The number of houses sold in Fayette County in 2010 declined for the fifth straight year, yet property values have remained stable, and Fayette County's property valuation administrator sees that as a positive indicator that Lexington continues to weather the housing-market downturn better than many cities.
For the first time, David O'Neill, Fayette County's PVA, has compiled an annual report about the state of property in Fayette County, which accompanies the official certification of the 2011 Fayette County tax rolls received last week from the Kentucky Department of Revenue.
O'Neill said he thought it was important to compile the snapshot of Lexington's real estate landscape "so people can form a more educated opinion of what's going on in our economy."
"We've been chugging along in this recession for so long now, and the national news has consistently been painting a little bit different picture than what we're experiencing in Fayette County," he said.
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Among the highlights of the report:
The number of sales of single-family residences has steadily decreased over the last five years, from 5,432 sales in 2005 to 2,917 in 2010. That's a fall of 46 percent.
But when homes do sell, "values are holding," O'Neill said. The median home sale price increased from $142,000 in 2005 to $156,000 in 2010. Many areas of the country have seen prices decline when the housing bubble burst.
Both commercial and residential construction in Fayette County have fallen dramatically since 2005. In 2005, 2,289 new residential units were built. That fell to 602 in 2010. In 2005, 165 commercial buildings were built; that dropped to just 14 in 2010.
Overall, the taxable fair cash value of all property in Fayette County has risen modestly since 2008, a contrast to other areas of the country hit harder by the housing downturn.
Fair cash value for commercial property in 2011 was $6.42 billion, up slightly from the total of $6.2 billion in 2008. Fair cash value of all residential property in Fayette County was $15.2 billion, up from $14.7 billion in 2008.
O'Neill's report also includes more specific information, such as the biggest property-tax assessments in Fayette County. The top assessment belongs to Fayette Mall, which owns properties assessed at a total of more than $108 million for 2011.
In general, O'Neill said, there have been no wholesale, upward reassessments of any neighborhood in Fayette County for two consecutive years.
"We have not had the sales or economic conditions that would help justify to taxpayers a reassessment was necessary," O'Neill said.
However, during this same period, the property-tax roll has continued to grow, "albeit at a very modest rate, less than 2 percent," O'Neill said.
O'Neill attributes this growth to property sales, additions and improvements to property and to the PVA's use of better technology, including high resolution aerial photographs to discover improvements not previously listed on the tax rolls.
The 109,000 parcels of property in the county have a total value of slightly less than $23 billion. Of those parcels, 75,000 are single-family homes.
The report shows that people are buying houses with more square footage — approximately 1,600 square feet in 2010 compared with 1,450 square feet in 2005. But the price per square foot of homes remains flat: $97.99 compared with $97.93 five years ago.
Lisa Peel with Keller Williams Realty has seen home sales steadily decrease.
"They haven't plummeted. Other parts of the country are in a panic. We are not," said the veteran real estate broker, who has sold property in Central Kentucky for 21 years.
But sellers have to be "very realistic about market values today," Peel said. "Prices are not what they used to be."
Realtor Whitney Pannell tells her sellers there is so much inventory on the market, a house has to be "HGTV-ready." Whether it's a $100,000 house or a $1 million house, "Buyers don't want to come in and have to make repairs," she said.
For a house to sell, Peel said, property has to be in excellent condition, as well as "very fairly priced."
"It's about price and condition, no matter what price range you're in."
The five-year decline in the annual number of home sales has put a strain on real estate companies, developers and related fields such as banking, mortgage lending and property appraisers.
Todd Johnson, executive vice president of the Home Builders Association of Lexington, said a few builders have gone out of business. "Not many, but a few," he said.
Builders take on jobs they might have passed on a few years ago, including traveling long distances to locations such as Eastern Kentucky, Johnson said. "They are considering just about anything that comes to them in terms of a building or remodeling job."
Typically, the PVA inspects and reassesses neighborhoods every four years. The office has divided the county into about 300 residential neighborhoods.
While no neighborhood assessments were raised in the last two years, six neighborhoods had their assessments lowered, O'Neill said.
Those were Winburn, the Johnson property off Russell Cave Pike near the northside library branch, Tuscany in the Hamburg area, Garden Meadows near Greendale Road, the Camelot neighborhood near Wilson-Downing Road and the Village at Tates Creek on the southwest corner of Man o' War and Tates Creek Road.
A downward reassessment is not necessarily an indication of a neighborhood in decline, O'Neill said. Some of these neighborhoods had not been reassessed since 2006, when real estate prices were strong.
"We may have been assessing a little aggressively, so we are backing those down a little bit," he said.
The PVA annual report also includes numbers about the foreclosure trend in Fayette County.
Foreclosures increased gradually from 298 in 2005 to 369 through 2007. That number jumped to 485 in 2008 and 566 in 2009 as the housing market lost steam. The PVA report shows foreclosures fell slightly to 524 in 2010 and early 2011, though O'Neill said that was due more to regulatory changes than improvements in economic conditions.
Foreclosures are scattered throughout the county, but the biggest concentrations fell in an area between North Broadway and Winchester Road, and along Man o' War Boulevard east of Tates Creek Road, according to the report.
Generally speaking, these are in areas "where people would be more susceptible to losing their job and missing a mortgage payment when the economy goes south," he said.