Are you getting mixed signals?

In a recent 30 day period the Lawrence Journal World reported the following headlines; Local Home Sales, Prices Drop (Feb 15), Home Sales Fall Despite Warm January (Feb 28), Valuations Rise 10.8% (March 7; Corrected to an 8.4% increase on March 10). So just what is happening in Lawrence and are we to believe that the real estate market is crashing. . . or booming?

If you are in the “my home value just went up 10%” camp, hold on a minute. It may very well have, but then you would be the exception. In most cases, you have been enjoying very steady and consistent property value increases over time. While it is true that property appreciates and homes do increase in value, that is just a portion of the overall increase. New homes, subdivisions, and new commercial development that were not a part of the previous year’s numbers are now added to this year’s totals. As our population grows, we also have new real estate shoppers coming through the doors of our city. If Hy-Vee reported an 8.4% increase over the previous year, would we jump to the conclusion that prices went up 8.4%? More likely we would understand that the increase has come for several reasons. Prices may have increased some with inflation, new customers may have come through their doors requiring the store to have more merchandise on hand, and new lines of merchandise may have been added. Bottom line:it is important to not get lost in the headlines. If you were an average home owner in the area, your home probably appreciated between 4% and 6% in the last year.

If you find yourself in the “bubble bursting” camp, there is comforting news for you. Lawrence is not in a real estate bubble! History shows that our increases in real estate prices have been steady and consistent but are not out of this world. Yes, we all want a community that provides housing opportunities for everyone, and candidly we need to get to work on it. But don’t confuse our real estate market with all of the bubble hype. Headlines and hype create perception, but the reality is this; as reported from the Multiple Listing Service within the Lawrence Board of Realtors, the average sale price of a “sold” Lawrence home over the past 5 years has increased 4.9% per year (’01 2.2%, ’02 4.7%, ’03 9.4%, ’04 1.9%, ’05 6.3%). And here is your fun fact of the day:when we look at market activity through January and February of 2006, as compared to January and February of 2005, this year’s trend is up as well.

With today’s headlines things can be confusing. Not to mention that real estate is as unique to each individual as any investment available. But the waters are warm and safe. Rates are attractive, there is a plentiful supply of property to choose from, and Spring is a great time to buy and sell real estate in Lawrence.