What types of properties are these affluent buyers choosing?
Are they drawn to specific regions?
Luxury Homes and Estates
A common thread is interest in luxury real estate.
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In the Bluegrass region around Lexington, high-income buyers frequently purchase equestrian farms or country estates.
ft. English manor there sold for $4.45 million, the highest-priced home in the area in recent years.
These properties offer upscale finishes and walkable city amenities with less upkeep than a house.
However, this is a smaller slice of the market compared to standalone homes and estates.
They have been purchasing luxury homes primarily in eastern Jefferson County suburbs and nearby upscale enclaves.
This migration influx included affluent professionals who injected new demand for top-tier properties.
), while downtown Lexington had a few luxury condo offerings as well.
However, a defining trend has been high earners moving a bit further out to get more land.
Counties adjacent to Fayette Jessamine, Woodford, Scott, Bourbon experienced a surge in luxury transactions.
During 20182023, Northern Kentucky benefitted from the broader Cincinnati-region housing boom.
These regions experienced a jump in activity especially in 20202021, when remote work allowed more weekend escapes.
In the Appalachian eastern part of the state, the Red River Gorge became a surprising hotspot.
These buyers, often in their 30s or 40s, are typically dual-income professional couples or entrepreneurs.
That said, Kentuckys overall migration balance for the wealthy is a bit complex.
The net effect is a slight brain drain at the very top end even as moderate-income population grows.
Nevertheless, Kentuckys lower cost of living remains a selling point to attract affluent remote workers.
The average 30-year rate hit an all-time low of just 2.65% in January 2021.
These ultra-low rates significantly boosted the purchasing power of buyers.
High-income households took advantage: many refinanced to sub-3% rates or bought new homes with cheap financing.
Low rates also made owning second homes more feasible (monthly costs were minimal relative to their incomes).
However, the tide turned in 2022.
Faced with high inflation, the Feds rate hikes pushed mortgage rates sharply upward.
This rapid rise had a cooling effect on the housing market, including the high-end segment.
Even wealthy buyers become more cautious when financing costs double.
Many affluent buyers either pay cash or make very large down payments.
Tax Policy Influence
Tax changes in this period had mixed effects on high-income homebuyers.
The SALT cap did not bite Kentucky as sharply as it did, say, New York or Illinois.
State tax policy, meanwhile, turned increasingly favorable for high earners in Kentucky.
Wealthy households actually saw significant gains by mid-2021, U.S. homeowner equity reached record highs.
Come 2022, the economic picture shifted to inflation and uncertainty.
High earners were still financially capable but perhaps more cautious the era of frenzied bidding wars cooled.
High-income buyers then were often in wait-and-see mode.
Jumbo financing was also harder to obtain in the early 2010s as banks tightened credit.
From 2013 to 2017, conditions improved significantly.
Low interest rates and recovering stock wealth led more affluent buyers back into the market.
However, that periods growth was steady and modest.
Luxury home sales growth rarely exceeded single digits annually in the first half of the 2010s.
Contrast that with 20182023: we saw explosive spikes.
In late 2020, luxury home sales were up 60%+ year-over-year nearly quadruple the pre-pandemic growth rate.
Such a meteoric jump has no parallel in the 20082017 span.
In 20182023, we saw double-digit annual gains in luxury prices around 2020-2021.
Millennials were mostly too young to be in the $500k+ bracket until the late 2010s.
Builders responded accordingly in each era.
They concentrated on luxury single-family homes and expansive properties, fueling record growth in the upscale market.
