Kentucky Homes: 7 Types Falling In Value While 5 Are Rising

The Kentucky housing market is shifting dramatically, creating both challenges and opportunities for homeowners and buyers alike. Some property types are losing value fast, while others are becoming hot commodities across the Bluegrass State.

I’ve researched the market trends to help you understand which Kentucky homes are worth your investment and which ones might leave you underwater on your mortgage.

1. Falling: Coal Country Properties

The decline of Kentucky’s coal industry has devastated property values in once-thriving mining communities. Homes in counties like Harlan, Pike, and Letcher have seen double-digit percentage drops in value over the past decade.

Local job losses have triggered population decline, leaving fewer buyers for available properties. Empty storefronts and reduced services in these areas further diminish appeal. For current owners, selling often means accepting significantly less than their purchase price.

2. Rising: Energy-Efficient Modern Homes

Green is gold in Kentucky’s current housing market! Homes built with energy efficiency in mind are commanding premium prices and selling faster than traditional builds. Solar panels, smart home technology, and superior insulation make these properties stand out.

Buyers are increasingly willing to pay more upfront for long-term utility savings. These eco-friendly homes typically save owners 30-50% on monthly energy costs compared to conventional homes, making them incredibly attractive in a state with temperature extremes.

3. Falling: Rural Farmhouses Without Modern Updates

Once the backbone of Kentucky living, traditional farmhouses lacking modern amenities are struggling to maintain their value. Buyers today want the charm of country living but with updated electrical systems, modern plumbing, and energy-efficient features.

Many of these properties sit on the market for months longer than their renovated counterparts. The cost of bringing these homes up to modern standards often exceeds what buyers are willing to pay, creating a difficult situation for sellers.

4. Rising: Horse Farm Properties

Kentucky’s equestrian heritage continues to drive strong demand for horse farm properties, especially in the Bluegrass region. These specialized properties feature stables, riding rings, and pastures perfect for raising and training horses.

Foreign investors and wealthy horse enthusiasts view these properties as both lifestyle purchases and solid investments. The limited supply of prime horse farms keeps values climbing steadily. Even smaller horse properties with just a few acres have seen impressive appreciation in recent years.

5. Falling: Homes Near Declining Shopping Centers

Remember when living near the mall was desirable? Not anymore in Kentucky! Properties near struggling or abandoned shopping centers have seen their values plummet as retail continues its transformation.

Empty storefronts create an impression of neighborhood decline that turns off potential buyers. Increased crime rates around some abandoned commercial properties further damage nearby home values. The good news? Some developers are eyeing these spaces for mixed-use redevelopment, which could eventually reverse the trend.

6. Rising: Bourbon Country Cottages

Kentucky’s booming bourbon tourism has created a hot market for charming cottages near distilleries. Visitors want authentic experiences, and staying in a historic home near the bourbon trail delivers exactly that vibe they’re seeking.

Savvy investors are snatching up properties in towns like Bardstown and Frankfort to convert into vacation rentals. A well-located cottage can generate significant income through platforms like Airbnb. The bourbon boom shows no signs of slowing, making these properties increasingly valuable.

7. Falling: Flood-Prone River Properties

Climate change has made Kentucky’s waterfront properties increasingly risky investments. Homes along the Ohio River and in eastern Kentucky flood zones face more frequent water damage, driving insurance costs sky-high and values downward.

The devastating floods of 2022 served as a wake-up call for many buyers. Insurance companies have responded by raising rates dramatically or refusing coverage altogether. Even properties with flood mitigation features are struggling to maintain their value as the perception of risk grows.

8. Rising: Walkable Urban Neighborhoods

Young professionals are flocking to Kentucky’s urban neighborhoods where they can walk to restaurants, shops, and entertainment. Areas like Louisville’s Highlands, Lexington’s Chevy Chase, and parts of Covington offer this highly sought-after lifestyle.

The pandemic actually strengthened demand for these neighborhoods. With more remote work options, people value community connections and convenience more than ever. Homes in these areas often sell within days of listing, frequently above asking price.

9. Falling: Large Suburban McMansions

Those massive suburban homes that dominated Kentucky’s housing boom in the early 2000s are falling out of favor. Today’s buyers balk at the maintenance costs, huge utility bills, and formal spaces that don’t match modern lifestyles.

Many of these supersized homes sit on the market for months or even years. Younger buyers typically prefer smaller, more efficient homes with flexible spaces. Aging baby boomers are downsizing, creating a surplus of these large properties with too few interested buyers.

10. Rising: Tiny Homes and ADUs

Smaller is better for many Kentucky buyers today! Tiny homes and accessory dwelling units (ADUs) are seeing tremendous growth in popularity and value, especially in urban areas and tourist destinations.

Affordability drives much of this trend, with younger buyers facing steep housing costs. Retirees also appreciate the low maintenance and reduced expenses of compact living. Municipalities across Kentucky are updating zoning laws to accommodate these alternative housing options, further boosting their appeal and investment potential.

11. Falling: Homes With Outdated Floor Plans

Formal dining rooms and closed-off kitchens are killing property values across Kentucky. Modern buyers strongly prefer open concept designs that facilitate family interaction and entertaining.

Homes with choppy layouts, narrow hallways, and single-purpose rooms languish on the market. The cost of removing walls and reconfiguring spaces often exceeds what sellers can recoup. Ranch homes from the 1960s and 1970s are particularly vulnerable to this trend unless they’ve been substantially updated.

12. Rising: Homes With Outdoor Living Spaces

Kentucky’s beautiful seasons make outdoor living spaces incredibly valuable in today’s market. Properties featuring well-designed patios, outdoor kitchens, fire pits, and covered porches command premium prices.

The pandemic permanently shifted how we value outdoor entertaining areas. Buyers now see these spaces as essential, not optional. Even modest homes with thoughtfully designed outdoor areas are selling faster and for more money than comparable properties without these features.