Lawrence and Douglas County

Lawrence and Douglas county

Study finds city growing increasingly affordable

January 9, 2006


Buying a home in Lawrence is more affordable for most residents than it was 20 years ago, according to a new study, but it's still a tougher prospect than just about anywhere else in Kansas.

"You've seen home price gains, which weigh in affordability, but you also see a rise in incomes ... and a drop in mortgage payments," said Zoltan Pozsar, an economist with Moody's

Pozsar's analysis showed that it takes 13.3 percent of the average Lawrencian's income to buy a house here, down from 19.4 percent in 1985. But elsewhere it takes the average Kansan just 9.8 percent of their income to buy a home - and among the state's metropolitan areas, only Kansas City, at 14.7 percent, took a bigger bite out of residents' wallets.

Mayor Boog Highberger, who said he's nearly ready to appoint a task force on affordable housing, wasn't swayed by the statistics showing Lawrence residents are having an easier time house-hunting.

"They're talking about average income, and I think there's more income disparity than there used to be," Highberger said. "I think there's a perception that it's harder for working people to buy a home in Lawrence."

And City Commissioner Sue Hack said she was troubled by the numbers showing Lawrence is, in Kansas, a relatively expensive place to live.

"That's not a contest where we want to be in the higher tier," she said.

Lawrence housing prices have risen steadily over the years; the average single-family home sold in October went for $201,000, up from $179,000 a year earlier.

Median household incomes in Douglas County also have seen steady gains, from $26,402 in 1989 to $38,868 in 2003, the most recent year available.

Even with recent increases, though, interest rates for 30-year mortgages now are much lower than a generation ago - around 6 percent now, compared to around 13 percent in 1985.

"If home prices have steadily increased and interest rates have dramatically decreased, then I certainly buy into that idea, that it's easier to buy a home today than it used to be," said Rob Hulse, president of the Lawrence Board of Realtors.

Don Schmidt got his real estate license in 1981, when mortgage rates were even higher - around 18 percent.

"Interest rates are so reasonable" now, Schmidt said last week.

Schmidt said those low rates, combined with a wider availability of home loans, have changed the housing market, making homebuyers more mobile.

"I do see people are moving more," he said. "It used to be we'd sell a house and the client would stay in it 20 years. Now we're lucky if they stay for six years."

City officials, though, are well aware of Census figures showing that 11,000 of the city's workers commute rather than living in Lawrence. That figure, they say, can be attributed to relatively high housing costs here.

"When we put it beyond the ability of people to be in the community where they choose to work," Hack said, "that's not the kind of community we want to be."

Affordable housing?

A new Moody's study shows that Lawrence is more affordable for residents to live in than it was 20 years ago based on the percentage of income it takes to buy a house in the city.

Today, it takes 13.3 percent of the average Lawrencian's income to purchase a house, down from 19.4 percent in 1985.


norm 11 years ago

So, what, paying for another study to "force" Lawrence into the bottom "tier" of "affordiablity" is what's in order?

Heck, why's the norm around here. Good grief....

just_another_bozo_on_this_bus 11 years ago

I agree, Norm. We don't need to base our actions on information or any sort of plan.

badger 11 years ago

Did that study account for the fact that in 1985, a lot more people worked and lived in Lawrence, as opposed to now, when a lot of people who live in Lawrence don't work there?

Of course it takes less of an income to buy a house in Lawrence, if you're making more money because you work in Kansas City than you ever could if you worked in Lawrence.

Was it 'the average Lawrencian's income' or was it the average income available in Lawrence?

I think that's a difference worth exploring.

commonsense 11 years ago

I am a school teacher making $29,900 per year with a good credit rating. Unfortunately, I can't get a loan for a $201,000 (city average) house because I don't make enough money. So, like most of my other single teaching friends, I rent and have roommates.

gilmourfam 11 years ago

I agree. The cost of housing here is outrageous. We moved here 2 years ago from Wichita so that I could go to school. My husband works in Lenexa and commutes daily. The cost of gasoline, coupled with high heating bills, and other utilities stretches our budget. We bought our house for less than 150k but can barely afford it. The same house would sell for less than 100 in other cities like Wichita. I would venture to guess that the cost of housing is a good contributor to the problems we have with homelessness. How can you afford to pay over a thousand dollars a month for a house when you have no educational skills and you can't get a job for more than $7 an hour. Even if you worked 60 hours you would barely make $1200 a month after taxes. It's time for the city to wake up and make some changes about the cost of housing. Landlords and banks are making too much profit.

Though the study says interest rates are affordable now, those low rates added on to highly inflated costs mean more money going out to interest and less to principal. It also means more interst compounding on that late payment.

Housing here is very expensive.

samsnewplace 11 years ago

commonsense...I agree with you totally! You have to be pretty well off to actually live here, because most of us are commuters from smaller places that are still affordable. If they actually think we are going to believe this story, I have a bridge I would love to sell the City too. At one time I could afford a home here, back in the early 80's before Lawrence out-priced itself at my house.

Todd 11 years ago

Wow, single people with no downpayments deserve nice houses! Give me a friggin' break. Save some money, get married, and buy a starter house. People have been following this formula for generations.

jranderson 11 years ago

Even starter homes here are expensive. I am married, am working on saving money to buy a home for my family, but the homes we are left to choose from are not suitable even as a 'starter home'. Income does not equal the cost of living.

Todd 11 years ago

I see busted up older houses going for the low $100s. Buy one of them and put some work into it. After a few short years you'll have a nice place in a nice location. Something you probably couldn't get if you just saved for those same years. This type of activity makes the city a nicer place.

lunacydetector 11 years ago

i don't see other communities embracing 'smart growth' or 'new urbanism' like lawrence. i also don't see other communities curbing new growth like lawrence.

that's why you see a junky house that needs to be rehabbed going at a price like it was just rehabbed. then there was the city wanting to rent ground to new home buyers. the city keeps the ground, the new homeowner gets to pay for their house but also pay rent to the city. i think this idea may have been enacted on the east side of town somewhere. how pitiful.

the 'no growth' control freak mentality needs to stop.

Todd 11 years ago

It would be nice if median house selling price for 2003 was used to compare to the 2003 median household income. One month's average selling price in a small city like Lawrence isn't a good metric especially if a really expensive property sold that month.

I sure wouldn't mind seeing an in debt serious of articles in the paper about home buying. Seems people complain about affordable housing yet don't really what it takes to buy a house.

Todd 11 years ago

from above "in-depth series" instead of "in debt serious"

just_another_bozo_on_this_bus 11 years ago

The reason you see junky houses going for high prices is because that is what the market dictates. The main determiners of that are that (a) lots of people want to live here, and (b) a high percentage of those people are students who want rental housing, and landllords can afford to buy up what would be starter homes for much more than a young family can.

commonsense 11 years ago

Recently I found a "starter" house that I liked for $130,000. It was a 2 bedroom, one bath with a basement. It was decent old home in my price range. The problem is that the basement was falling in and needed reconstruction. This was causing the walls to shift and crack on the main floor. Also, the garage was falling down, all the windows were broken and the frames were rotting. The yard had no fence and no landscaping, basically dirt with a few clumps of grass. The gravel driveway (or lack there-of) was full of ruts. The size of the house was no more than 1,200 square feet, etc. etc. All this for $130,000! Now then, if I choose to purchase this home, I will need an additional $20,000 or more just to repair the current problems. Maybe I'll go out and get "married" and that will solve the problem!

girly 11 years ago

Maybe they should do a study on how expensive it is to shop in downtown lawrence. You either have to shop at Penneys or Kohl's, or go to KC.

Sigmund 11 years ago

The city and county don't like raising property taxrates. In order to get more tax revenue they merely raise the valuation. Real estate agents, who get a percentage of selling price, encourage buyers and sellers to accept those values as "market value." When buyers and sellers agree on a price that matches those valuations, they become reality.

So all is well, right? Afterall buyers and sellers, operating in a free market, will properly value any item. Well not so fast tulip breath, you might want to look at some of the biggest economic crazes and crashes, the tulip-bulb market.

Todd 11 years ago

Property ownership is not an entitlement.

Jamesaust 11 years ago

There are some difficulties in comparing housing costs from 1985 to 2005.

The article does admit the single largest one - changes in interest rates. This is however a phenomena applicable everywhere and does not change the affordability of Lawrence housing to housing anywhere else (relative cost). If you have a fixed, low interest rate, good for you; if someone next year has to pay 13% mortgage interest than the point of this article becomes invalid. That long term interest rates haven't risen more is a "conundrum" for Alan Greenspan. Don't expect conundrums to last.

Also, "household" income is quite distinct from "personal" income. Even during this 20 year period, the percentage of households needing two working adults to pay expenses rose (after a sharp increase over the last 50 years). A more appropriate measure for the affordability of housing is what it would cost one working adult supporting a fixed family size (say, four) to make payments on a house.

Third, "Median household incomes in Douglas County" is not the same as median household incomes EARNED in Douglas County. The percentage of persons earning income outside the County has increased during this 20 year period.

Fourth, 1985 is propably not a good starting point for comparison. It follows a period of record-high interest rates. High interest rates discourage construction. The period of 1985 to 1990 (the greatest part of the 'improvement' in affordability) is more of a natural catch-up period than a real improvement. Perhaps a 1975 or 1980 through 2005 comparison would show a flatter graph line.

Fifth, the 1990's particularly were a period of declining material costs, and of course, after labor and mortgage interest, the actual material cost makes up the largest part of the price of a house. One cannot expect a similar decline going forward. And, as noted, this applies everywhere, not just Lawrence, so there is no relative improvement.

Finally, there is no indication of whether the study held constant the 'value' of the house in question. (It appears to use a proxy of average sale price.) A more useful measure would be the price of a new house of fixed character - for example, my impression is that over these 20 years housing costs in Lawrence have been 'controlled' by eliminating basements, increasing shared wall 'town houses,' or building on smaller lots.

Hong_Kong_Phooey 11 years ago

Todd - you seem intent on telling everyone that they shouldn't be able to own a nice home, but should be content with buying a "money pit" starter and then fixing it up. Do you live in a home? How much did it cost? When did you buy it? How much do you make a year?

The fact is that the median cost of DECENT housing in Lawrence went up $30,000 in one year. The median household income went up $12,400 in 14 YEARS. That's not right. There has to be a better solution, other than your "get married" (why should someone have to get married? Isn't a house payment punishment enough?!) and buy a crap house and fix it up (which is going to cost a boatload of additional money - which, if people had that in the first place, why not buy a better house?).

dviper 11 years ago

I thought it was fairly common knowledge that Lawrence and the KC area were the most expensive housing markets in Kansas. I surely would have thought Ms. Hack would have known this because her in-laws are realtors. I also would have thought most people (especially if you've purchased a home in the last 13 years) would have known that housing is largely more affordable today than 20 years ago mainly because of lower interest rates.

However, the most interesting thing in the LJW news article is the statement made by Mr. Highberger. He seems to dismiss the data and statistics simply because they do NOT agree with his political agenda and views. It reminds me of a company survey years ago that when the results were compiled and completed showed employee's opinions differed from company executive management. So instead of addressing the issues, the corporate management brushed aside the results and put into place mandatory employee training to explain to the employees' why their opinions were wrong.

Additionally, the LJW should have also published census data that showed how many people live in Lawrence but work outside of Lawrence. I know in my immediate neighborhood area of about 35 homes, only 3 people work in Lawrence and everyone else commutes to Topeka or KC (4 retired couples in the area also). I've seen the data before somewhere, and it is a relevant statistic to show in comparison. Lawrence is mainly a university town, and is quickly becoming if not already, a bedroom community.

I only wish the LJW had interviewed all of the commissioners and published all their comments. It is actions and comments like this and others in the recent past that the voters need to remember next election.

badger 11 years ago

Y'know, Todd, you talk about buying a junky starter house and putting a couple of years' worth of work into it. Well, if you're not a licensed contractor, plumber, or electrician, you're going to have to hire them, and they don't work cheap.

I looked at houses for what I could afford on a 'professional' salary in Lawrence (hint: better than the 10-12 dollars most Lawrencians make if they're lucky). None of them were livable. I don't mean they weren't nice, I mean they had holes in the walls and cracked foundations. You may know how to fix a settling foundation, or put in new windows, or replace aged wiring, but I don't. I can install a sink or a faucet or a lightswitch, but replacing half a load-bearing wall? Out of my league and likely to stay so. Replacing the original plumbing on a house built in 1960? The same. Taking up and replacing rotting hardwood flooring that's been painted green and carpeted over? Well beyond my skillset.

I looked at a couple of those houses in the 'low 100s' you talk about. Not one of them would have been livable for less than an additional 20,000 dollars and four to five months - during which time I'd have to keep paying my rent. Then, to make it nice, as opposed to just safe for occupancy, that would have been another 20-40,000, even taking into account that I can spackle and plaster, and change those light switches and faucets and sinks myself, and am willing to do all the painting.

Now, working all this in around a full-time job (50-70 hours a week), I can imagine that I'd have someplace nice in a nice neighborhood somewhere around 2015. That is, of course, assuming that the neighborhood filled up with people willing to put in that same effort, and not just a lot of slumlord landlords and indifferent tenants.

I opt not to get married just so I can afford a house. I'm pretty sure that there are better reasons to get married, and I'm also pretty sure that you shouldn't have to be married to own a house. It hasn't always been a requirement. A starter house with a few flaws is one thing. A money pit on the verge of condemnation is another entirely.

samsnewplace 11 years ago

Todd says that "property ownership is not an entitlement", very true, but isn't this part of being able to live in a free country...being able to own your own home? I'm very glad he has no worries concerning home-ownership. I would love to be able to afford a "nice" small home in Lawrence, nothing fancy, just not a fixer-upper that costs $100 thousand plus alot more. I don't forsee this ever happening as when you look at housing these days, you might get a pit with four walls for $100 thousand and now who is going to be that stupid. I will stay will my big house up north that is paid for and commute, it's not worth working two jobs just for the priviledge of living in Lawrence.

just_another_bozo_on_this_bus 11 years ago

dviper said:

"However, the most interesting thing in the LJW news article is the statement made by Mr. Highberger. He seems to dismiss the data and statistics simply because they do NOT agree with his political agenda and views."

Or are you dismissing his views because they don't fit with your political agenda and views? Do you have any data that show that there isn't a greater disparity in income?

Todd 11 years ago

Freedom doesn't equal entitlement. You don't have the right to own a livable house in Lawrence.

Here's the deal with real estate, the best time to buy was 5 years ago. You can apply that slogan just about all the time anywhere. That means in 2011 when you are sitting around waiting for city officials to help you buy a slab house in a flood zone you'll think back and say, "I should have bought back in 2006 it was way better than now."

Another item not mentioned when talking about housing prices is the rental market. My guess is that the rental market is bigger in Lawrence today than it ever was.

Yep, I'm one of the JoCo commuters and that's how I afford things. I might/could make it work in my current situation working in Lawrence. To be honest I'm probably under qualified to work in my career field in Lawrence. I bought my Lawrence house in 2003 and have been pumping cash into it since. When I was at KU I always dreamed of moving back to Lawrence and living in a historic neighborhood. It took me 6 years of savings and job hunting to make it happen. At my current rate I'm estimating 2010 before all the work I want done is finished. (I'm not a contractor so I do the labor and outsource the skilled work)

bankboy119 11 years ago

Housing in KC is much more affordable...and livable. I love it.

Bozo, the whole article is about the I would say dviper has data to back up her statements. Unless you are trying to dismiss the data as well...and if you are would you care to explain what data would be more accurate?

just_another_bozo_on_this_bus 11 years ago

Highberger didn't dismiss that data. He was merely expressing caution in how it is interpreted.

dviper 11 years ago


I do not agree with Mr. Highberger's political views, but I do try my best to be objective. I do not have any objective data or statistics at hand to state whether or not the disparity in income is greater or not. Do you? However, I would tend to think the income disparity (just as is the average income statistics stated in the article) would be smaller than 20 years ago just by looking at generally available economic and job related data.

Additionally, Mr. Highberger made many promises in his election campaign on improving the affordability of housing in Lawrence for lower income wage earners. I'm sure most of the taxpayers and voters in Lawrence would like for him to be objective, instead of like most politicians promising everything but the moon and delivering nothing. He as of today has not done much of anything except finger pointing and making statements blaming 'the evil' developers and builders for all of Lawrence's woes. But he has done a good job of supporting and introducing randomness and nonsense to Lawrence.

badger 11 years ago

Todd said:

"Here's the deal with real estate, the best time to buy was 5 years ago. You can apply that slogan just about all the time anywhere. That means in 2011 when you are sitting around waiting for city officials to help you buy a slab house in a flood zone you'll think back and say, "I should have bought back in 2006 it was way better than now." "

It's not entirely true, you know, not even true enough for 'just about' these days. For example, a lot of the people who bought houses five years ago in any tech boom area still, five years later, owe more on the house than they could sell it for.

In theory, if you just hold on to a piece of land long enough, it will go back up in value, but that doesn't necessarily mean it's true in reality. Right now, if had you bought a large house in central Texas five years ago, your house is probably worth a third of what you paid for it - and that's more than it was two years ago, when the bottom fell out hard. Even as the land appreciates, you may never match (in adjusted value) what that land was worth at the height of the boom. By the time that $500,000 house hits the half-million mark again, inflation will have passed it by and half a million will only be worth (in buying power) $400,000.

As we base more of our economy on tech, be it computers, alternative energy, biotech, what have you, the economy is likely to lean more strongly, rather than less, to the boom-and-bust model based on this or that innovation, trend, or development. People will continue to buy 150,000 1-BR 'fixer-uppers', put 20 or 30 thousand dollars of real money into fixing them thinking they can sell it for a quarter million in three years, and find that their comparative value is lost when the market goes bust. Lawrence is not terribly likely to go bust in the immediate future, but if it doesn't build on its own industry, it's going to get knocked flat in one of KC's bust cycles, when gas prices/home prices/taxes get too high for Lawrence to be an attractive commuter spot as belts tighten.

spikey_mcmarbles 11 years ago

Prices are high because people like living in a university town. Example: I'll pay more for a toyota than a hyundai because I perceive the value of the toyota to be higher. Houses in Topeka are way cheaper than in Lawrence, but lots of people prefer to live in Lawrence because they perceive that life in Lawrence will return a higher value to them. I could own a better house in Prairie Village than in Lawrence, but I choose to live in Lawrence because I like the town. I've lived in KC, and it's ok, but I'm living in Lawrence now, and I like it alot more.

benm024 11 years ago

I guess I don't see the problem. Real estate is high because people want to live here more then many of the surrounding areas, period. Be careful what you wish for... If what you do to make it more affordable for low-income earners ends up driving out the West Lawrence community, you just turned Lawrence into a Kansas version of Columbia, Missouri. Or Topeka without a mall...

Godot 11 years ago

For whatever it is worth, I purchased my first house in Topeka 32 years ago. It was a very nice house, three large bedrooms, 2 baths, vaulted ceilings, lovely yard in a quiet, family oriented neighborhood. I paid $21,000. A friend of mine bought a house here in Lawrence at the same time, a 1920's fixer-upper. He also paid $21,000.

Topeka has stagnated - isn't much bigger than it was when I lived there. We all know what has happened in Lawrence.

I checked the Topeka real estate values, and I would probably be able to buy that old house back for between $55 and $60K.

My friend's house in Lawrence (which he remodeled to accomodate his growing family over a period of several years) would sell for around $190,000, easy.

It pays to buy real estate in a community that sees growth in its future.

Godot 11 years ago

By the way, Compton and friends are close to approval on that big re-development project for the area around Washburn University. Things might just start to pick up in Topeka. Now might be a good time to invest in a home there.

spikey_mcmarbles 11 years ago

"The problem with unaffordable housing will continue until Lawrence has better paying jobs. As long as the town settles for the attitude of no matter what your skill level is we are going to pay you student wages, this issue will continue. Those of us who want to stay here, but won't put up with the lack of good quality jobs will just continue to comute."

You hit the nail hit on the head. You can either scrape by and work in Lawrence for low wages, or you can drive 30 minutes east and make 60% more.

assistant1234 11 years ago

As someone who recently moved from the northeast, I always chuckle when I hear people grumbling about real estate prices in Lawrence. I could afford three times the house here that I could before, and the property tax rate is half of what it was back east. Count your blessings people!!!

Godot 11 years ago

"I could afford three times the house here that I could before, and the property tax rate is half of what it was back east. Count your blessings people!!!"

So, did you reduce your income by two thirds to move here, too?

I've noticed that people who move here from the coasts are likely to pay top price for Lawrence property. Maybe we could start a little "How to Haggle" tutoring club for people who are relocating here so we can let them know that they don't always have to offer the asking price (or more - I saw that done more than once last summer). Then that might help stop those 8 to 10 per cent valuation increases on our property taxes every year.

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