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Lebanon, Kentucky: Rising Home Values and Shifting Ownership in a Small Urban Center
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Lebanon, Kentucky, a charming city with a rich history, has experienced notable shifts in its housing market over the past decade. Located in central Kentucky, this city of approximately 10,565 residents as of 2022 has seen fluctuations in homeownership rates and significant changes in average home and rent prices.
The homeownership rate in Lebanon has shown some variability but has generally remained stable, hovering around 65-68% between 2013 and 2022. In 2013, the homeownership rate was 69%, which decreased slightly to 64% by 2022. This minor decline coincided with a substantial increase in average home prices. In 2013, the average home price in Lebanon was $101,830, which rose steadily to reach $178,395 by 2022, representing a 75% increase over this period.
Federal interest rates have played a role in shaping homeownership trends in Lebanon. The period from 2013 to 2016 saw historically low interest rates, ranging from 0.09% to 0.4%. During this time, homeownership rates remained relatively stable, fluctuating between 65% and 69%. As interest rates began to rise more significantly from 2017 (1%) to 2019 (2.16%), there was a slight increase in homeownership to 68% in 2019, possibly due to buyers rushing to secure mortgages before rates climbed further.
Renter percentages in Lebanon have shown an inverse relationship to homeownership rates, naturally. The proportion of renters increased from 31% in 2013 to 36% in 2022. Interestingly, average rent prices have experienced significant fluctuations during this period. In 2013, the average rent was $547, which increased to a peak of $827 in 2017 before declining to $655 in 2022. This volatility in rent prices could be attributed to changes in housing supply, local economic conditions, and population growth, which increased from 9,870 in 2013 to 10,565 in 2022.
Looking at the most recent data, the average home price in Lebanon continued its upward trajectory, reaching $185,983 in 2023 and $193,488 in 2024. This represents a further 8.5% increase from 2022 to 2024. Concurrently, federal interest rates have risen dramatically, reaching 5.02% in 2023 and 5.33% in 2024, levels not seen since before the 2008 financial crisis. These higher interest rates may impact future homeownership rates and housing affordability in Lebanon.
Applying predictive models to forecast 5-year trends, we anticipate that average home prices in Lebanon will continue to rise, albeit at a potentially slower pace due to higher interest rates. By 2029, average home prices could reach approximately $225,000 to $240,000, assuming a moderate annual growth rate of 3-4%. Average rent prices are also expected to increase, potentially reaching $750 to $800 per month by 2029, reflecting both inflation and the ongoing demand for rental properties in the area.
In summary, Lebanon, Kentucky has experienced a significant increase in average home prices over the past decade, with a slight decrease in homeownership rates. Rent prices have shown volatility but have generally trended upward. The recent sharp increase in federal interest rates, coupled with rising home prices, may present challenges for potential homebuyers in the coming years. However, the steady population growth and the city's appeal suggest that Lebanon's housing market will likely remain dynamic and continue to evolve in response to local and national economic factors.
