Lawrence housing prices jump by more than 13 percent in 2018; buyers show signs of pulling back
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The new number in the Lawrence housing market is $200,000. While Lawrence housing prices have been causing people to wring their hands for years, statistically speaking, the odds were in your favor of finding a home in town for well below $200,000. A new report shows a dramatic increase in home prices has changed that.
Lawrence housing prices in 2018 grew at their fastest rate in recent memory, and the median selling price of Lawrence homes topped the $200,000 mark for the first time, according to figures from the year-end report by the Lawrence Board of Realtors.
The median selling price of Lawrence homes jumped by 13.4 percent in Lawrence during 2018. While community leaders have been talking about rising housing prices for years, the 2018 jump in prices is a big departure from past years. During the last five years, the largest increase in median selling prices has been 5.3 percent in 2016. This year’s market more than doubled that.
Another way to look at it is in dollar values. In 2017, the median selling price of Lawrence homes was $180,000, meaning that half the homes in town sold for more than that, and half of them sold for less than that. In 2018, the median selling price jumped to $204,200. Back in 2014, it was $167,000.
The numbers likely will add fuel to an already serious discussion about affordable housing ahead of this year’s City Commission elections.
“We remain very concerned about housing affordability in our community,” Greta Carter-Wilson, president of the Lawrence Board of Realtors, said in the organization’s report.
“I think that jump is gigantic,” Vice Mayor Jennifer Ananda said of the increase in selling prices.
Figuring out how to address rising prices, though, will be a hefty project as well. Ananda said more work is needed to figure out what factors are at play. On the one hand, there may be a true shortage of lower-priced homes on the market. Or lending practices in the community also could be playing a role, she said. If only higher-income individuals are qualifying for home loans in the city, that would make it more likely that higher-priced homes are what’s selling in the market, pushing up the average price as a result. Then there is the rental market. Ananda said she wants to better understand how people who buy lower-priced homes to convert them into income-producing rental units are impacting the market.
“It is incumbent on us to make sure the conversations are happening,” Ananda said. “We have to do what we can to encourage the conversations between the affordable housing folks, the lenders, the builders and others.”
Lawrence housing prices increased at a rate significantly higher than those in the Kansas City market. A year-end report by the Kansas City Regional Association of Realtors showed the median sales price for homes in the Kansas City metro area increased by 7.9 percent in 2018. The median selling price of a home in Lawrence is now almost equal to that of homes in the Kansas City metro. The median selling price in the metro stood at $205,000 compared to $204,200 in Lawrence.
There are some signs that the market itself may start to push housing prices lower. The other big finding in the year-end report is that the total number of Lawrence homes sold in 2018 declined by 2.9 percent to 1,226 homes. That’s the first time sales have declined in Lawrence since 2014.
It isn’t clear from the numbers alone whether that is a sign that homebuyers began to balk at prices or simply couldn’t find the homes they were seeking. Traditionally, though, as the number of sales begin to fall, prices also begin to weaken.
The numbers, though, do show that availability of homes remains a concern. Real estate agents for the last several years have been talking about a short supply of homes on the market. In 2018, the trend showed signs of stabilizing, but is far from historic norms.
The Lawrence market ended the year with 219 homes on the market, which is up from 183 in December 2017. A broader number that real estate professionals look at is the number of days a home sits on the market before it sells. In 2018, the median number of days on market was 12, which was basically unchanged from 11 days in 2017. The fact the numbers didn’t take a significant drop in 2018, however, was a positive sign that inventory issues didn’t get significantly worse during the year. Still, the number of days on market is near historic lows. For comparison, the median number of days a home sat on the market in 2013 was 42.
Other facts and figures from the Board of Realtors report include:
• The median selling price for a newly constructed home was $339,400 in 2018. That’s up about 11 percent from 2017 totals. The number of newly constructed homes sold in 2018 did increase. Agents sold 132 newly constructed homes, up from 114 in 2017. This is the fourth year in a row that sales of newly constructed homes have increased in Lawrence.
• While the number of homes sold declined, the total dollar value of all homes sold in the market increased in 2018. Agents sold $291.7 million worth of homes in 2018, up 7 percent from 2017 totals
• Of the 219 homes on the market in December, 144 of them were priced at $200,000 or above. In the $100,000 to $149,900 range — which is a prime one for starter homes in Lawrence — there were 31 homes on the market. Those 31 homes would satisfy about 1.6 months worth of demand, based on past sales history, the report said. Such little demand is a sign that it is a seller’s market for those types of homes. Real estate agents say a market is roughly balanced between buyers and sellers when there is a five to six month supply of homes on the market.
• 2019 appears to be off to a slower start than 2018. Agents ended the year with 43 contracts for sale, compared to 76 in December 2017. Contracts for sale are a good indicator of how many actual sales will take place in the coming months.