Tag Archives: investing

One Week Left in 2025: Why Residential Rental Properties Will Shape 2026 By TW Shortt 

4 Jul

As 2025 ends, it is worth pausing long enough to separate noise from the signal. Real estate markets are often explained after the fact, but they are best understood through experience—especially local experience. 

Working through multiple market cycles in Hardin County—from the late-1980s slowdown to the post–Cold War Fort Knox adjustments, the mid-2000s correction, and the pandemic-era surge—has made one thing clear: while the circumstances change, the core market patterns do not. 

The data from 2024 and 2025, viewed through that long lens, points clearly toward residential rental property as a defining segment for 2026. 

A Market That Was Already Cooling 

Well, before any recent employment headlines, the residential market was signaling a shift. In 2024, 82 percent of single-family listings were sold. By 2025, that number slipped closer to 72 percent, even as total listings increased. 

That combination—rising inventory and declining sell-through—has always marked a transition from momentum-driven markets to fundamental-driven ones. I have seen it repeatedly. When that line is crossed, sellers must adjust expectations, and investors who understand cash flow begin to re-enter the picture. 

Rentals Have Always Moved First 

Over decades of brokerage and property management work, one lesson has held: rental housing reacts differently to uncertainty than owner-occupied housing. 

When buyers hesitate, they rent. 
When jobs feel less secure, households delay purchases—but not housing. 

I saw this after the base realignments at Fort Knox. I saw it during the 2008 fiscal crisis. I saw it again during COVID. Each time, rental demand firmed up before softening, and well-located rental properties retained their value better than speculative owner-occupied inventory. 

Blue Oval and Market Psychology 

The latest news about job reductions tied to the Blue Oval project introduces uncertainty—not just for those directly affected but for the broader market. In real estate, psychology often moves faster than statistics. 

In my experience, announcements like this do not cause immediate collapse. Instead, they cause hesitation. That hesitation shows up first in buyer behavior: longer decision times, fewer marginal buyers, and more households choosing to rent “for now.” 

That shift tends to strengthen rental occupancy and stabilize rental income, even as sales volume slows. 

What 2026 Is Likely to Reward 

Based on what we saw in 2024 and 2025, and on decades of local market behavior, 2026 is shaping up to be a year when rental fundamentals matter more than narratives. 

Expect: 

  • Stronger interest in income-producing residential property, 
     
     
  • Premium pricing for rentals with documented rent history and stable tenants, 
     
     
  • Less tolerance for underperforming or poorly managed properties, and 
     
     
  • A renewed focus on cash flow, cap rates, and operating expenses. 
     
     

This is not a market for shortcuts. It is a market that rewards experience, discipline, and realism. 

Closing Perspective 

Real estate does not change because of headlines alone. It changes because people adjust how they live, how they spend, and how much risk they are willing to take. After forty years in this market, I am confident that residential rental property has consistently been one of the most resilient segments during periods of transition. 

As we close out 2025, the signals are familiar. For those willing to look past the noise and focus on fundamentals, 2026 is already taking shape. 

Disclaimer: This column reflects the author’s views and is for general informational purposes only; it should not be relied upon as financial, legal, or real estate advice. 

TW Shortt is a Hardin County real estate broker, past president of the Heart of Kentucky Association of REALTORS and writes the Focus on Finance column on housing and local economic issues. 

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The First Rain After Closing: When the Basement Tells a Different Story  

4 Jul

A veteran Kentucky real estate broker explains disclosure duties, buyer protections, and why most wet-basement disputes are resolved through settlement rather than court.  

Most brokers can say with confidence that very few things unsettle a new homeowner faster than a flooded basement — especially when it happens right after closing. Most experienced brokers have seen this situation many times, and while it feels catastrophic now, it is rarely unmanageable.  

Kentucky does not promise buyers a perfect house. Older homes come with quirks, maintenance issues, and sometimes water. What Kentucky law requires is honesty. Under KRS 324.360, most sellers of one-to-four-unit residential property must complete a Seller’s Disclosure of Property Condition before closing. That form specifically asks about basement water, leaks, flooding, and related repairs.  

Agents and brokers take that responsibility seriously. When representing sellers, experienced brokers insist that disclosures be completed fully and truthfully, not treated as a formality rushed through at the end of a deal. When representing buyers, most brokers push for the Seller’s Disclosure early in the transaction — not days before closing — so potential issues can be identified, evaluated, and priced appropriately. In practice, early disclosure prevents more disputes than almost any inspection clause ever could.  

When a basement floods shortly after purchasing, the real question is not whether water entered the home, but whether the seller knew the problem was recurring and failed to disclose it. Kentucky law requires disclosure of latent, or hidden, material defects — problems a reasonable buyer would not discover during a normal walk-through or inspection. Chronic water intrusion, past flooding concealed by fresh paint, or a sump pump that only works on dry days are classic examples.  

Many brokers have handled transactions in which buyers later discovered long-standing water problems, and they have also seen cases where the issue was an unexpected failure or an unusually heavy storm. The difference matters. Courts — and more importantly, negotiators — look closely at what the seller disclosed, what was visible, and what the buyer’s inspector noted. Kentucky cases such as Fenske v. Oddo and Waldridge v. HomeServices of Kentucky reflect what brokers see every day: buyers have stronger positions when problems were concealed, and weaker ones when warning signs were present but ignored.  

From a practical standpoint, the first few days after discovering water are critical. Most brokers advise buyers to document everything: photos and videos of standing water, water lines on walls, damaged property, and any visible mold, along with notes about when the water appeared and under what conditions.  

Next, professionals should be brought in. Waterproofing contractors, foundation specialists, or plumbers can often tell whether a problem is new or has existed for years. Written estimates and professional observations often serve as the foundation for resolution.  

Then, attention returns to the paperwork. The Seller’s Disclosure form, inspection report, repair invoices, and even emails or text messages often tell the real story. In most brokers’ experience, disputes are resolved by documents far more often than by arguments.  

Most buyers are surprised to learn that these cases rarely end up in court. Once repair costs are clearly identified and the seller’s disclosures are reviewed, resolution is usually straightforward. Sellers may contribute toward repairs; insurance coverage may apply, or the parties may reach a negotiated compromise. Because litigation is costly, time-consuming, and uncertain, most people choose a practical solution — one that restores the home and allows everyone to move on.  

That said, buyers should speak with a Kentucky real estate attorney before confronting a seller or agent. A lawyer can evaluate the facts, explain deadlines, and help frame a demand that encourages resolution rather than escalation.  

Based on how these situations are typically handled, the guidance from experienced brokers is consistent: insist on disclosure early, document problems thoroughly, rely on qualified professionals, and focus on practical outcomes. Water problems are stressful, but with transparency and experience on all sides, they are often solvable — and usually without a courtroom.  

By TW Shortt, CRB  
Broker/Owner, REALTY WORLD Knox Realty Group 

Disclaimer: This column is for general informational purposes only and is not legal or tax advice. It does not substitute for consultation with a licensed attorney regarding your specific situation.  

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Will Artificial Intelligence Replace Real Estate Agents? 

4 Jul

The short answer is yes—but not immediately, and not without some important qualifications. 

Anyone paying attention to the rapid development of artificial intelligence can sense that meaningful change is approaching and approaching quickly. Even casual users of AI tools recognize how quickly the technology is evolving. Professionals who spend their workdays analyzing data, processing information, and communicating with clients increasingly ask a simple question before beginning almost any task: Can artificial intelligence help with this? 

Often, the answer is yes. 

Recently, while discussing the renovation of a commercial building with a client, we wondered what the property might look like after certain improvements. Within seconds, an AI system showed the upgraded building. Moments later, the same system produced rough renovation cost estimates and a preliminary pricing memo. Tasks that once required days of research and consultation were completed in minutes. 

Experiences like this are becoming common across many industries, and real estate will not be immune to this technological shift. 

In fact, the industry is already experiencing structural change. One of the most significant developments in recent years involved federal antitrust litigation against the National Association of Realtors regarding commission practices within the Multiple Listing Service (MLS). In Burnett v. National Association of Realtors (W.D. Mo. 2023), a federal jury concluded that certain industry rules related to buyer-agent commissions could restrain competition. Following the verdict and related litigation, NAR agreed in 2024 to a nationwide settlement exceeding $418 million and adopted new rules affecting how commissions are communicated through MLS systems. At the same time, the U.S. Department of Justice has continued examining brokerage practices across the country. 

For decades, the MLS system helped structure cooperation between brokers by allowing listing agents to offer compensation to buyer agents. As those rules evolve, one of the traditional pillars supporting the brokerage model has begun to weaken. 

Another traditional role of real estate agents has been pricing property. Yet it is becoming increasingly difficult to argue that human judgment alone can outperform modern data systems. Artificial intelligence can analyze thousands of comparable sales, neighborhood characteristics, economic indicators, and pricing trends within seconds. Automated valuation models continue to improve, and as their accuracy increases, consumers will place greater confidence in these systems. 

At the same time, buyers and sellers now have unprecedented access to real estate information. Online platforms such as Zillow, Redfin, and Realtor.com allow consumers to examine listing histories, review neighborhood statistics, estimate property values, and even take virtual tours of homes—often without ever speaking to an agent. Much of the information that was once required for a professional intermediary is now available directly to the public. 

Looking ahead, it is not difficult to imagine the next stage in the evolution of the real estate marketplace. A fully integrated AI platform could allow property owners to list homes directly while buyers enter detailed search preferences. The system could instantly match buyers and sellers based on price, location, and property characteristics. Showings could be scheduled automatically, and self-guided tours could become routine. Agents might enter the process later, assisting primarily with negotiations, legal matters, or complex transactions. 

In such a system, artificial intelligence would perform many of the routine tasks currently handled by agents. Listing distribution, buyer searches, comparative market analysis, marketing materials, and document preparation could all be automated. 

However, the disappearance of real estate agents is unlikely to occur overnight. 

Real estate transactions involve large financial commitments, legal complexity, and emotional decision-making. Many buyers and sellers still value experienced guidance when making one of the most important financial decisions of their lives. Negotiation skills, local market knowledge, and the ability to manage complicated transactions remain in areas where experienced professionals can add real value. 

The challenge for agents is not to resist technology but to adapt to it. 

Those who learn to use artificial intelligence as a tool—while strengthening their negotiation skills, local expertise, and advisory roles—will continue to find opportunity. Those who ignore it may eventually discover that the profession they once knew has changed beyond recognition. 

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Stop Chasing Business—Start Attracting It 

4 Jul

Why strong fundamentals, not incentives, are the real drivers of local economic growth 

By T.W. Shortt, Real Estate Broker
Originally published in The News-Enterprise on April 18, 2026.

Every small town in America is looking for new business opportunities—and for good reason. New businesses bring energy, jobs, and momentum. Economic success often builds itself. When one business opens, others tend to follow. Along the way, the tax base can grow, providing revenue to support infrastructure, public services, and long-term stability. 

Over time, many experienced municipal leaders have come to recognize something important: attracting economic opportunity is not always about chasing businesses from place to place or offering incentives at every turn. Incentives can play a role, but they are rarely the foundation for sustained growth. 

In many communities, real work begins at home. 

Strong communities often focus on the fundamentals—reliable municipal services, public safety, and overall appearance. Clean streets, well-maintained properties, and active storefronts tend to send a clear message to investors and business owners. At the same time, vacant buildings and neglected areas can quietly discourage outside interest. In many cases, these are conditions that can be addressed through consistent standards and steady attention over time. 

I have come to believe—partly from early lessons at home—that progress usually begins with action rather than wishing things were different or focusing on what is outside our control. It starts by doing what can be done, right where you are. 

That same principle often applies to communities. 

When cities take an honest look at where they are, set a clear direction, and commit to improving the basics, they begin to position themselves for opportunity—not by chance, but by design. 

Most communities, of course, find themselves somewhere between two familiar paths. 

One path relies heavily on recruiting—attending conferences, offering incentives, and waiting for a major project to arrive. The other emphasizes strengthening what already exists—developing a plan, supporting local businesses, maintaining core corridors, and improving the day-to-day environment that residents and investors experience. 

Over time, communities that consistently invest in their own foundation often begin to see a shift. Vacancy rates may stabilize. Existing businesses expand. Confidence is growing. And eventually, outside interest tends to follow. 

Why? 

Because capital is naturally drawn to places that demonstrate order, stability, and visible pride of ownership. 

The same pattern can be seen in business, regardless of size. Successful organizations rarely spend all their time focused outwardly. Instead, they invest in their strengths, address weaknesses, and make steady, disciplined improvements along the way. 

As communities grow, many reach a point where they can support a dedicated economic development role. At its best, this position is less transactional and more strategically focused on evaluating local conditions, understanding market realities, and helping guide long-term direction. That direction may evolve, but it tends to remain grounded in sound fundamentals rather than short-term pressures. 

In many cases, communities struggle not because opportunity is absent, but because the fundamentals are overlooked or applied inconsistently. 

Real, lasting growth often comes from discipline, consistency, and a commitment to doing the basic things well—day in and day out. Communities that move forward tend to be those that take care of what they already have, set clear expectations, and follow through. 

Because in the end, investment follows confidence. And confidence is built where people see order, stability, and pride. 

You do not build economic growth by chasing it. 
You build it by becoming the kind of place that cannot be ignored. 

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The Real Estate Industry Is Being Rewritten  

4 Jul

The residential real estate industry is undergoing one of the most significant transformations in its modern history. The pace of change has become so rapid that even many professionals within the business are struggling to keep up. Individuals entering the industry today will experience a career environment dramatically different from that of someone who entered the field only five years ago. 

Two powerful forces are driving this transformation: major legal challenges to traditional real estate commission structures and the rapid rise of artificial intelligence. 

For decades, the residential real estate business has operated under a commission-based compensation system that typically involved shared commissions between listing brokers and buyer agents through local Multiple Listing Services (MLS). While this structure became deeply embedded within the industry, federal regulators increasingly questioned whether portions of the system limited competition and discouraged alternative pricing models. 

The Federal Trade Commission studied these issues as far back as 1983 and again in 2007, identifying concerns about limited price competition and structural barriers that made it difficult for alternative brokerage models to gain widespread acceptance. More recently, high-profile litigation involving the National Association of Realtors has accelerated nationwide discussions regarding transparency, consumer choice, and commission practices. 

At the same time, artificial intelligence is rapidly reshaping how real estate information is analyzed, marketed, and delivered to consumers. AI has moved far beyond the novelty stage and is now capable of performing large-scale data analysis, generating marketing content, automating customer interaction, identifying market trends, and streamlining administrative tasks that once required significant human labor. 

Consumers now have access to more information than ever before. Buyers and sellers can research neighborhoods, estimate property values, compare financing options, and communicate instantly through digital platforms. These technological advances are gradually reducing the public’s reliance on traditional gatekeepers of information. 

However, technology alone does not instantly change the industry. Longstanding systems, consumer habits, and institutional structures tend to resist rapid disruption. Many consumers still associate traditional commission-based brokerage with full-service representation, professional expertise, and transaction security. That perception continues to reinforce the existing model even as alternatives become more visible. 

What makes this moment different is that both legal pressure and technological change are occurring simultaneously. The combination may reshape how brokerage services are priced, delivered, and consumed over the next decade. 

One of the most significant developments may be the gradual “unbundling” of traditional real estate services. Instead of a single commission structure covering all services, consumers may increasingly choose among multiple levels of representation, ranging from full-service brokerage to flat-fee listings, consultation-based services, or hybrid approaches that allow property owners to take a more active role. 

This shift could lead to greater pricing transparency and more consumer choice, but it will also require both real estate professionals and consumers to adapt to a rapidly changing environment. 

The real estate industry has always evolved alongside technology, regulation, and consumer expectations. What we are witnessing now may represent the beginning of the most substantial restructuring of residential real estate brokerage in generations. 

By T.W. Shortt 

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From Duty Station to Portfolio: How Military Families Can Build Wealth Through Real Estate 

22 Jun

By: Dominic Schroeder

For most Americans, building wealth requires years of saving, investing, and careful financial planning. For military families, however, there is another opportunity that often goes overlooked: turning required relocations into a long-term real estate investment strategy. 

Here in the Fort Knox area, active-duty military members receive Permanent Change of Station (PCS) orders and move to a new duty assignment. Many families simply rent a home or purchase a house and sell it when they leave. Others take a different approach. They purchase a home, live in it during their assignment, and then keep the property as a rental when military orders send them elsewhere. 

Over the course of a military career, this strategy can result in the ownership of several income-producing properties. 

One of the most valuable benefits available to service members and veterans is the VA home loan program. Qualified borrowers can often purchase a home with no down payment, competitive interest rates, and no private mortgage insurance requirements. These advantages make homeownership more accessible and can allow military families to begin building equity much earlier than many civilian households. 

Consider a service member who purchases a home near a military installation, lives in it for several years, and then converts it to a rental property after receiving new orders. During ownership, the mortgage balance is gradually reduced while the property may also appreciate in value. If rental income covers the property’s expenses, the owner benefits from both principal reduction and long-term appreciation. 

Repeat this process several times during a twenty-year military career, and the results can be substantial. 

Of course, real estate investing is not without risk. Property values can fluctuate. Unexpected repairs occur. Vacancies happen, and tenants do not always perform as expected. Successful investors prepare for these realities by maintaining cash reserves, carefully evaluating each purchase, and selecting properties in areas with strong long-term demand. 

Military families already possess many of the skills required for successful investing. Discipline, planning, risk assessment, and long-term thinking are qualities developed throughout military service. When applied to real estate ownership, those same skills can help create lasting financial security. 

Surprisingly, many eligible veterans never fully utilize their VA home loan benefits. While homeownership remains one of the most common ways Americans build wealth, many service members are never shown how to use repeated relocations as a financial advantage rather than merely a disruption. 

The key is to view each PCS move differently. Instead of seeing relocation as an inconvenience, consider it an opportunity to acquire another asset. A home purchased today may become tomorrow’s rental property, and a series of carefully selected homes can eventually become a portfolio that produces income long after military service has ended. 

The military teaches people how to accomplish difficult missions through preparation and execution. Building wealth through real estate requires the same mindset. For military families willing to think beyond the next assignment, today’s duty station may become the foundation of tomorrow’s financial independence. 

By Dominic Schroeder 

Dominic Schroeder is a retired U.S. Army Military Police veteran whose career took him around the globe. As a REALTOR® with REALTY WORLD Knox Realty Group – The Fort Knox Office™, he applies that same discipline, planning, and attention to detail to assist clients with complex real estate transactions throughout Hardin County and the Fort Knox region. 

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Welcome to Inside Real Estate Today

22 Jun

More Than $125 Billion: The Hidden Savings Account Most Homeowners Never Think About

At this very moment, an estimated $125 billion (about $380 per person in the US) or more of homeowners’ money is sitting in mortgage escrow accounts across America.

Let that sink in for a moment.

That is not money belonging to banks. It is not money belonging to insurance companies. It belongs to homeowners who have been required to deposit funds each month to pay future property taxes and homeowners’ insurance premiums.

For many Americans, these escrow accounts represent one of the largest pools of personal savings they possess—yet few homeowners ever think about them.

A mortgage lender establishes an escrow account to collect money for property taxes and insurance. Instead of receiving separate tax and insurance bills throughout the year, homeowners pay one monthly mortgage payment that includes principal, interest, taxes, and insurance. The lender then pays those bills when they become due.

For millions of families, this system provides convenience and peace of mind. It reduces the risk of missed tax payments, insurance cancellations, and unexpected financial surprises.

But there is another side to the story.

Because taxes and insurance are collected months before they are due, lenders may hold thousands of dollars belonging to a homeowner at any time. Federal regulations permit lenders to maintain reserve cushions in these accounts to ensure future obligations can be paid.

Multiply those balances by the tens of millions of mortgage loans in America, and the result is staggering. Industry estimates suggest that more than $125 billion (about $380 per person in the US) may be sitting in residential escrow accounts nationwide.

The question homeowners should ask is simple:

What happens to all that money while it sits there?

In many cases, the answer is not much.

While some states require lenders to pay interest on escrow balances, many borrowers receive little or no return on funds that may remain in escrow for years. If $125 billion (about $380 per person in the US) earned just four percent annually, it would generate approximately $5 billion (about $15 per person in the US) in interest each year.

Recently, our office assisted a homeowner in the Lexington area who wished to assume responsibility for paying his own property taxes and homeowner insurance. After reviewing the situation, it became apparent that $7,000 had accumulated in the escrow account. Based upon the timing of the tax bills, insurance premiums, and the lender’s reserve requirements, the actual amount needed to comfortably satisfy future obligations appeared to be much closer to $4,000.

To be clear, there was nothing improper about the lender’s actions. Escrow balances often fluctuate throughout the year due to payment schedules, annual escrow analyses, tax increases, insurance adjustments, and reserve requirements. Nevertheless, the homeowner was surprised to discover how much of his money was sitting in the account.

Closing an escrow account is not a one-step process. The borrower must typically meet lender requirements, demonstrate sufficient equity, maintain a satisfactory payment history, and formally request an escrow waiver. Depending upon the lender and loan program, additional reviews and documentation may also be required.

In this case, the homeowner closed the escrow account and received the accumulated funds. Going forward, he will be responsible for managing and paying his own property taxes and insurance premiums directly.

Managing taxes and insurance independently is not for everyone. It requires discipline, planning, and the ability to set aside money throughout the year. Miss a tax payment or allow insurance coverage to lapse, and the consequences can be severe.

For many homeowners, escrow remains an excellent tool. It simplifies budgeting and helps ensure important bills are paid on time. For others—particularly those with substantial equity, strong financial habits, and a desire for greater control over their money—an escrow waiver may be worth exploring.

The next time you review your mortgage statement, look at the escrow section. You may discover that one of your largest financial assets is an account you have never considered.

In an era when Americans are searching for every available dollar to combat inflation, rising insurance premiums, and increasing property taxes, it may be worth asking a simple question:

How much of your money is sitting in an escrow, and is it working as hard as you are?

By T.W. Shortt
Focus on Finance – June 2026

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