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Lawrence home sales increase by nearly 28 percent in 2012, but home values on the decline, according to two new reports
Another day and another sign that Lawrence’s economy had a bit of a bounce-back year in 2012.
Yesterday we reported on strong growth in retail sales in Lawrence. Well, Lawrence homebuyers are not to be outdone. They actually increased their buying pace faster than shoppers did.
A new report shows homes sales in Lawrence increased by 27.9 percent in 2012 compared to 2011 numbers. Real estate agents sold 899 homes in the city limits during the year, according to numbers compiled by the Lawrence Board of Realtors.
Sales hit an abysmal level in 2011, so having a large increase over those numbers is one thing. But also important to note is that sales totals for 2012 were about 8 percent above 2010 totals. So, the local real estate market made up for more than two years worth of losses in 2012.
Sales of newly constructed homes jumped by nearly 40 percent, totaling 88 for the year. But new home builders haven’t yet returned to the 2010 level of activity, when they sold 102 new homes.
Not all of the numbers indicated a housing rebound. Some indicated that sellers adjusted their expectations downward on what their homes are worth.
The median selling price in Lawrence checked in at $159,500, down 5 percent from $167,900 in 2011. The Board of Realtors report comes out at the same time that the Douglas County Appraiser’s office is finalizing its work on change-of-value notices that will be mailed to Douglas County homeowners.
While the Board of Realtors data shows a 5 percent drop in selling prices, most homeowners shouldn’t expect to see that type of decline in the home values that the county creates to figure your property tax bills. But many will see a decline, and for some this will be at least the second year in a row they’ve seen their properties lose value.
The preliminary numbers show about 28 percent of residential homeowners will see a decline between 2 percent and 4.99 percent in value.
Another 24 percent are expected to see declines between .01 percent and 1.99 percent, while another 8 percent are expected to see values drop by 5 percent or more.
About 33 percent of homeowners are expected to see their values remain steady.
The appraiser’s office is estimating 7 percent of residential properties in Lawrence and Douglas County will see some sort of increase in values.
When you add it all up, local governments may see their tax bases decrease by 1.2 percent to 1.5 percent as they begin building 2014 budgets this summer.
Homeowners should start receiving their change-of-value notices on Feb. 28, and then can begin determining whether they want to contest their values through the county process.
If you are wondering why the Board of Realtors numbers show a 5 percent decline in the average selling price, yet the appraiser is projecting most homeowners will see declines far less than that, there are some reasons.
The biggest is sample size. The Board of Realtors number is a selling price for just 900 homes. The appraiser’s office is trying to create a value for about 30,000 residential homes in the county.
A second factor is randomness. There’s no guarantee that the 900 homes sold by local real estate agents are representative of the type of housing stock that exists throughout the county. For example, four-bedroom ranch homes may have been the big seller in 2012. (This is just an example. I don’t know what the big seller was.) But four-bedroom ranch homes don’t make up the majority of the homes in Douglas County, so it would be difficult to use the selling price of those ranch homes to determine the value of other dissimilar homes.
But perhaps the most interesting reason is foreclosures, or their close cousin, short sales. I don’t have final 2012 foreclosure numbers yet, but I’ll work to get them. What I do know is that the Douglas County Appraiser’s office is not considering many of those foreclosure sales to be valid in terms of being comparable sales to set values for other properties.
On foreclosed properties, banks don’t get to keep the amount of money that is over and above the amount owed on a foreclosed mortgage. So, banks don’t have a lot of natural motivation to negotiate a deal that represents the full market value of a property. Their motivation is to get the foreclosed homes off their books. At least this is how Douglas County Appraiser Steve Miles has explained it to me previously.
In a recent report, he noted he’s seen several foreclosed properties bought and then almost immediately sold for double the purchase prices. That leads him to believe the foreclosure sales aren’t representative of fair market value in most cases.
All of it leads me to believe that it will be another interesting year in Douglas County real estate in 2013.