The US government spends $8.2 billion per year on real estate.
While the majority of this money is spent on real properties in the US, some are actually used for things other than real estate investment, like hospitals and prisons.
A recent study by the National Association of Realtors found that while real estate has been a popular investment for the middle class, the poor and those living in rural areas are disproportionately affected.
What’s driving the trend?
There are two main reasons for this, says David Stemper, vice president of real estate for New York-based real estate brokerage CBRE Group.
The first is that property is cheap.
In 2017, the average home sold for $1.15 million in Kentucky, compared with $2.3 million in New York and $5.8 million in Los Angeles.
The second is the low cost of living.
In 2018, the median US price of a home was $207,000, according to the National Assn.
of Realty and Martingale.
But there are also cheaper options, including rental properties, for people in Kentucky.
The average monthly rent for a rental unit in Kentucky is $2,717, according, and the average monthly mortgage payment is $1,828.
A study from the National Real Estate Association found that a recent move from a home in rural Kentucky to a condo in downtown Louisville, Kentucky, can cost $300,000 per year in lost sales and lost income.
What about property taxes?
Kentucky’s property tax rate is 3.95%, lower than New York’s and lower than California’s, according a 2017 report by the New York State Association of Real Estate Boards.
So it’s a little more expensive for people to live here, but it’s also more affordable for the government, which pays for the property tax, says Stemperer.
This makes it an attractive place to live for many people, especially millennials who are not as interested in buying their first home as their parents were, Stemmer says.
But he also warns that a lot of the housing costs could be coming from the state’s reliance on government subsidies for certain types of housing.
The housing tax credit has been an important part of the Kentucky housing boom for decades, but with the economic downturn, it’s beginning to run out, Stemberger says.
In fact, Kentucky is one of just four states that have cut its housing assistance by less than $1 billion per annum since 2008, according an analysis by the US Census Bureau.
The biggest cuts came in Kentucky and New York, where the government is cutting off housing assistance to about 5 million households.
“We’re now seeing real estate prices start to climb,” says Stemberg.
And while the state is losing money, it still has a surplus.
The government has received $8 billion from its housing tax credits so far this year, says state Treasurer Mike DeWine.
“But we’re still going to be able to afford to maintain this kind of housing supply.
We’re still not spending all of our tax money,” he says.
What you need to know about Kentucky: Kentucky is home to the University of Kentucky.
But the university also houses the US Naval Academy.
Other colleges and universities are nearby: The University of Louisville, the University at Cincinnati, and West Virginia University.