The Lexington real estate market, while not on pace with the national level, is doing very well for itself. Strong market fundamentals are in place to support growth in the area. As a result, the Lexington real estate market should continue to thrive for the foreseeable future.
On average, Lexington homes have appreciated at a rate of 2.9 percent over the course of a year. That number is down from the 4.8 percent appreciation rate seen in 2012. Nonetheless, Lexington real estate continues to grow in value. Homes in the area are valued at an average of $142,700. On the other hand, the national average is approximately $208,067, and appreciating at a rate that is nearly twice as much as Lexington. However, with Lexington homes valued nearly $70,000 less than the national average, the housing market is considerably more affordable. That is great news for Lexington real estate investing.
Even at 2.9 percent, appreciation rates in the Lexington housing market have helped to pull the city out of a period of post-recession price weakness. As a result, homeowners have seen equity return. Even Lexington real estate investing is benefiting from the return of equity. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Lexington housing market one year ago have appreciated, on average, by $6,115. The national average was $14,170 over the same period.
- Homes purchased in the Lexington housing market three years ago have appreciated, on average, by $13,315. The national average was $53,857 over the same period.
- Homes purchased in the Lexington housing market five years ago have appreciated, on average, by $12,660. The national average was $48,036 over the same period.
- Homes purchased in the Lexington housing market seven years ago have appreciated, on average, by $13,004. The national average was $13,870 over the same period.
- Homes purchased in the Lexington housing market nine years ago have appreciated, on average, by $11,128. The national average dropped $2,822 over the same period.
The Lexington housing market is in a great position, partially because of the strength of its job sector. Actually, the local economy has paid large dividends to both homeowners and Lexington real estate investing. Supply and demand look to be the beneficiaries of strong market fundamentals. There is one area that helps the city really stands out from the rest: unemployment. Lexington’s unemployment rate is 4 percent. That is nearly a 2 percent decrease from last year and almost 2 percent better than the national average.
While the Lexington housing market is not appreciating as fast as the rest of the country, it remains affordable. In fact, Lexington is more affordable than most major metros across the country. This is great news for someone looking to buy, and Lexington real estate investing in general. From a historical standpoint, Lexington’s affordability is strong and improving. According to the National Association of Realtors (NAR), Lexington homeowners spend about 7.6 percent of their income on monthly mortgage obligations. The rest of the country spends more than 15 percent of their income on the same debts. Affordability is particularly attractive to first-time buyers and Lexington real estate investing.
According to RealtyTrac, the distressed market in Lexington will continue to serve as a great source of affordable deals. That said, most of the distressed properties in the Lexington housing market are scheduled to be placed up for auction. In fact, more than 97 percent of the area’s foreclosures are going to be up for auction in the near future. Surprisingly enough, that rate is 22.7 percent lower than the previous year. Auctions will continue to serve as a great source of deals for Lexington real estate investing.
Aside from foreclosures, Lexington real estate investing should continue to remain hot in the area’s most popular neighborhoods. According to Trulia, Liberty Area and Beaumont Residential are the most popular neighborhoods in the Lexington housing market, with average listing prices of $221,231 and $498,953. Outside of foreclosures, popular neighborhoods are some of the best options for investors looking to make a profit.
Many people in Lexington are college grads, and many are married. Many residents are property owners, and many are between the ages of 20 to 29. All of this is good to know if you are interested in Lexington real estate investing – especially as a buy and hold investor. Rental property is in high demand and availability is low. Rent prices have increased by 19 percent over the past 3 months. This is same as the county average of $1,599 and 20 percent higher than the state average of $1,278.
Lexington Housing Market Summary:
- Current Median Home Price: $142,700
- 1-Year Appreciation Rate: 2.9%
- Unemployment Rate: 4%
- 1-Year Job Growth Rate: 1.6%
- Population: 308,428
- Median Household Income: $50,279