Lexington, KY is fairing better than the Case-Shiller Index

Don't lump Lexington, Kentucky into the national housing market

Lexington, Kentucky and Fayette County are being painted by many with the same broad brush the media is using when discussing the overall condition of the housing market. While the Case - Shiller index may be a fair representation of larger markets, it bears very little correspondence to what is happening in our own back yards.

The Case - Shiller index is derived from the study of real estate transactions in two different groups of 10 Metropolitan Statistical Areas, orMSAs. The first tier consists of the greater areas around: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York City, San Diego, San Francisco and Washington DC. Do any of those sound like Fayette County to you? The second tier doesn't get any closer comparatively: Atlanta, Charlotte, Cleveland, Dallas-Fort Worth, Detroit, Minneapolis-St. Paul, Phoenix, Portland, Seattle and Tampa. The closest we get is Cleveland, and I don't think we are anything like them.

Fayette County, and the surrounding counties belonging to the Lexington Bluegrass Association of Realtors, did not see the spike in appreciation many of the MSAs in the Case-Shiller index did. One statistic published earlier this year in the Lane Report indicated that we have seen a modest, but steady appreciation in real estate of approximately 3% per year through 2007. Compare that to the third quarter of 2006 data for Phoenix (16.81), Las Vegas (9.76), Miami (21.19), Tampa (16.05), Seattle (17.3) and others listed in "Economic Real Estate Trends". (Found at http://www.pmi-us.com/media/pdf/products_services/eret/pmi_eret08v1s.pdf)

What does it mean for us? We never had the run up in prices experienced by many of the MSAs in the Case - Shiller index, so we shouldn't see the crash in real estate prices they are. The good news is we aren't! Unfortunately it seems that many people are just listening to the national news and not paying attention to what is actually happening closer to home. Through August of this year our average sales price of existing homes has not changed from a year ago.

While sales are down 15% compared to last year (2007 was a record year), average sales prices are level - not declining, according to year to date statistics from the Lexington Bluegrass Association of Realtors. Average number of days on the market has increased to 80 from 75, but the number of homes on the market has decreased.

All in all, Fayette County has a robust and healthy real estate market. With the announcement this week of the changes in the secondary mortgage market, the one time tax credit available to new buyers and dropping interest rates I expect we will see a further improvement.