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Residential Department: Spotlight: Kentucky: June 2017


Spotlight: Kentucky

Kentucky’s recession rebound has been slow to take root.

The Commonwealth of Kentucky’s recovery from the Great Recession has been sluggish, even compared to a slow national recovery. Kentucky has had positive growth in gross domestic product (GDP) in 27 of the 29 quarters since the end of the recession, according to a 2017 report published by the Center for Business and Economic Research (CBER) at the University of Kentucky. Its GDP, however, has only increased 13.7 percent from second-quarter 2009 to first-quarter 2016. The U.S. GDP grew 15 percent over that same time frame.

Job growth in the commonwealth known for the Kentucky Derby also has lagged behind the national average since the end of the recession. In 2016, for example, U.S. employment growth averaged 1.6 percent, but Kentucky saw only 1 percent job growth this past year. The CBER report cites declines in the manufacturing and construction sectors during the first half of 2016 as contributing to the anemic job growth this past year.

The job-growth problem may be more widespread, however. A quarterly report published this past January by the Kentucky Governor’s Office for Economic Analysis, stated that “six of the 11 employment super sectors lost jobs” in the final quarter of 2016 — the second quarter of Kentucky’s fiscal year. Mining performed the worst, losing 18.8 percent of its job base year over year.

The Governor’s report forecasts only a 0.8 percent increase in nonfarm employment for the remaining two quarters of the state’s 2017 fiscal year, which ends on June 30. Manufacturing employment is projected to increase only 0.3 percent, and both mining and construction employment are expected to lose employment, compared to the final two quarters of fiscal 2016.

Mining and construction employ less than 5 percent of the state’s nonfarm labor force, however. The largest nongovernment sectors, according to the U.S. Bureau of Labor Statistics, are trade, transportation and utilities, which as a sector provides more than 400,000 jobs (20.7 percent); and manufacturing, which employs more than 250,000 Kentuckians, or 13 percent of the labor force.

Both of these sectors are impacted greatly by two of Kentucky’s major industries: automobiles and bourbon. Kentucky ranks fifth in the nation in automotive-industry employment, and it produces and ages 95 percent of the world’s bourbon supply, according to two reports by the Urban Studies Institute at the University of Louisville.

Recent investments in these two industries should help expand employment opportunities and increase the commonwealth’s GDP. The 2015 automotive report cited more than 300 announced projects that would invest $4.5 billion in Kentucky’s automotive industries. The 2017 distillery report cites over $600 million in planned capital investments into the industry over the next five years.

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Home sales and prices

r_2017-06_Spotlight_chart1Median home prices across Kentucky remained stagnant from 2012 to 2014, barely changing — $109,999 in 2012 to $110,265 in 2014, according to data from the Kentucky Association of Realtors. The market came alive in 2015, however, with closed sales increasing 7.3 percent and the median sales price rising an astonishing 25.6 percent, to $138,485. Closed sales increased another 8 percent in 2016 as the median sales price in the state reached $141,743.

The median value of a Kentucky home as of April 2016 was $125,375, according to Neighborhood Scout, a website that uses U.S. Census and Federal Housing Finance Agency data to calculate local and state housing-market data. More than 40 percent of all homes in Kentucky are valued at or below $108,000, according to Neighborhood Scout.


Kentucky’s unemployment rate was a full percentage point higher than the national rate in January 2007, months before the beginning of the Great Recession. Needless to say, the state’s unemployment rate skyrocketed in 2008 and 2009, going from 5.8 percent in April 2008 to 10.6 percent in April 2009, according to data from the U.S. Bureau of Labor Statistics.

Kentucky’s unemployment rate stayed above 10 percent for 21 months, from March 2009 until November 2010, and remained above 8 percent until October 2013. The unemployment rate declined dramatically in 2014, however, decreasing from 7 percent in April 2014 to 5.3 percent in December 2014. Since then, Kentucky’s unemployment rate has stayed within a few basis points of the national average, which was at 4.4 percent as of this past April.

Delinquencies and foreclosures

r_2017-06_Spotlight_chart2Kentucky’s foreclosure-inventory rate was 0.9 percent this past December, according to CoreLogic, just slightly higher than the 0.8 percent national rate. The state’s serious delinquency rate, a measure of future foreclosure activity, stood at 2.8 percent, 20 basis points higher than the national rate. These rates were low compared to other judicial-foreclosure states, however. Only five other judicial states posted lower rates in both categories.

Kentucky foreclosure activity has remained steady over the past four years, according to Attom Data Solutions, ranging from 2,000 to 2,500 filings (defaults, auctions, and bank repossessions) per quarter since 2013, after peaking at more than 4,000 filings in third-quarter 2010. Filings dropped below 2,000 per quarter for the first time in more than seven years in fourth-quarter 2016, however, and again in first-quarter 2017.

Sources: Attom Data Solutions, Center for Business and Economic Research, CoreLogic, Kentucky Bourbon Festival, Kentucky Governor’s Office for Economic Analysis, Kentucky Department of Travel, The Lane Report,, National Association of Realtors, Neighborhood Scout, University of Kentucky, Urban Studies Institute, U.S. Bureau of Labor Statistics, U.S. Census Bureau,,

3 Cities to Watch


The largest city in Kentucky, Louisville is probably best known as home to Churchill Downs, the site of the annual Kentucky Derby. More than 600,000 people live in the greater Louisville area, but according to, the city has more barrels of bourbon than people, as well as 31,000 open jobs. The median home price in Louisville is $146,169, according to Neighborhood Scout, more than $75,000 below the national median price.


r_2017-06_Spotlight_LexingtonThe self-proclaimed “horse capital of the world,” Lexington is surrounded by more than 400 horse farms and somewhere between 10,000 and 30,000 horses. Lexington and surrounding Fayette county also comprise the second-largest community of people in the commonwealth, with a population of almost 315,000, but as home to the University of Kentucky’s 30,000 students, it also has the feel of a college town. Lexington’s median home value of $175,000 makes it one of the most expensive places to buy real estate in Kentucky.


Settled in 1780, Bardstown is the second-oldest city in Kentucky. Its historic downtown contains almost 200 buildings on the National Register of Historic Places, including a stagecoach stop built in 1779. Recently named the “Most Beautiful Small Town in America,” Bardstown is better known as “the Bourbon Capital of the World.” The city has made bourbon since 1776, and hosts the annual Kentucky Bourbon Festival every fall. Home to 13,000 lucky people, Bardstown median home value is a reasonable $135,000.

What the locals say

“In addition to new-construction shortages, we’re seeing a price bubble again for several reasons. Buyers want to act now as many postponed their purchases for several years. Now the economy’s improved, and they’re also concerned that interest rates may go up later in 2017. Some buyers may be overpaying because of these factors, especially if they’re set on buying a new home.”


Judy A. McGaha 
Branch production manager,
Caliber Home Loans 


Will McDermott is managing editor for Ask a Lender. Reach him at or (800) 297-6061.

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