photo by: Nick Krug

The east leg of the South Lawrence Trafficway, left, is shown on Tuesday, June 21, 2016. The highway, which runs parallel to 31st Street, remains under construction and is expected to open this fall.

I once was in the market for a beachfront home. I told the realtor my price range. I was encouraged when she didn’t laugh. I was less encouraged when she showed me a blanket. Lawrence’s real estate market hasn’t reached that extreme, but realtors are seeing significant price increases. A new report is predicting even more in 2017.

Home prices in Lawrence are expected to finish 2016 up 5.1 percent, and are predicted to rise another 4.1 percent in 2017, according to a new report from the Wichita State University Center for Real Estate.

Lawrence hasn’t seen that type of growth in home prices in quite some time. Since 2012, the average annual increase in Lawrence home prices has been just 0.8 percent. Rising home prices are consistent with what local real estate agents have been reporting throughout 2016: the supply of homes is in short supply, thus prices are rising.

The WSU report, which was delivered to the Lawrence Board of Realtors on Thursday, confirmed that trend. The report called Lawrence’s supply of homes for sale “incredibly tight.” The trend of an undersupply of homes isn’t a new one for Lawrence. The report highlighted that the number of homes available for sale in Lawrence has consistently trailed the national average since 2014.

The spike in home prices will create several questions. Perhaps the largest is whether Lawrence homebuilders will increase their pace of building. Even as home sales have increased in Lawrence in recent years, the number of new single family homes under construction has remained pretty flat, or has fallen in some years. The report predicts 2016 will finish relatively flat — 225 new housing starts in Lawrence and Douglas County compared to 221 in 2015. The report is predicting a slight decline in 2017 to 220 single family housing starts.

That’s in contrast to what is happening in the Kansas City market. As home sales increase in the metro, so too has home construction. Kansas City home starts are estimated to rise by 22 percent in 2016, and another 4 percent in 2017.

The report wasn’t real clear on why Lawrence home construction isn’t surging more, but in my talks with some real estate professionals, I hear a couple of factors. Local homebuilders still remember the pain that the recession created and are being cautious. Plus, Carl Cline, president of the Lawrence Board of Realtors, said there is probably an even more practical reason the numbers haven’t surged.

“We only have so many builders, and so many builders can only build so many homes,” Cline said. “We lost a large number of builders in the financial debacle.”

But I also hear that the average price point of a new home in Lawrence is making it tough on builders.

For example, through August, the median selling price of a newly constructed home in Lawrence was $314,450. The median selling price for an existing home was $171,000. That’s a big gap, and I’ve had real estate agents tell me buyers may not be seeing enough value in new homes. That may change, though, if the price of existing homes rise but builders are able to keep the price of new homes relatively steady. It also will be interesting to see if builders undertake more projects outside of west Lawrence neighborhoods, which traditionally come with some pretty big price tags. New construction out near 23rd and O’Connell in eastern Lawrence, for example, won’t be producing many homes of more than $300,000.

There is one other important reason to keep an eye on home prices. If home prices do increase at the rates predicted by the WSU report, that would make it more likely that homeowners will see higher assessed values on their property tax bills.

The Douglas County Appraiser’s office is tasked with determining what the fair market value of every home in the county is as of Jan. 1. That work is underway. Property owners will receive change of value notices in March. For the last several years, tax values for most properties haven’t gone up much. Now, tax bills have still increased in many cases because several governments have increased their property tax rates, i.e. mill levies.

Property owners from the 1990s and early 2000s, though, still remember when tax values often did rise by 5 percent or more. If that happens, and mill levies continue to rise, that would be a double whammy for taxpayers. But, I still think it is too early to predict that tax values actually will rise by 5 percent.

The Douglas County Appraiser’s most recent report had mixed signals on that front. The report said the office had analyzed all the sales made during the first half of 2016. It compared the selling price of those homes to the tax value that had been assigned to those homes. The selling prices were, on average, about 1.7 percent higher than the tax values. That would indicate some upward adjustment of tax values may be warranted, but that’s quite a bit less than 5 percent.

The appraiser’s report, though, did note that it also had evaluated the selling prices of some homes through the end of August. That analysis found the selling price of an average three-bedroom, two-bath home with 1,300 to 1,800 square feet was $184,987. That’s up 9.5 percent from the same time period a year ago. What the data shows in the next few months probably will be key in determining how much tax values rise.

Other findings from the WSU report include:

• Home sales in Lawrence and Douglas County are expected to finish 2016 at about 1,400 homes, up about 1 percent from 2015 totals. Home sales for 2017 are predicted to come in at 1,510 units, which would be about an 8 percent increase.

• Mortgage rates are predicted to remain low through 2017, with rates for a 30-year mortgage predicted to remain below 4.5 percent. While 4.5 percent is historically very low, that would represent an increase. Mortgage rates for 30-year loans are closer to 3.5 percent nationally.

The WSU report also provided projections for other Kansas communities. Those include:

• Kansas City: Sales growth of 4.4 percent, and an increase of 4.2 percent in home prices in 2017.

• Manhattan: Sales growth of 6 percent and an increase of 4.7 percent in home prices in 2017.

• Topeka: Sales growth of 2 percent and an increase of 1.9 percent in home prices in 2017.

• Wichita: Sales growth of 5 percent and an increase of 3.5 percent in home prices in 2017.

In other news and notes from around town:

• I’ve gotten word that a date has been set for the ribbon cutting of the eastern leg of the South Lawrence Trafficway. KDOT plans to have a ribbon cutting at 10 a.m. on Nov. 4 near the eastern end of the SLT, or near the intersection of E 1750 Road, which is also known as Noria Road.

Do not, however, plan to start driving on the SLT right away. My understanding is the road won’t actually open to traffic on Nov. 4. KDOT is still saying the road will open before Thanksgiving, but an exact date hasn’t been set. The road looks largely completed, but there is some ancillary work still being done on the site. Also, KDOT has said it wants to make various safety improvements to the intersection of the SLT and Kasold Drive extended. That intersection is on the western portion of the SLT, which has long been open. KDOT officials, though, expect traffic on the western leg of the SLT to increase significantly once the eastern leg of the trafficway is open. Thus, KDOT wants to complete those improvements before the eastern leg opens. Those improvements shouldn’t take long — they involve some barriers to limit turning motions — but work hasn’t yet started on that project.

Expect the ribbon cutting on Nov. 4 to be a big deal. The SLT project has been in the works for more than two decades, has been the subject of at least two major federal lawsuits, and many more protests. It also has been touted as one of the most important regional transportation projects for the state, providing a more direct route from Topeka to Johnson County. Look for the road to change traffic patterns in Lawrence significantly. It already is creating development pressure, evidenced by the new and proposed retail development along south Iowa Street.

U.S. Sen Pat Roberts, as we reported, was in Lawrence Thursday. In a brief conversation I had with him, he told me he plans to attend the ribbon cutting. His office was instrumental in securing federal funding for the project. Roberts estimated he worked a good 11 years on funding issues for the road. Given that, he said he knows what one of his messages will be at the ribbon cutting.

“Sometimes you just have to be persistent,” Roberts said.

Roberts said he remains convinced that the trafficway will play a key role in creating a high-tech corridor between Manhattan and the National Bio and Agro-Defense Facility there and Kansas City and the large animal health sciences industry that exists in the metro.

• Since we are speaking of U.S. senators, just a quick note that Kansas’ other senator, Jerry Moran, also was in Lawrence on Thursday. Moran was getting a briefing on some federal research grant money at KU. We tried to catch up with Moran to ask him a few questions about his campaign, the current environment and other matters, but were unsuccessful. His press representatives said Moran didn’t have any media availability during his visit to Lawrence.

• Just like I’ve had to put that beach house dream on hold (someday I’m going to be able to afford a blanket and an umbrella), it looks like one Lawrence resident will have to put on hold her dream of being a co-host on Kelly Ripa’s popular daytime talk show Live! with Kelly.

As we have reported, Lawrence resident Courtenay DeHoff was named a finalist in a competition to be a co-host for a day on the “Live! with Kelly” talk show. This week she was named one of the 10 finalists based on a video tape she sent in and voting by the show’s audience.

On Friday, though, DeHoff was not among the five finalists announced by the show.

• One housekeeping note, Town Talk will be off next week. Unless I find a really cheap beach house, the column should resume Oct. 24.