The “Horse Capital of the World” Remains Stable as 2026 Progresses
by Carole VanSickle Ellis
Last year, home-flipping rates plummeted in most U.S. cities as returns fell in roughly 70% of those metro areas. In Lexington, Kentucky, however, fix-and-flip investing was still going strong as the market headed into 2026.
According to ATTOM Data, Lexington posted a 40.3% increase in home flipping year-over-year at the start of this year. This rate was exceeded only by Binghampton, New York (up 136.4%); Boulder, Colorado (up 72.4%); and Greeley, Colorado (up 49.4%). Not surprisingly, statewide house-flipping returns are influencing the rise in Lexington flipping activity; In May 2025, ATTOM reported home flippers were still achieving roughly 7% returns on investment (ROI) statewide, which translated to an average gross profit of about $85,000 per flip.
Realtor.com analyst Dina Sartore-Bodo credited Lexington’s “equestrian heritage,” “vibrant downtown,” and the University of Kentucky with “providing a steady demand for housing” and, by extension, keeping local real estate in high demand. She also observed Lexington’s housing inventory offers a “variety of architectural styles to choose from,” allowing home-flippers to leverage a variety of renovation strategies in their projects.
A High Standard of Living in a Relatively Affordable Market
While Realtor.com reported in April 2026 that Lexington home values have only fallen about 1.4% in the past year, the median sales price is still relatively affordable compared to other metro markets of similar size. As of April 2026, the median sales price in Lexington was $336,000 (vs. the statewide median sales price of $254,900) and, interestingly, the median list price was just under $370,000 (vs. the statewide median list price of about $290,000). At present, homes are going under contract in about 35 days, but nearly two-thirds are selling under list price.
Florida-based law firm Becker & Poliakoff recently published a list of the “hottest and coldest states for real estate in 2026,” and cited Lexington as one of the reasons they ranked Kentucky 13th on the list of hottest real estate markets. The firm based the analysis on metrics including: growth in home prices, rent, employment, new-home purchases, construction permits, rental vacancies, housing-burden cost, and population relocation.
“Our cost of living is lower, wages are comparable, and we have many of the amenities people are looking for… in the form of availability of shopping, entertainment, parks and recreation facilities, good schools and universities, and access to quality medical care,” said Mike Inman, president of Bluegrass Realtors, in response to the results of the study. He concluded, “Both locals and out-of-state buyers want to be in this area for a number of reasons,” and Lexington, like the rest of Kentucky, benefits from comparably lower property, income, and sales tax rates.
Although Lexington’s housing inventory currently is boasting a number of indicators that would place it in what HousingWire refers to as “seller-favorable territory,” buyers are holding their own and refusing to pay the top-dollar prices set by optimistic sellers. As of December 2025, 39.4% of all listings sold after a price cut, and 11.3% of listings were relisted at least once, a “sign of seller strategy adjustments,” HW Data and Rachel Bader wrote at the end of last year. Bader did note buyers will benefit from a nearly 30% increase in sales inventory in 2026.
Rental Availability is Limited
The local rental market in Lexington tightened over the course of 2025, resulting in the city being ranked third on RentCafe’s list of most competitive small rental markets in the south and 11th nationwide. “[If you are] looking for an apartment rental in Lexington…11 other people are likely eyeing the same place,” observed The Lane Report analysts in a report on the data at the beginning of this year.
For rental-property owners, Lexington is a sound market. Apartments rent in about 45 days, which is slightly faster than the national average, and more than 70% of renters renew their leases. As of April 2026, Realtor.com reported fewer than 500 rental units were available in Lexington, down nearly 5% year-over-year and nearly 20% in the last three years.
Occupancy rates hover just over 93%, noted Lane Report analysts, adding, “This is not enough to meet the current market demand.” Lexington rental rates are relatively affordable, however, compared to national averages. Median rent has risen year-over-year by nearly 20% but remains just under $1,800/month. This brings it close to the national average, but, when multifamily rates are isolated from single-family rentals (SFRs), the average rent falls to just over $1,000/month, reported Rent.com. This is 34% below the national average, but the rate is increasing slowly while other markets report softening rents.
Investors able to create new rental supply, either via new construction or converting existing residential properties into small multifamily, will likely find high demand for their assets. According to EHI Consultants, who were commissioned by Lexington’s city council to assess the housing needs of Lexington, the city needs to increase its overall housing supply by 16% (nearly 23,000 units) in order to fill the current gap, and rentals tend to be clustered in the northern area of the city.
“[This means] residents have few geographic options for where to live if they have limited budgets,” observed Adrian Bryant, a civic information specialist reporting on local issues in Lexington for CivicLex. Bryant noted that EHI Consultants warned in the same study that of those 23,000 units, more than 17,000 units “are needed for households with incomes at 80% or lower of the area median income (AMI).” Lexington’s AMI is $62,908.
Whether investing in rentals, rehabs, or retail properties, investors in Lexington can likely expect a slower moving, less volatile market in Lexington than in other areas of the country. Local broker Cynthia Trgo, who noted she believes the market might be turning to favor buyers slightly, summed it up, “Our market is just so stable. I expect it to be a really great year for anyone wanting to get involved in real estate.”
SIDEBAR 1
By the Numbers
3 // Ranked 3rd Safest City in America — Safewise
41 // Percentage of the Lexington population that has a bachelor’s degree or higher — U.S. Census Bureau
3 // Ranked 3rd Best City to Raise a Family — Zumper.com
10 // among the Top 10 Best Big Cities to Live In — Money Magazine
6 // Ranked 6th Best City for New College Grads — Smart Asset
3 // Ranked 3rd Best City with Highest Salaries and Lowest Cost of Living — GoBankingsRates.com
11 // Ranked 11th Best City for First-Time Homebuyers — Smart Asset
10 // Ranked 10th Best City Work-Life Balance — Smart Asset
50 // Top 50 Foodie Towns in the United States — Daily Meal
SIDEBAR 2
When Horses & Housing Collide
When you think of Lexington, Kentucky, you likely think of rolling green pastures, picturesque barns and farmhouses, and luxurious stables most people would be happy to live in. That is because Lexington is home to more than 450 horse farms, including the 1,200-acre Kentucky Horse Park, which attracts about 1 million visitors every year.
Lexington has always been ideal for raising horses, due in large part to “the water that passes through the massive limestone shelf that lies beneath our nourishing bluegrass pastures,” according to VisitLex.com. The additional minerals in the water create strong bones and increase durability in horses, and more money changes hands in sales transactions for those horses in Lexington than in any other location in the world.
Horses and housing sometimes collide in Lexington, where there is a significant housing shortage. According to some estimates, 23,000 more housing units are needed to meet demand. However, the land needed to create that housing may be, in large part, agricultural land currently in use as equine land, warned Bailey Truitt, a Fellow at Equal Justice Works in Lexington. Truitt, who believes “the equine industry in Kentucky is a necessary component to both the state’s economic security and cultural identity,” said rezoning agricultural land will only “further urban sprawl and prevent people from having housing near work areas in Lexington,” thus “negatively impacting job opportunities and creating crowded and cluttered roadways.”
Investors considering acquiring rezoned land or land that could potentially be rezoned for residential use should consider this hot-button issue before doing so in the Lexington area.
