Call it a stimulus hangover.
In 2010, Lawrence’s real estate market started to show signs of life as tax credits for first-time homebuyers — part of the federal stimulus package — did boost sales.
But now as numbers for the first half of 2011 are released, it is clear that Lawrence’s real estate market is no longer stimulated.
“The stimulus created an artificial boost for awhile,” said Gary Nuzum, senior vice president of McGrew Real Estate. “We knew it would help us last year, but we also knew it was stealing buyers from us in future years. And it has. It is killing us right now. I never thought it would hurt us this much but it has.”
Home sales and construction
Homes sales for the first six months of 2011 are down nearly 25 percent compared with the first six months of 2010, according to numbers released by the Lawrence Board of Realtors.
Board president Bob Kocour, an agent with Stephens Real Estate, said the numbers look a little better when compared with 2009, when the tax credits were not in place. But still, this year’s totals are about 5 percent below totals from 2009, which most real estate professionals said was a historically bad year.
“I think we’re down about 50 percent from our peak,” Nuzum said of the number of homes being sold in the market. “Something has to happen in the economy to get people feeling comfortable with being homeowners again.”
The slowdown in home sales has had the predictable impact on home construction numbers. The city issued 59 single-family and duplex permits for the first half of 2011. That’s down from 75 permits in the same time period a year ago.
“That number is pretty discouraging,” said Bobbie Flory, president of the Lawrence Home Builders Association. “I can tell you that this downturn has lasted longer and has been deeper than most people in our industry anticipated.”
Kocour said July numbers do seem to be better than anticipated, and he said the market still has some good things going for it — namely interest rates. But Kocour said real estate agents are nervously watching the debt debate in Washington, D.C. There has been speculation that interest rates will rise either because the debt ceiling is not raised in a timely manner or because credit rating agencies downgrade U.S. debt.
“But hopefully by Tuesday, they’ll have something in place,” Kocour said. “They better, anyway.”
Local industry leaders are in agreement about what is needed to provide the market a sustainable boost: jobs.
“There are a lot of people still on the sidelines out there, and it is certainly because of the economy,” Kocour said. “Businesses that normally hire people aren’t doing that, and they aren’t moving people around right now either.”
Kocour said the trend in Lawrence does seem to be that work situations are causing more people to leave Lawrence than to move to the community.
On the building front, Flory said that national economists keep telling builders that there is good reason to believe the market will bounce back. In the meantime, the number of builders constructing homes in the city have dwindled to a “handful,” she said.
“Nationally, we are told that there is all this pent-up demand that is going to burst at any minute,” Flory said. “The reality is that there are still children growing older and leaving home who need a place to live. A lot of people are putting a lot into the pent-up demand theory.”
Here’s a look at some numbers from the first half of 2011:
- Realtors have sold 551 homes, down from 742 a year ago. The category that is particularly taking a beating is sales of newly constructed homes. They are off almost 60 percent. A total of 34 newly constructed homes have been sold in the first half of 2011
- The average selling price of homes in Lawrence is up 2.4 percent from a year ago. The average now stands at $182,058. The median price is $161,000. Real estate professionals said the higher prices are because there are far fewer homes being sold to first-time homebuyers, which tend to be lesser priced homes. Nuzum said many of the homes on the market are priced above $200,000. He estimated those homes are selling for at least 5 percent less than they were a year ago.
- There are lots of houses on the market. In June, there were 1,030 homes on the market. That’s up from 891 a year ago.
- Homes are taking longer to sell. The average days a home sits on the market is now 100. That’s up from 81 last year.
- The number of apartments being built in the city is on the rise. The city has issued permits for 126 apartment units. That’s up from 83 during the same time period of 2010.
There have been several large commercial projects started in Lawrence during the first half of the year. Here’s a list of the 10 largest projects thus far:
- Bowersock north bank power plant: $11.3 million.
- Comfort Inn & Suites, 150 N. Iowa: $3.3 million.
- Wastewater treatment plant improvements, 1408 E. Eighth St.: $3.1 million.
- Crossgate Casitas apartments, 2451 Crossgate Drive: $2.1 million.
- Hy-Vee renovation, 3405 Clinton Parkway: $2 million.
- Northwind Apartments, 200 N. Mich.: $1.3 million.
- Single-family dwelling, 1716 Lake Alvamar Drive: $1.1 million.
- PKV Dental Offices, 530 Folks Road: $1 million.
- LMH information technology/business health remodel, 325 Maine: $867,834.
- Plastikon Industries remodel, 3780 Greenway Circle: $800,000.
In total, the city has issued permits for $49.8 million worth of projects. That’s up from $47.6 million during the same period last year. That puts the city on pace for about $100 million worth of projects in 2011. Here’s a look at how that $100 million pace compares with the amount of projects started in past years:
- 2001: $152.2 million
- 2002: $141.5 million
- 2003: $150.5 million
- 2004: $117.7 million
- 2005: $131.2 million
- 2006: $171.4 million
- 2007: $104.4 million
- 2008: $146.4 million
- 2009: $75.3 million
- 2010: $101.8 million