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Thinking about investing in real estate in Lexington in 2025? You're on the right track.
Despite economic shifts, Lexington's real estate market shows promising stability and growth potential.
In this blog post, we will explore why investing in this city is a wise choice.
We rely on solid, up-to-date data and statistics from trusted sources to guide our analysis.
By the end, we will share our own conclusions based on a thorough examination of the facts. Enjoy the read!
How this content was produced 🔎📝
This article offers thoughtful insights and analysis based on reliable sources, but it should not be considered financial advice. We work hard to research, compile, and analyze data to give you a well-informed perspective. However, as you can guess, our analysis involves subjective choices, such as source selection and methods, and it cannot fully capture the market's complexity. Please, always do your own research, consult professionals, and make decisions based on your own judgment. Any financial risks or losses are your responsibility. Additionally, you should know that we have no affiliation with the sources mentioned, ensuring our analysis is completely impartial.
1) Lexington boasts an impressive "livability score" of 87, highlighting its exceptional quality of life
Signal strength: strong
The fact that the livability score in Lexington is 87 is a strong indicator that buying property there is a wise investment.
This score is considered excellent because Lexington offers a unique blend of urban and rural environments, providing residents with the best of both worlds. Additionally, the city is known for its high-quality education system, which attracts families and ensures a steady demand for housing. Furthermore, Lexington's vibrant cultural scene, including events like the annual Festival of the Bluegrass, adds to its appeal.
These characteristics contribute to the city's high livability score, making it an attractive place for potential homeowners and investors. When a city has such a high livability score, it often leads to increased property values over time, offering a promising return on investment.
However, if the livability score were to drop below 70, it might indicate underlying issues that could affect property values negatively.
Source: AreaVibes
2) Lexington's "vacancy rate" of 7.0% shows a bustling and competitive market with most spaces filled
Signal strength: strong
The vacancy rate in Lexington is 7.0%, which is considered very low. This low vacancy rate indicates that the market is highly occupied and competitive, suggesting strong demand for rental properties.
When demand is high, it often means that property values are likely to increase over time, making it a potentially profitable investment. In such a market, properties that are easily rented are typically well-maintained, single-family homes.
These homes are often located in desirable neighborhoods like Chevy Chase, where amenities and schools are attractive to renters. Investing in these types of properties can be a smart move because they tend to have lower vacancy rates and stable rental income.
If the vacancy rate were to rise above 10% or more, it might indicate an oversupply of rental properties, which could make investing less attractive.
Sources: NeighborhoodScout, DataUSA, USCensus
We created this infographic to show how property prices in Lexington compare to other big cities in Kentucky. It shows the median price as well as the price per sqft, making it easy to see which places might offer the best value. We hope you find it helpful.
3) Lexington's 2025-2026 infrastructure projects, like "Georgetown Road" and "Hamburg Connector," are designed to boost real estate values
Signal strength: moderate
Several infrastructure projects in Lexington, Kentucky, are poised to boost real estate values in the coming years, making property investment in these areas potentially lucrative.
The Georgetown Road Improvements project, scheduled for construction in FY 2025, involves widening and reconstructing Georgetown Road (US 25) between Spurr Road and Kearney Road. This project is expected to improve accessibility and reduce congestion, thereby increasing the appeal of properties along this corridor.
Similarly, the Nicholasville Road “Access Management” Project aims to manage access points along US 27 between Nicholasville and Man O’ War Blvd. By reducing traffic congestion, this project could make the area more attractive for residential and commercial investments.
The Hamburg Connector Project, set for completion in FY 2025, will create a new roadway connection between Sir Barton Way and Polo Club Blvd. This project is anticipated to boost property values in the Hamburg area by providing an alternate route and enhancing overall connectivity.
Additionally, the construction of the RISE STEM Academy for Girls at 2160 Versailles Road, with a planned completion by July 2026, could positively impact real estate values in the surrounding area by offering a state-of-the-art educational facility.
Sources: Lexareampo, Lexington KY News
4) Lexington, Kentucky, is experiencing population growth, with a "0.87%" rise
Signal strength: moderate
The population growth in Lexington, Kentucky, is a promising indicator for real estate investment. A steady increase in population, such as the 0.87% rise from 2023 to 2024, suggests a growing demand for housing and infrastructure.
Analyzing historical data, Lexington has consistently added residents over the years, with a notable addition of 27,282 people since 2010. This consistent upward trend in population growth reflects a thriving community and economy, which are key factors in real estate value appreciation.
Future projections further bolster this perspective. The short-term forecast anticipates a 2.6% population increase over the next five years, while the long-term outlook predicts a 5.6% rise by 2034. Such growth forecasts indicate a sustained demand for housing, making property investment in Lexington a strategically sound decision.
Moreover, Lexington's position within Kentucky's broader growth context, particularly in Fayette County, underscores its potential as a leading growth area in the state. This regional significance enhances the attractiveness of investing in property, as it aligns with the expected demographic and economic expansion.
Sources: Macrotrends, Synergos Technologies, Kentucky League of Cities, World Population Review, WKYU FM
Our team designed this infographic to show how competitive the real estate market in Lexington is vs. other major cities in Kentucky. It shows the percentage of sales above the list price, a key indicator of market competition.
5) Lexington's median home price is significantly lower, at 31% below the national average
Signal strength: minimal
The fact that Lexington still has a median home price 31% below the national average suggests that there is room for growth in property values. This means that investing in real estate here could potentially yield a good return as the market catches up with the national trend.
In Lexington, the most expensive properties are likely to be luxury homes located in desirable neighborhoods such as Chevy Chase or Ashland Park. These areas are known for their historic charm and proximity to amenities, which drives up demand and prices.
On the other hand, the cheapest properties are probably small, older homes in less developed areas like the East End. These properties might require some renovation but offer a lower entry point for investors.
If the median home price in Lexington were to rise to above the national average, it might indicate that the market is becoming less favorable for new investments.
Source: Zillow
6) A local in Lexington can afford a house in about 3.6 years, which is reasonable
Signal strength: minimal
In Lexington, the fact that it would take around 3.6 years for a local to buy a house is a positive indicator for real estate investment. This is because it suggests that the housing market is relatively affordable compared to other areas, where it might take much longer for locals to purchase a home.
The median household income in Lexington is approximately $83,263, which is a healthy income level. This income level supports the ability of residents to afford homes, as the median home price is around $301,468, making it accessible for many families.
When the local population can afford to buy homes, it often leads to a stable and growing real estate market. This stability is attractive to investors, as it indicates a lower risk of market volatility and potential for consistent property value appreciation.
However, if it took significantly longer, such as over 5 years for a local to buy a house, it might suggest that the market is becoming less affordable, which could deter potential buyers and investors.
Source: USCensus
This infographic we have made will show you how market values have changed during the last decade in Lexington vs other major places in Kentucky. Here, the percentage increase or decrease in market value will help you see long-term trends.
So, is investing in real estate in Lexington a solid option in 2025? Absolutely, it is.
Investing in real estate in Lexington in 2025 is a smart move, and here's why.
First, the city boasts an impressive livability score of 87, indicating a high quality of life that attracts residents and boosts property values. This score reflects Lexington's unique blend of urban and rural environments, a strong education system, and a vibrant cultural scene. These factors ensure a steady demand for housing, making it a promising investment.
Additionally, Lexington's low vacancy rate of 7.0% highlights a bustling and competitive market, suggesting strong demand for rental properties. This demand often leads to increased property values over time, offering a potentially profitable investment opportunity.
Moreover, upcoming infrastructure projects like the Georgetown Road Improvements and the Hamburg Connector are set to enhance accessibility and connectivity, further boosting real estate values. These projects, along with a 0.87% population growth, indicate a thriving community and economy, key factors in real estate value appreciation.
Finally, with a median home price 31% below the national average, there's room for growth in property values, making Lexington an attractive market for investors. The affordability of homes, with locals able to purchase a house in about 3.6 years, adds to the market's stability and potential for consistent property value appreciation.
Related analyses:
- Here is why prices are going to climb in 2025 in Lexington