Archive for Monday, January 30, 2012

Residential real estate market endures dismal 2011

January 30, 2012


It seems 2011 was the year for sitting — or perhaps cowering — in your house, not buying a new one.

Lawrence home sales declined by 14.7 percent in 2011 from the previous year, and sales of newly constructed homes plummeted by nearly 45 percent for the year, according to recently released figures from the Lawrence Board of Realtors.

“It is still the economy, and in particular people lost some confidence in the economy and Congress,” said Gary Nuzum, a senior vice president with McGrew Real Estate in Lawrence. “Everything that went on during the year just put people in a do-nothing mode.”

The new numbers also created questions about whether the market is poised to turn around. Sales in December 2011 were down 24.7 percent compared to December 2010 totals. The local numbers are in contrast to national reports. The National Association of Realtors reported that December sales of existing homes were up 3.6 percent compared to December 2010.

Realtors said the local real estate market did deteriorate considerably in the second half of the year.

“The fall was definitely slower than we were anticipating,” said Oliver Minnis, president of the Lawrence Board of Realtors and an agent with Stephens Real Estate. “As slow as the fall was, it is positive that we had the totals that we did. There wasn’t any real sense of urgency with buyers last year, and that feeds on itself.”

In terms of totals, the report found:

• Nearly 200 fewer homes were sold in the Lawrence area than in 2010. Home sales totaled 1,058 for the year, down from 1,240 in 2010 — or a decline of 14.7 percent. The numbers also are down from 2009 totals, when 1,253 sales were recorded.

• Sales of newly built homes continued to reach new lows in 2011. Only 64 newly built homes were sold in 2011, down from 115 in 2010 — or a decline of 44.3 percent.

• The year ended on a sourer note than 2010. At this time last year, real estate agents had reason for optimism. Home sales in 2010 were down just 1 percent from 2009 totals. And sales of newly built homes had shown signs of life, increasing by nearly 20 percent from 2009 totals.

• Lower home sales have not resulted in lower selling prices. The average selling price for 2011 was $185,095, up 2.6 percent from 2010’s mark of $180,339. The median sales price has held steady at $158,000. This data, though, runs counter to what the Douglas County Appraiser’s office is seeing through its sales data. The appraiser is predicting a general decline in appraised values. His office currently is setting those tax values, and change of value notices will be mailed in March.

• It is taking longer to sell a home. The average days on market rose to 94 in 2011, up from 81 in 2010. The median days on market rose to 60, up from 44.

Added all up, the numbers suggest a local real estate industry that is in full weather-the-storm mode.

“The last couple of years have been downturn years, no doubt,” said Bryan Hedges, president of Realty Executives Hedges Real Estate. “You just have to live through them. As far as last year, we’re just trying to forget.”

Real estate agents with several different firms, though, said there are signs of 2012 getting off to a better start. Unseasonably warm weather has helped bring out more potential buyers.

“For some home buyers, spring is already here,” Minnis said. “It seems like the general mood is more optimistic than it has been for a few years. I don’t think we’re going to set any records for 2012, but I think it is going to be better.”


Steve Jacob 6 years, 3 months ago

Think it shows how much we nationally over-valued homes up to 2008. Nothing would have moved the past three years if not for the first time home buyers tax credit and foreclosed deals.

Centerville 6 years, 3 months ago

LJW's print version included this howler: "Home Sales plummet in Lawrence - Numbers in contrast to national trend" [However, on the national level ]" except for that errant spike in home prices in April 2011, we have now seen 18 consecutive months of housing price declines since that "rebound" in late 2009. "Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall," David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement. "The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand." But nice try, LJW, at trying to carry the correct water.

Chad Lawhorn 6 years, 3 months ago

Your quote above is about home prices. The story references home sales. Those are two different pieces of data. You understand that, right? Thanks, Chad

Richard Heckler 6 years, 3 months ago

My banker implied there are a lot of empty houses sitting around waiting for the new magic moment. Yes some financial institutions are hanging on to them instead of allowing owners to stick around and are not putting them actively on the market. Some banks must have a ton of spare change thanks to taxpayers.

It's a tool of pretend....... pretend the market is not flooded with real estate that is not moving.

Ron Holzwarth 6 years, 3 months ago

"the new magic moment."? I liked the old one!

"This Magic Moment" by Ben E. King & the Drifters:

Richard Heckler 6 years, 3 months ago


Our city's current budget crunch could easily be tied directly to infrastructure expenses needed to serve new residential developments. The community is way over extended in this regard.

If residential growth paid for itself and was financially positive, we would not be in a budget crunch. But with increased numbers of residential you have increased demand on services, and historically the funding of revenues generated by residential housing does not pay for the services, they require from a municipality.

Hmmmmmm sounds like an industry that produces tax increases.

Not only that I've been reading that the cost of a new home is being considered not a great investment any longer. After so many got ripped by the real estate industry on inflated pricing. Inflated prices are unfriendly to business on the long term. Some think Lawrence,Kansas is still living the life of the reckless bubble.

verity 6 years, 3 months ago

Might also have something to do with the fact that too many new homes are built so poorly.

Armstrong 6 years, 3 months ago

But, but, but ..... Obama fixed the economy

LivedinLawrence4Life 6 years, 3 months ago

I just checked with a lender and their interest rate for a 30-year-fixed home loan is 3.875%

It sounds to me like prices are at a low for the Lawrence area. So, with record low interest rates and record low prices, this seems like a good opportunity to buy some real estate or refinance and save some money!

Ron Holzwarth 6 years, 3 months ago

It is interesting that the interest rate offered is lower than the actual, as opposed to "core", inflation.

Just think, if we experience a hyperinflation event, you'll be able to pay off your house with a week's paycheck!

Ron Holzwarth 6 years, 3 months ago

The "official", that is, "core inflation" last year was 3.6 %.

So, if we are to believe that statistic from the US government, the actual interest rate being offered is (3.875 - 3.6) %, = 0.275 %.

Historically, 0.275 % annually is a very low interest rate to pay on anything.

Carol Bowen 6 years, 3 months ago

“It is still the economy, and in particular people lost some confidence in the economy and Congress,” said Gary Nuzum, a senior vice president with McGrew Real Estate in Lawrence. “Everything that went on during the year just put people in a do-nothing mode.”

  • The number of homeowners in Lawrence has decreased to approximately 50%. Why would we need more houses?

  • The housing bubble burst because of the turnover in ownership. Each time a house is sold, the price is a little higher until the price exceeds the house's value. Returning to that real estate and developer model wil not stabilize Lawrence's economy.

Ken Schmidt 6 years, 3 months ago

Overall there seems to be a failure to also admit bank are not lending as they used it or not. To get a home now, your credit score should be over 720 with 20% down and a remaining asset balance (many times required to be liquid cash funding) to be deposited and held to pay three months of home payments. While I do not necessarily believe this is such a bad thing--moving away from the bad loans that led to the situation, it also keeps potential buyers from making moves today that were much easier to make four years ago.

Carol Bowen 6 years, 3 months ago

Very true. Hedging on subprime mortgages contributed to our economic collapse.

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