Creighton and Nikki Alexander paid $299,900 - the asking price - for their new house in Lawrence and they love their new digs.
Four bedrooms.
Four baths.
A finished basement.
"It's the floor plan - the flow," Creighton Alexander said. "It's just what we wanted."
But don't go looking for 2-inch blinds, granite countertops or brushed-nickel faucets in the new place off Harvard Road - at least not yet.
The Alexanders' new tri-level home, on Allen Court in the heart of the growing Foxchase South subdivision near Langston Hughes School, offers an example of what has become a market reality in Lawrence.
As costs continue to rise for everything from land to construction materials to labor, folks like the Alexanders are finding that $300,000 just doesn't buy as many extras as it used to in Lawrence.
That means what once were sure-fire deluxe homes are no longer quite so deluxe. Features once commonplace in a $300,000 home - a level that remains at least $100,000 above the median price paid for single-family homes in town - now are becoming less prevalent, as the gap between average and above-average listings continues to narrow.
At the highest reaches of the market, Realtors for months have been busy showing more than a dozen homes listed for more than $1 million. A couple properties are even said to be approaching closings in the coming weeks, in what would be the first seven-figure resale transactions in town.
"Three-hundred thousand can get you a solid, good-value home," said Mike McGrew, vice chairman for Coldwell Banker McGrew Real Estate. "But if you want to start tricking it out, it's not going to be a four-bedroom, three-baths, three-car-garage home with all amenities.
"It's not to say there aren't some $300,000 houses that do have some of these tricks, but it's rare. And It certainly won't be a new house."
Plenty of choices
Such observations come as the availability of $300,000 homes continues to favor buyers, although not as much as perhaps a year ago. As of Friday, there were 24 homes priced from $290,000 to $310,000 available through the Lawrence Board of Realtors Multilist, the clearinghouse for homes listed for sale. Of those, 13 were new construction.
There have been 16 such homes sold or placed under contract since Jan. 1, suggesting that the availability of properties in the $300,000 range is running slightly beyond what is considered market equilibrium. The National Board of Realtors says that a six-month supply gives equal footing to buyers and sellers.
More about local real estate
The nationwide supply for the past several years has been about 4.5 months, said Walter Molony, a spokesman for the association in Washington, D.C. Now it's shifting to closer to 6 months.
While price increases are slowing significantly in what have been the hottest markets - such as California, south Florida and others - many smaller Midwestern and Southern areas actually have been gaining momentum, he said. And as the overall economy gains strength, employers hire more people and those already employed feel more secure in their jobs.
That's good news for college towns such as Lawrence, he said, where employment spikes and declines tend to be less common.
Video
Nikki Alexander gives a tour through her $300,000 home. Enlarge video
Buying at $300,000 in Lawrence shouldn't be much of a stretch, Molony said, given that it's not all that far from the national median price of $218,000, and that the Lawrence market generally is poised for continued strength.
"You've got affordability in a market like Lawrence, which is not the case in San Francisco," he said.
Building value
In Lawrence this year, listings in the $300,000 range have spanned from a new 1,443-square-foot condo sold in the Hobbs Taylor Lofts downtown to a 30-year-old, 4,556-square-foot rancher with a basement near the Lawrence Country Club.
"If you want to go older, you can get bigger," said Mark Buhler, an executive for Stephens Real Estate Inc. "You can look in some established, very successful neighborhoods. If they happen to be dated - if you have any design flair, or elbow grease, and want to make something different - some people believe that you have a much better chance of building equity by buying an older place."
What does it cost?
So, what is the cost of stepping up to a $300,000 home in Lawrence? We asked Capitol Federal Savings to run the numbers on a 30-year, fixed-rate mortgage at 6.625 percent interest on a $300,000 home, with a down payment of 20 percent.
Cap Fed also provided numbers for identical terms on a $200,000 house, the level generally considered the median for single-family homes in Lawrence:
¢ $300,000 house: $2,003.16 monthly payment, which includes $1,536.75 for principal and interest, $316.41 for taxes and $150 for insurance.
¢ $200,000 house: $1,335.44 montly payment, which includes $1,024.50 for principal and interest, $210.94 for taxes and $100 for insurance.
That's what the Alexanders thought they'd do. The couple had bought, updated and sold three "fixer-upper" homes in the Dallas area during their eight years working at Southern Methodist University:
¢ The first, a three-bedroom, 2,500-square-foot home, was bought for $139,000 and sold two years later for $189,000.
¢ The second, a Highland Park condo with less than 1,000 square feet of space, was bought for $139,000 and sold for $169,000.
¢ The third, a 2,200-square-foot house, was bought for $210,000 and sold recently for $250,000.
As they prepared to relocate to Lawrence - they both start July 1 as pastors for the Methodist campus ministry at Kansas University - they started looking for options. They checked out about 30 homes in town, starting at $250,000.
But as they surveyed the market, they found that many homes they'd been checking out in the $270,000 price range - often 20 or 30 years old - would need a lot of work, Creighton Alexander said.
Comfort at home
"We'd be putting in $20,000 just to get the place ready," he said, ticking off needs for new paint, a bathroom remodel or other projects. "I'm here with a new job, a new place, a new town - and three kids who are all moving around and active - and I wanted to get out of the home-improvement business."
So now the Alexanders are busy unpacking boxes and getting settled on Allen Court. The place has all the basics they need, and their children - Canon, 4, Whitby, 2, and Cosmo, 8 months - run, walk and crawl around like they've lived in the place for years.
But Nikki Alexander knows there's still work to be done. Even in a new house, she's looking to add the blinds, replace the chrome faucets, install granite countertops and complete other as-yet-undetermined improvements that just a few years ago already would have been in place in a $300,000 home.
She's looking forward to her father hauling up some limestone from the family ranch in Oklahoma, to augment the landscaping that soon will materialize amid the sod-only backyard - an area that lacked privacy until the Alexanders added another $4,400 to their purchase price, the cost for installing a cedar fence.
So the home went for more than $300,000, buying a larger-than-average lot on a cul-de-sac three blocks from a school and without a need for major renovations.
The extras will just take some time.
"This place is great," Nikki Alexander said, looking out the kitchen window at the roof of Langston Hughes School. "But after we're done with everything, it will just pop."
Comments
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doc1 (anonymous) says…
houses around here are "not" a value. It out of control.
jranderson (anonymous) says…
I'm sorry, but I feel my spouse and I are grown up, work our butts off to support our family of three, and cannot in any way shape or form afford a 300,000 house, let alone one with amenities. So forgive me for saying it's not that simple. I'm greatly offended by the remark that it's simply growing up.
blessed3x (anonymous) says…
Gotta go along with Macon on this one.
If you don't know by now that Lawrence is quickly becoming a financially unreasonable place to live, you are simply not paying attention. If you are one of these people that refuses to move to an area with lower housing/living costs I only have one thing to say to you. Enjoy renting. We moved to a smaller, nearby community from Lawrence and saved 50% on our house. We live in a quiet, down to earth neighborhood where I don't have to worry about what's going to be banned next. So quit whining or move. There are a lot of nice options out there.
tanzer (anonymous) says…
I am intrigued by the fact that a couple of methodist pastors can afford a 300K home. perhaps I have chosen the wrong field....
shortyidared (anonymous) says…
Richard Gwin, you should do something about those dust spots!
LuckyNun (Tanya Spacek) says…
I think I missed the lecture that explained why granite countertops are essential. could someone explain that to me, please?
although, yeah, brushed brushed nickel is prettier looking than chrome.
if it wasn't for Tenants to Homeowners, I'd still be sitting in an apartment, reading this article, jaw agape, trying to wrap my brain around how to afford a $120,000 "raze it and start over", much less a $250,000 "fixer-upper" on a combined income of $37,000 a year. yay, land trust!
as it is, my husband and I now have a beautiful house with tons of light, deep windowsills for all my flowers and herbs, and it's solidly built. best of all, the mortgage is lower than what we would be paying in rent for a three bedroom apartment, much less a house with a yard. I wouldn't trade this house for one twice its price. I need to post some pics, so people can see how awesome it looks.
anyway, my question for other readers is, what's the bigger problem around here? low wages or high housing costs? god knows, the combination makes it almost impossible to get into a house these days. it's too bad...it seems only fair that people who work full-time should be able to afford a home of their own, in the same town in which they work, if they want to buy one. we made out okay, but what about other people in our situation?
LuckyNun (Tanya Spacek) says…
tanzer: I know, right? I'm switching my major from molecular bioscience to religion! that's where all the money is!
ASBESTOS (anonymous) says…
I have always wondered about home prices in Lawrence. The same $300,000 house in DFW would be $200,000 max with ALL the bell and whistles. I do not understand what is keeping prices in Lawrence so high with a lower median income level.
This makes no sense at all and does not follow the economic principal of "supply and demand".
lunacydetector (anonymous) says…
i predict a fire sale on the $300-$350K houses in the very near future....and thanks reality check, i was thinking about doing the same thing - the figures.
one more thing to anyone reading, don't ministers take a vow of poverty?
Fatty_McButterpants (anonymous) says…
People actually pay $300,000 for one of those things??! Those houses are usually poorly built (in Lawrence's OTHER "Builder Blitz"), have no character, and are all built of the same crappy material. "Yay, I got a house on the far westside of town - I must be moving up in the world!" I'm currently renting, but I would much rather have one of the older, better-built homes located in old West Lawrence or East Lawrence than to have to go into debt for a gazillion years for a house that looks like a smiley face with two buckteeth.
Rationalanimal (anonymous) says…
Spending 300k and getting a stripped down house is the result of this city commission putting a death grip on growth. There is absolutely no competition out there besides a network of developer chronies, e.g. Compton, Fritzl and Schwade (a/k/a Dewey Srewem and Howe). The net result is a 300k for a shell made of particle board. Thanks city commission, your policies are really helping Lawrence families.
ASBESTOS (anonymous) says…
Don't forget these folks are also helping out Mexico by employing illegal aliens, which should keep the cost of the houses down! LOL
lelly (anonymous) says…
$300,000 for a house? You have GOT to be kidding me? I know what those houses look like. Believe me, that's a bad deal. I have had numerous interactions with realtors in this town. MANY are without scruples, manners or ethics. Talk about cronyism. Between the builders and the realtors, the seller and buyer are getting the squeeze. I am so happy to see Lawrence FSBO doing some business. Hopefully, that'll squeeze the bad apples out of the home business.
Again, this story smells of "journalism" with a slant. Remember Lawrence, read every story in the journal world with the question "Who does this story benefit?" floating in your mind.
GOPConservative (anonymous) says…
I'm glad to see new home prices going up in Lawrence. I hope all the commuters will move and buy something less expensive closer to their jobs.
This is a great time for commuters to take advantage of the appreciation, sell their houses and move. The price of gasoline is going to get higher and higher. You can no longer afford to drive 60 miles per day to work. Get a job close to your work and ride your bike!
Further, as the fuel cost and interest rates continue to increase, the housing bubble will burst. Housing prices will fall. Sell now while the market is still good.
I'd even like to see the City impose a 20% surcharge on all new homes and give that money back to the taxpayers as a tax cut to pay us back some of the money we've had to spend subsidizing all this development all these years.
We existing taxpayers are the ones who have been burdened with the costs of all the new sewer systems, water lines, schools, stop lights, police, fire department, roads, etc.
Our property taxes have gone up 8 to 10 times in 20 years because the developer shills on the City Commission have made the taxpayers pay for the associated costs of development. It is time to cut the mill levy and give the taxpayers a break.
We don't need to spend more money on development, the SLT or anything else related to attracting commuters. Let them move closer to their jobs. Growth has been bad for Lawrence.
nadia4801 (anonymous) says…
Having walked through the home on 1011 Allen Court while it was for sale, I can honestly say the home is well built, has a lot of character, and is not made of "crappy materials." While I don't disagree on the fact that SOME (not all) of the newer houses out there are being built solely for the realtor's and builder's benefit, many houses are built with family life in mind. Because of the sky high cost of building materials and construction costs, builders are forced to sell their homes for more money than ever before. While some of the homes are truly poorly built, we cannot assume that all new "west-side" homes are truly a waste of over $300,000.
ASBESTOS (anonymous) says…
Nadia said:
"Because of the sky high cost of building materials and construction costs, builders are forced to sell their homes for more money than ever before. "
Building materials costs are going up but they are not "shy high". If you use the RS Means construction database you will find that the building material cost is less than 30% of the cost of the house.
Builders are not "Forced" to sell at higher prices, it is just that they can. The market in Lawrence has definately been "manipulated" to benefit the developers, who after all make a hell of a lot more than the home buyer makes on the asset.
Visiting a house while it was "on sale" is not the same as visiting a house while it is "being built", and shows your lack of understandng. ANyone can paint a "biosolid" and call it gold and make it look nice,.. but it is still a biosolid. Same with houses, if you look at the "finished product" without seeing how it was constructed you do not know if they used good materials or crapola. Additionally, the labour used to build these houses are usually third world equilivant sill set. The houses are built much worse than they were just a decade ago because the labor skill set is poor and the supervision is terrible. Homebuyers usually have to almost take the builder to court to get simple fixes done like repairing a roof. ANd we now wonder shy we have a problem with mold in houses?
You rarely find a journeyman, carpenter, cabinetmaker, or framer on the job anymore in the homebuilding industry. Why, it is NOT that they are unwilling to do the job, or do not want to do the job, it is that the builder wants to pay slave wages to illegals that a journeyman will not accept. The builder then pockets the difference, but he does charge the homeowner for it.
I think if we went back to the construction trade-skilled workers, the costs of the houses would go down, because of superior construction, value, less maintainence issues, and beter value. This costs less but gets the homebuyer/owner more, it however costs the builder in profit.
If ther ever was a business sector that needs regulating it is the homebuilders.
rednekbuddha (Kelly Powell) says…
Easy chief....us rednecks have never even seen a 300k house.....the term you are looking for is "good old boy"
bugmenot (anonymous) says…
If you don't like the prices in Lawrence, move to Topeka or Kansas City, KS. People are willing to pay a premium to live in Lawrence. Quit crying about the high prices, someone with more money than you is willing to pay extra for a house. Sounds pretty fair to me.
GOPConservative (anonymous) says…
Reality_Check,
I've always been a Republican and will always support the principles of Republicanism.
I was raised in Kansas under Eisenhower. Most of the people my parents knew were Republicans. They were farmers and small business owners. None of them worked for the government. They were people I admired.
Eisenhower warned us of what was happening. Government for the people and by the people was becoming government for the special interest and by the special interests.
With a few notable exceptions, our politicians now serve special interests, who have become skilled at using deceptive language and obfuscations to trick and deceive the voter.
If the politicians are good shills, they will receive nice goodies like homes for 30% below the market value, dream trips, use of corporate jets, etc. Inevitably, the legislation pushed through by our elected officials ends up sucking taxes from the common people to line the pockets of overpaid members of "the club."
Lawrence was a microcosm of the trend away from free enterprise toward a coalition of tax-sucking enterprise that cost more taxes than it generates.
True Conservative Republicans are concerned with government serving the common good through compromise and democracy, not lining the pockets of the special few. We believe not only in lower taxes, but also in tax fairness.
What good has all this development done for Lawrence? We've brought in all these commuters. Now, the same folks who brought them in are cheerleaders for a $200 million road to save them five minutes in their commute.
All the while, the taxpayers have essentially been subsidizing this "growth" with higher property taxes to cover the costs of infrastructure and services.
Nearly everyone is still in denial about the realities of the 21st Century. People don't want to accept that rising fuel prices and interest rates are changing the dynamics.
China is already indicating a desire for better interest rates for its part of our Nation's $10 trillion debt. Other creditors also want better rates. Rates will soon be so high that those who have been investing the housing boom will start investing in T-Bills.
The irony is that the same people who benefited most from the tax cuts will be receiving even of our more of our tax dollars as interest when they loan back the windfall they received.
Conservative Republicanism should have nothing to do with schemes to cheat and deceive the people. We should speak out against tainted campaign contributions, lies, distortions, deceptions and obfuscations.
We need to reclaim our Party and restore our principles. We need to denounce fraud and corruption at every level.
Conservative Republicanism ought to stand for honesty, integrity, respect and a strong belief in democratic principles through a limited government that is free of corruption.
just_another_bozo_on_this_bus (anonymous) says…
I'd say you very accurately described the building industry these days, asbestos.
Another thing that drives up costs is the relatively recently developed idea that every family needs at least a 3500 sq. ft. house and 3-car garage, and often with an acre or more of yard to boot.
The zoning changes that allow for 3000 sq. ft. lots could help bring housing costs down. The average family of four can easily live in a 1500 sq. ft house, if it's well-designed. And if it's well-built and insulated, would cost very little to heat and cool.
Jamesaust (anonymous) says…
""You've got affordability in a market like Lawrence, which is not the case in San Francisco," [a spokesman for the National Board of Realtors] said."
This is false but also true - and true in a particularly significant way.
First, its false. Wages in San Francisco are particularly higher than no-job Lawrence. Also, the opportunities for the type of 'house flipping' as related by the profiled couple in this article allow for much, much larger gross dollar cumulative accumulation.
But, this is a particularly instructive way in which government, whatever its good intentions, distorts markets by its intervention.
While real estate may not be tradable - you can't exactly move property from San Francisco to Lawrence - its value, reduced to dollars, can.
Thus, for example, a KU faculty member I recall who moved from a certain Southern California position a few years back, sold the crackerbox bungalow for something like 1/2 a million and took a job at KU, buying an nice house - maybe $300k - and pocketing the remainder as 'lifesyle' money.
Of course (Note: this is the kicker!) this can be afforded because the government allows this extra money - besides the new house purchase price - to be kept tax free.
So, not only do you have the demand for housing in Lawrence heightened by people taking advantage of the disparity in property values but the IRS subsidizes - at your cost - them keeping (part) of the extra beyond what they use to buy their house in town for (which can pay for dinners out, trips to Europe, the new Audi sportscar, etc., etc.).
Kookamooka (MJ Browne) says…
This article was really offensive to me. Having it on the front page was even worse. What a wake up call! Lawrence is without a doubt in the pocket of the developers. Every square inch of green space in this town makes some real estate mogul pant like puppy. Try as they do, the city commission can't plan for smart growth when you have the richest "movers and shakers" in town grabbing up the land and dumping a multi family housing "project" ON IT! Even our public library will have multi family housing attatched to it! Sewers? infastructure? They don't care. MORE, more, more. When will they have enough? Until development becomes unprofitable it will run rampant. So, I say...tax, tax, tax development and force them to slow down and look somewhere else! There is plenty of housing here, right now, for everyone!
monkeyhawk (anonymous) says…
"The boom has lasted much longer than most of us expected. My hypothesis is the sheer number of Baby Boomers playing real estate investor this time. See, they're so worried about their retirement, they have to grab at The Next Big Thing. Stocks, then RE, now probably bonds and precisious metals."
On the other hand, maybe some of the boomer investors have plenty on hand for retirement and can diversify fearlessly. You just might have more competition for those foreclosures than you expect.
hitme (anonymous) says…
http://hometownlawrence.com/
scroll down on the left side of the page and click on "property values"
LuckyNun (Tanya Spacek) says…
Jamesaust:
Oddly enough, I think I know who you're talking about (the KU person).
Godot (anonymous) says…
Jamesaust, add the "I don't know what real estate should sell for in Lawrence" factor, and your analysis is complete.
There are people moving here from the coast who do not have the time, or the inclination, to dicker. They have cash in their pockets from the profits they made from the sale of their overvalued propertyies, and they pay the asking price, or even worse, overbid, to make the deal. The realtors know this.
formerlyKS (anonymous) says…
Interesting discussion.
I was back in Lawrence last week for the first time in several years. Two observations:
1. The town definitely looks dumpier than I remember. Does anyone here think all that disgusting, uni-color tract homes along I-70 west of town is progress? New neighborhoods in Topeka are far nicer.
2. The older neighborhoods look in piss-poor shape, too. I was comparing some houses in old west Lawrence to those in Topeka's Westboro...no comparison. The houses in Topeka are much bigger, nicer, and cheaper.
3. Why move to Lawrence anyhow? You can have all the amenties in Jo Co for less money. Lawrence really isn't the same town it was ten years ago. It really just looks like any other smaller midwestern town than couldn't say no to development.
tanzer (anonymous) says…
reality - i get your math, but 138K for the first house is still a lot of cash for a couple of preachers.
Pro_Lawrence (anonymous) says…
The building industry abd the city of Lawrence needs to take advantage of the REAL Dollars concept, expecially with interest rates creaping up. Lawrence has our own currency that nobody uses. A true visionary ideal from the Honarable Boog Higherberger that needs a second look during Shrub's newly created recession.
Jackson (anonymous) says…
More than 4,000 houses within SF zoned neighborhoods are used for rental to three (3), or more, unrelated renters. This automatically inflates their value by 50%.
Reduce the number of unrelated renters to two (2) and these houses will become "affordable".
Todd (anonymous) says…
A $300k house is significantly more expensive than the median house in Lawrence. (about 50%) Yet, when affordability is discussed median income and no down payment are assumed. That's crazy talk. (hence, it's
Median house price: $163k
Median household income: $41k/yr
http://money.cnn.com/best/bpretire/sn...
Buying the median house with 20% down using a 30 year fixed rate mortgage @ 6.75% gives you a principle + interest of ~$850/month. Tack on insurance of $75/month and taxes $150/month to get a grand total payment of $1075 or about 32% of gross monthly income.
Is Lawrence housing affordable? Yes, when the middle family can reasonably buy the median priced house.