Lawrence is rebounding strongly from a “double-dip hangover” that left the city’s real estate industry languishing longer than most other Kansas communities, according to a Wichita State economist.
Stanley Longhofer, director of Wichita State’s Center for Real Estate, told members of the Lawrence Board of Realtors on Friday that he now sees Lawrence as one of the hottest real estate markets in the state, after it appears to have put a rough 2011 behind it.
“You certainly didn’t have the type of numbers you would like to see in 2011,” Longhofer told Realtors. “And that was different than the rest of the state. For some reason, Lawrence had a double-dip hangover, but since the end of last year there has been very strong growth.”
The Lawrence Board of Realtors released it numbers for home sales through September, and the city is on pace to see 2012 totals top 2011 sales by 25 percent. Home sales through the first nine months of the year totaled 723, up from 577 a year ago.
Longhofer said he is forecasting Lawrence in 2013 to post sales growth of 15.8 percent, the strongest growth of any of the state’s metro markets.
Local Realtors said they have seen signs of a turnaround.
“We have seen an absolute improvement in terms of numbers and value,” said Doug Stephens, broker at Stephens Real Estate. “I think there is more optimism in the housing market than there has been in awhile.”
Lawrence may be benefiting from a recovery that has started to take hold in Kansas City. Longhofer said the Kansas City market seemed to have “found its footing in 2012.” Home sales are projected to grow by 18 percent in 2012, or by an estimated 1,500 sales.
But Lawrence isn’t entirely out of the woods. Longhofer said Lawrence could face downward pressure from the west, depending on what Topeka’s market does as the capital city adjusts to possible state budget cuts. Longhofer is projecting Topeka home sales to only grow by 0.7 percent in 2013.
“If there is one market where I would say I’m still concerned about the underlying fundamentals, it would be Topeka,” Longhofer said. “That could have a spillover effect for Lawrence.”
The inventory of homes for sale in Lawrence also remains higher than the national average, Longhofer said. He estimates Lawrence has about an eight month supply of houses on the market, compared with the national average of six months. The higher-than-average inventory gives buyers an advantage in the market, but Longhofer said inventories are coming down quickly in Lawrence.
In fact, Longhofer believes home prices in Lawrence will end 2012 about 0.2 percent higher than they were a year earlier. That would mark an end of four straight years of value declines, based on the formula Longhofer uses. For 2013, Longhofer is estimating values will increase by 2.1 percent.
“I would say Lawrence’s market isn’t at full steam ahead yet, but it is picking up steam,” Longhofer said. “Compared to where we have been, that’s a good place to be.”