyndham Hills Dr

What distinctive features set this home apart?

The house has a large, open “feel” to it especially with vaulted ceilings and oak floors. Nice windows allow for light and the landscaping is lush and full around the exterior of the home and within the fenced in backyard in rear. The updated color scheme enhances warmth that the home exceeds.

Can you describe the architectural style of the home?

Traditional architecture with crown moldings throughout the entire first floor. Basement has a very large family room with many windows and doors plus a bedroom, office/exercise room and another room currently used as a fifth bedroom.

What are the advantages of the location & neighborhood?

The Reserve at Willow Bend is convenient to shopping and restaurants including a Kroger and Wal-Mart for all of your grocery needs. Fayette Mall, Lexington Green and Palomar offer a magnitude of shopping locations and there are multiple movie theaters within minutes. It’s also close enough to New Circle Rd and Man ‘O War Blvd allowing for ease when navigating around town.

Fast Tube by Casper

Have there been any recent renovations or upgrades?

Granite counter-tops have been added to kitchen and all three bathrooms. The dishwasher has been upgraded to High Efficiency and is whisper quiet. Updated lighting in the kitchen and a new backsplash in the kitchen to compliment the new granite counter tops (as of November 2010). There are also minor upgrades to the bathroom mirrors

Does the community of any amenities we should know about?

Membership is available to the Willow Oak Pool.

What amazing views will the new homeowner be able to enjoy?

Beautiful landscaping is seen through the front windows of this gorgeous Lexington home which features a nice grounds for relaxing on the deck and enjoying the pleasant yard-scape.

What makes the price of the home so great?

The amount of plentiful living space with the living room, dining room, two large family rooms, an oversized master bedroom, three bedrooms and bonus room are sure to compliment almost anyone’s lifestyle. The galley-style kitchen has a very generous amount of counter space perfect for preparing large meals for multiple people and is perfect for just day-to-day cooking needs.

Should you wish to set up a showing or have any additional questions about 753 Wyndham Hills Dr Lexington, KY 40514, please contact Mike Wheatley at Milestone Realty Consultants.

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When Good Just Won’t Do – Mike Wheatley

May 6, 2011

By Judy Craft

We have all found ourselves in situations where we panic or don’t know what to do, such as a natural disaster, health emergency or, in our business, a transaction gone badly. When this happens, we all look for that person with a clear head and keen sense of focus to lead us out of danger. A little dramatic, yes, but a good description of our featured agent, Mike Wheatley. Mike is an unusual blend of accountant, counselor, tour guide, and leader, all peppered with a great sense of humor. Those characteristics make Mike a top producer not only within Milestone but also across our region selling Bluegrass homes. In 2009 Mike was the top Individual Agent for all Central Kentucky – an amazing feat, especially in a bad economy. That doesn’t surprise me however, as Mike is not only a great agent but also a team player and a delight to be around. Even if you didn’t need to buy or sell a home, you would want to “hang out” with Mike!! Mike recently agreed to be interviewed for this blog series on what makes a good Realtor® a great Realtor®.

Kentucky Realtor® Mike Wheatley

Licensed since 1993, Mike has his Sales Associate license as well as his Broker’s license. He studied Nutrition in College and worked in the field for a number of years. When asked about his sales background he brought up his paper route when he was 15! The food industry is grueling, so Mike was no stranger to working long hours, 7 days a week. This translated well into his real estate career as the top professionals also work erratic and long hours, especially throughout the Spring Market. Hard work doesn’t scare Mike; in fact, he seems to thrive on it. It doesn’t hurt that his wife, Diane, is very supportive and a constant source of encouragement.

A disciplined person, Mike places great value on Continuing Education and strives to improve his skills whenever possible. His daily disciplines include running and prayer – both vital to his overall health and well-being. He feels his life is more balanced now than it has been in the past but definitely believes there is room for improvement. Along with his sales activities, Mike is also a prolific writer and is in the midst of a series of articles entitled The Recovery which has been featured on our blog and has been quoted by many in our industry. If you have a chance to read Mike’s work you will find it well written and very informative. This is one of the many services Mike provides to his customers and clients on a regular basis providing them with timely and interesting market information.

If faced with starting over again Mike says he “Would have started in real estate even earlier, and not have been afraid to take that plunge into a commission sales lifestyle.” What would he tell an agent starting out in today’s environment? “Work hard, answer your phone messages and email messages promptly, find balance in your life. People succeed in even the worst of markets…there are always business opportunities available.” Great advice, Mike – thanks!!

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Central Kentucky Market Statistics: The Recovery Part 12

May 3, 2011

By Mike Wheatley

Welcome to the second edition of The Recovery series, formally known as The Hangover. The spring market for Central Kentucky homes continues to gain momentum, and there are several encouraging trends. Our official monthly market report has been released by the Lexington Bluegrass Association of Realtors®, and here is my take on the numbers, what they mean, and where we are headed.

The three main categories I focus on are pending sales, total inventory numbers, and average sales price. Pending sales for the month of March came in at 652 representing a 25% increase over February numbers, representing 3 consecutive months of increased pending sales! Inventory numbers, while still very high, are up 7% from the previous month, but actually lower than the same month last year. We always see inventory levels rise throughout the year until around September, when they start dropping off again. Average sales price for the month was up slightly from February 2011 and about the same as the same month last year. The average sales price figures continue to indicate we have reached a plateau of stability in our local market values. The ratio of final sales price vs. list price remained basically unchanged when compared to the previous month, and when compared to the same month last year.

The bottom line story is the same as last month and will continue to be the same throughout this year: we still have way too many homes on the market but homes that are priced right and in great condition will sell, just not as quickly as we want. As we continue through the first quarter of the year, I will put less focus on the how this year’s numbers compare to last years’, as it isn’t a fair comparison. I want to focus instead on trends we are seeing in our current market. Once we get through April, it will be interesting to see how we compare to last year-I expect the numbers from May going forward will look more and more impressive when compared to the previous year’s numbers.

Below is a summary of some of the key indicators for our local market:

Kentucky homes - Market Statistics

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Central Kentucky Market Statistics: The Hangover Part 11

March 18, 2011

By Mike Wheatley

Welcome to the latest edition of The Hangover Series as we roll into our spring market in Central Kentucky. In the spirit of being optimistic, I think I’ll change the name of the series to the Recovery…this hangover has lasted long enough! Our official monthly market report has been released by the Lexington Bluegrass Association of Realtors, and here is my take on the numbers, what they mean, and where we are headed.

The three main categories I focus on are pending sales, total inventory numbers, and average sales price. Pending sales for the month of February came in at 518 representing an 11% increase over January numbers, representing 2 consecutive months of increased pending sales of Central Kentucky houses! Inventory numbers, while still very high, were basically stable from the previous month and just a little higher than the same month last year. We always see inventory levels rise throughout the year until around September, when they start dropping off again. Average sales price for the month was up about 7% from January 2011 and up about 6% from the same month last year. The average sales price figures continue to indicate we have reached a plateau of stability in our local market values. The ratio of final sales price vs. list price remained basically unchanged when compared to the previous month, and was down slightly when compared to the same month last year.

Below is a summary of some of the key indicators for our local market:

Kentucky houses - Market Statistics

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The Hangover Part 10

February 11, 2011

By Mike Wheatley

One month is in the books for 2011 and this is the latest edition of The Hangover, my analysis of the Central Kentucky real estate market of Bluegrass homes. Don’t look now, but is the Hangover finally over? Our official monthly market report has been released by the Lexington Bluegrass Association of Realtors®, and here is my take on the numbers, what they mean, and where we are headed.

Bluegrass homes

The three main categories I focus on are pending sales, total inventory numbers, and average sales price. Pending sales for the month of January came in at 456 representing a 43% increase over December numbers. While December is historically slow, it is encouraging to see this much Pending activity despite the regular snowfalls we received. Inventory numbers, while still very high, were basically stable from the previous month and just a little higher than the same month last year. Average sales price for the month was down a little over 12% from December 2010 and down about 6% from the same month last year. This is bad news, right? I don’t think so. I think it represents the return of the first time homebuyer to our market, which has been a key to our market recovery since the expiration of the tax credit. The ratio of final sales price vs. list price didn’t change drastically, so the lower average sales price does seem to represent stronger activity in the lower priced homes.

Bottom line: we still have way too many homes on the market but homes that are priced right and in great condition will sell, just not as quickly as we want. As we continue through the first quarter of the year, the pending sales numbers will look horrible, but remember those numbers will be compared to the first quarter of 2010 when our market was artificially stimulated by the tax credit.

Below is a summary of some of the key indicators for our local market:

Bluegrass homes

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The Hangover Part 9

January 20, 2011

By Mike Wheatley

Welcome to 2011 and the latest edition of The Hangover, my analysis of the Central Kentucky housing market. It’s a new year, and the final numbers are in for 2010, undoubtedly one of the most challenging and interesting markets I’ve lived and worked through since becoming a Realtor® in 1993! Our official monthly market report has been released by the Lexington Bluegrass Association of Realtors®, and here is my take on the numbers, what they mean, and where we are headed.

A New Year for the Kentucky Housing Market

The three main categories I focus on are pending sales, total inventory numbers, and average sales price. The headlines always report on our market in terms of sales closed, and of course that’s an important number, since it doesn’t matter how much property sells if it never closes. However, looking at closings is like looking in the rear view mirror…that’s an indicator of past activity, sometimes as far back as a year. Pending numbers give me a better feel of what’s happening now…how many buyers are out in the marketplace. Inventory numbers are also an important indicator of how the market “feels”, both to the consumer and to real estate professionals. I think it contributes to the overall market mood…when I hear customers or clients say things like “there seem to be a lot of for sale signs up in my neighborhood”, what they’re really saying is “will my house ever sell?”, or if they are a buyer, they might be thinking “what’s the rush?”. Finally, average sales price is just an indicator to me of market stability, although other factors, like the tax credit, can manipulate this number.

Overall, the local market was worse in several ways compared to 2009…sales units were down, dollar volume closed was down, inventory and supply numbers were up, days on market were up, etc. The average sales price of Lexington homes was up, mainly as a result of the tax credit pushing most first time buyers to the first three months of the year, and then that buyer evaporated for the rest of the year. It is a sliver of good news though, and we will take what we can get! Many parts of the country would love to trade places with us with respect to our market conditions.

Lexington homes

What does 2011 hold in store? I’m expecting a market that looks much like 2010. The key factor will be when the first time buyer returns to our market, we will see the trickle up effect improve all price ranges. What’s keeping them away? Huge inventory levels, continued low interest rates, and lending policies that have swung way too far to the conservative side. The first two items combine to create absolutely no sense of urgency…why rush when the choices and the deals just get better and better? Lending policies do not need to return to the insane days of “no documentation” or “low documentation” loans, but they do need to relax from where they are now. The first quarter sales numbers will look horrible, but remember those numbers will be compared to the first quarter of 2010 when our market was artificially stimulated by the tax credit.

I am frequently asked about the foreclosure situation and how it affects our market of Lexington homes. While some specific neighborhoods have been battered by high foreclosure rates, overall, our local area and the state as a whole still falls way below the national average in the number of foreclosures taking place, but there are more than ever in our marketplace, with no apparent end in sight. Foreclosures affect our inventory levels and ultimately our average sales prices, and will continue to do so. While many of these properties don’t compete with other listings as a result of their inferior condition, I am seeing more and more foreclosures and/or short sales come to market in average or above average condition. They are not just the physically distressed properties like they once were.

What’s the good news? Interest rates have ticked up a little but still are very low, making this one of the greatest buying opportunities of all time. The retail spending numbers from Christmas seemed to indicate a little more consumer confidence, at least until the Visa bill arrives this month! Also, despite worse than normal weather locally, open house traffic has been strong for this time of year…throw in a couple of decent weekends weather wise, and we could see folks come out the woodwork!

Here is the Pending Sale chart with the December 2010 number:

Market Statistics - Click to Enlarge

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When is a Hangover No Longer a Hangover?

November 5, 2010

By Mike Wheatley

Thanks for reading the latest edition of “The Hangover”, my analysis
of the Central Kentucky real estate market. Although our official
monthly market report has not been released by the Lexington
Bluegrass Association of Realtors, I have analyzed the numbers
to provide a sneak preview.

When is a hangover no longer a hangover? Maybe after 6 straight months
of the market experiencing a pounding headache? That’s where we are…it
seems we have some chronic issues to deal with. Monthly Pending Sales
numbers still lag well behind the numbers of previous years, and in
October, the year to date closings will finally drop below where we
were one year ago, both in number of units and total sales volume in
dollars. The cushion in sales provided by the tax credit in the first
quarter has finally gone flat, as every month since May has lagged well
behind previous year’s numbers.

One bright spot is the inventory levels continue to drop. We should be
around 6616 Active Bluegrass homes when the report is released. However, the
inventory isn’t dropping due to an uptick in sales. Rather, they are
dropping mainly as a result of people taking their homes off the market.
I would compare it to the employment numbers we receive, when we hear
that unemployment is hovering around 10%, yet there are thousands of
other employable people who have simply given up searching for a job,
so the true number of unemployed would be higher than the stated
percentage.

I expect we will see the inventory numbers continue to decline through
the end of this year as this is historically the time of year when
people are reluctant to put their homes on the market. The bottom line
is that our inventory is still around 15 months,which is way above
where we would like to see it.

Moving forward, what will break us out of this slump? I wish I knew,
but whatever it is, it doesn’t appear that housing will lead the
economic recovery this time. We seem to be in the “chicken and egg”
phase of recovery, with each sector looking at the other saying
“you go first”. I think the single largest obstacle to the real
estate recovery is the foreclosure situation. While in Kentucky
it is still a small percentage of the total market when compared
to other states, the impact of foreclosures on inventory levels and
values has been significant. Looking at the calendar of upcoming sales
through the Master Commissioner, it doesn’t appear that it’s getting
better anytime soon.

Is there any good news out there when it comes to real estate??
Yes! Interest rates still are at historic lows, making this one of the
greatest buying opportunities of all time. My friends in the rental
business tell me their business is booming,with occupancy rates at all
time highs. How long before those folks get tired of paying someone
else’s mortgage and get into home ownership? Also, new construction
prices are still essentially at 2006-2007 levels, so even if you have
a house to sell and aren’t crazy about the price it will bring, you
have to remember that you’re also purchasing something at essentially
the same price you could 4 or 5 years ago. Maybe you don’t gain as much
on your sale, but you’re not paying more than you should on the new
purchase either.

Here is the Pending Sale chart with my projected number for October 2010:

As always, my goal is to provide accurate, timely information on our
local market. Feel free to call or email with any questions.

Mike Wheatley, REALTOR
MWheatley@MilestoneKY.com
859-533-2646

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Housing Still Part of the Dream

October 22, 2010

By Mike Wheatley

Despite all the craziness in the real estate industry, a recent study
discovered that 8 in 10 Americans still view home ownership as an
important part of achieving the American Dream…read the entire
story here.

The American Dream of Home Ownership is Still Within Reach

Other insights from the study include that most people do believe that
now is a good time to buy, but the employment situation and frustration
with lending practices are 2 big obstacles to making the move.

This seems to coincide with what I see and hear daily in our local market…
people know it’s a great time to buy, but those fears and frustrations
are preventing them from taking the plunge. However, despite all of this,
our local MLS, (Lexington BLuegrass Association of Realtors, has sold and
closed nearly 1 BILLION dollars in Bluegrass homes this year.
Not too bad for a “down” market!

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