Lawrence real estate market declines as available homes become scarce and buyers are forced to act quickly
If you have ever had luck in the world of speed dating, then maybe Lawrence’s real estate market is right for you. Speed home buying — out of necessity — appears to be the new trend in the local real estate market. In April, Lawrence homes were only on the market for an average of 11 days before they sold.
But while speed dating can lead to a wonderful evening talking about the companionship of cats, life lessons of Star Trek, and a worldview centered on the immeasurable benefits of “covfefe,” speed is not doing great things for the local real estate market. The latest report from the Lawrence Board of Realtors found that while the market has become fast-moving, it produced fewer Lawrence home buyers in April.
April home sales fell by 9.4 percent compared with the same period a year ago, according to the Board of Realtors. Real estate agents report that demand for homes remains strong in Lawrence, but there just aren’t enough people putting their homes on the market.
“Buyers aren’t finding homes to buy, or are competing with multiple offers on homes,” Mark Hess, president of the Board of Realtors, said in a release. “These market conditions cannot support the current demand, and sales are lower this last month as a result.”
The number that best shows the tightness of the Lawrence real estate market is the number of active listings available to buyers. In April, there were 228 active listings. That was down from 250 in April 2016 and down from 346 in April 2015.
But there is one other force in the market that may turn around that trend: Homes are becoming more expensive, which may cause more homeowners to consider selling. Of course, rising home prices run counter to the efforts of politicians to battle Lawrence’s affordable housing issues. Regardless, home prices are on the rise, and particularly so in April. The median selling price of homes in April rose to $177,000, up more than 7 percent from the same period a year ago.
How high home prices rise, whether more people put their homes up for sale, and whether home builders start building significantly larger amounts of new housing in Lawrence, are all interesting questions to monitor in the coming months. It also will be important to see whether April is the beginning of a new downward trend for the local real estate market.
Despite the market being tight all year, home sales in the early part of 2017 were still making gains. Even with the poor April, home sales year to date are still up compared with the same period in 2016. Here’s a look at year-to-date numbers:
• Real estate agents have sold 325 homes thus far in 2017, which is about a 5.5 percent increase from the same four months in 2016.
• Sales of newly constructed homes are now driving the entire increase in home sales in Lawrence. There have been 40 sales of newly constructed homes, compared with 23 at this time last year. The number of existing homes that have sold in Lawrence is stagnant.
• Year to date, the median selling price of Lawrence homes is $177,500, which is up from about $168,000 a year ago. Interestingly, though, the median selling price for newly constructed homes has fallen considerably to $298,700. That’s down more than 8 percent from last year’s level of about $326,000.
• Thus far in 2017, the median number of days a home sits on the market before selling is 18. That's down from 28 in 2016 and 43 in 2015. But as I noted earlier, the pace is quickening. The median number of days for homes sold in April was just 11 days.
In case you are wondering whether the trends in Lawrence are unique, they are not. According to a report from the Kansas City Regional Association of Realtors, home prices are rising even quicker in Johnson County, and the number of sales are also falling at a faster rate.
Through April, the number of sales in Johnson County has dropped by 3 percent, and in April alone they were down by 11 percent. Year to date the median selling price for Johnson County homes has risen by 9 percent to $260,000. The number of homes on the market is down by 15 percent compared with the same period a year ago.
I’ve always assumed the Kansas Jayhawk has a really nice bird house — I can only imagine the size of the worm cellar — somewhere in west Lawrence. Good thing because I think even the Jayhawk may have a hard time buying a home in the Lawrence market today. The Lawrence housing market is as tight as it has been in recent memory, and the low inventories are starting to result in reduced home sales.
Homes sales in May fell 16 percent compared with the same period a year ago, according to the latest report from the Lawrence Board of Realtors. Real estate agents insist the slowdown is not due to a lack of buyers. Homes that are up for sale are moving quickly. Year-to-date, the median number of days a home sits on the market before it sells is down to 22 days compared with an already-low 34 days last year. For homes that sold in May, sales came at an even quicker pace. The average number of days on the market was just 11 days for existing homes.
Instead, real estate agents say the market is being slowed by a smaller-than-normal inventory of homes on the market. In May, the number of homes on the market dropped to 260, down from 349 in 2015 and 451 in 2014. The Lawrence market is now estimated to have a supply of homes for sale to cover 1.8 months of activity. When a market is well balanced between buyers and sellers, a market generally has four to six months worth of homes on the market.
“Our peak selling months of May, June and July will feel the impact of such low inventory levels,” Carl Cline, president of the Lawrence Board of Realtors said in a release. “We went into June with a 1.8 month’s supply of homes on the market, which is the lowest absorption rate we’ve had in Lawrence in a long, long, long time.”
The low supply of homes is having a predictable impact on selling prices. Average selling prices are on the rise. Year-to-date, the median selling price for a Lawrence home is now $170,000, which is up 4.6 percent from the same period a year ago.
A big question going forward is whether this market will spur Lawrence homebuilders to really accelerate their pace of new home construction. Indeed new construction is going on both on the east and west sides of the community — the Oregon Trail addition is being constructed near Rock Chalk Park, Langston Heights is near Langston Hughes Elementary school in west Lawrence, and a new single-family neighborhood is under construction off of O’Connell Road in eastern Lawrence. But Lawrence homebuilders are still showing a good deal of caution before jumping back into the rapid pace of building from years ago.
May’s numbers will give builders something to think about. During the month, sales of newly constructed homes totaled 13, which was more than double May 2015’s total. For the year, newly constructed home sales total 35, which is about a 60 percent increase from a year ago.
The next couple of months likely will tell the tale for the Lawrence real estate industry in 2016. June and July traditionally are busy months. The industry will need to make up some ground if it hopes to post sales growth for the year.
Thus far, overall home sales in Lawrence total 449, down 3.6 percent from a year ago. Total dollar value of homes sold is at $91.4 million, which is down about 1 percent from a year ago. It is worth noting that both those numbers are better than 2014 figures, but I think real estate agents are becoming concerned about the tightening market.
Regardless, have a happy Fourth of July. Town Talk will be off on Monday, but I plan to return on Tuesday.
Update on 25th and Iowa development; building totals start slowly in 2015; Lawrence lands on list of ‘coolest towns’
Let’s face it: After a night that included the excitement of both an overtime KU basketball game and the thrilling spectacle known as a City Commission primary, we’re all just going to spend today refueling our bodies with Cap ’N Crunch and Mountain Dew. So, I’m going to give you an abbreviated news and notes version of Town Talk. Here we go:
• Some of you have been asking me what development is underway at the former gas station at 25th and Iowa streets. Signs are pointing toward a financial service company that specializes in title or payday loans. A building permit has been issued for $125,000 worth of renovations at the site. The tenant on the building permit application is listed as Anderson Financial Services, LLC. A little research online shows that the company operates several LoanMax locations across the country. The company specializes in providing cash loans secured by a vehicle title. The company already is listing the location at 2434 Iowa on its website, so I would say that is a pretty good sign that a LoanMax is coming to Lawrence soon. The company has about 25 other locations across the state.
• While we are speaking of building permits, 2015 got off to a slow start in January, according to the latest report from City Hall. But that is not unusual for January. (It takes a lot of Cap ’N Crunch to get motivated in January.) The city issued permits for $3.4 million worth of work in January, which is below the previous five-year average of about $6 million. The number of permits for single-family living units also were pretty unremarkable. Permits for five new units were issued, which technically is the lowest January number since 2011. But not by much. Every January for the past five years has seen fewer than 10 new housing starts. So, January numbers don’t tell us much, but we will want to keep an eye on housing numbers in 2015. (Really, we do, so get it on your schedule and factor it in when you’re making vacation plans.) Home building numbers struggled in 2014, and it will be interesting to see if they bounce back.
The January report does provide some information about a couple of smaller projects you have noticed while driving around town. Work that is underway at 721 Wakarusa Drive is to renovate the space for Pinot’s Palette, a business that brings people together to participate in an art class while also sharing wine. We reported on the business back in October, so plans are now progressing on that business.
The January report also shows that construction work at the shopping center at 23rd and Harper is for a new Nail City. That location in fact may or may not already be open. My nails can attest that we do not know. The report also notes activity at one of the condo units on the top floor of the Marriott Hotel building at Ninth and New Hampshire. About $125,000 worth of interior finish work is underway on the condo unit.
• Perhaps it is because we have made a point to keep an eye on housing numbers in 2015, but Lawrence has landed on an Internet list of the coolest cities in America. A website called the MatadorNetwork.com ranks Lawrence as the ninth “Coolest Town in the U.S.” As if you didn’t already know, Lawrence is cool — according to Matador — because many shops and bars sell records or used CDs, plus we have several venues that attract “legit musical acts.”
The site goes on to list a perfect day in Lawrence as shopping for some antiques at Amy’s Attic or Blue Heron in North Lawrence, grabbing an early meal at Zen Zero in downtown and then “just drink your way up and down Massachusetts Street, mingling with underagers and recent grads who haven’t figured out the next move.”
The other towns that joined Lawrence in the top 10:
Laguna Beach, Calif.
North Charleston, S.C.
Sun Valley, Idaho
Mount Desert Island, Maine
What does the MatadorNetwork know about cool towns? I’m not sure, but I felt like it was my duty to alert you, in case you start noticing a marked increase in cape-wearing individuals staggering along Massachusetts Street.
It appears everybody this year did their pre-Christmas calisthenics. Jumping jacks? No. Jumping the line at the checkout counter? Yes. Push-ups? Forget about it. Pushing your way to the discounted Halloween candy corn? Absolutely.
What? How can you not know what I'm talking about? A certain someone in my household told me this was critical. You must stretch your shopping muscles before the holiday season begins.
Regardless, lots of Lawrence shoppers apparently did just that. According to a new report from City Hall, retail sales from mid-October to mid-November were up by a solid 8.4 percent, compared with the same period a year ago. We'll have to wait another week or two for the next sales tax report to see whether that momentum carried into the true holiday shopping season.
But the report does give us a look at how retail spending shaped up in 2013. The report is based off the December sales tax payment the city received from the state, which means we now have 12 months of sales tax data.
The result? A fair to middling year for retail sales in Lawrence. Consumers in Lawrence racked up $1.38 billion in taxable sales in 2013. (The majority of it is retail sales, but it also includes the sales tax you pay on your utility bills, for example.) That's up 2.1 percent from 2012 totals.
A 2 percent growth rate is nothing to sneer at. Remember, back in 2009 and 2010, the city saw retail sales actually decline. And over the last 10 years, the city's retail sales have grown on average by about 2.3 percent per year. So, in that regard, 2013 was just a tick below average. But the 2.1 percent rate was the slowest since the economy started to recover after the recession. In 2011, sales grew by 4.5 percent and in 2012 they grew by 5.2 percent. Clearly, the recovery lost some steam in 2013.
And you perhaps could argue that it lost a little more steam in Lawrence than it did elsewhere in the state. Statewide, sales tax collections grew by 3.5 percent, according to figures from the Kansas Department of Revenue. But the growth was really hit or miss. Several of the state's larger retail areas didn't see that much growth. Here's a look at how several area communities and some of the larger retail markets in the state fared.
— Baldwin City: up 2 percent
— Emporia: up 3 percent
— Eudora: up 10.5 percent
— Garden City: up 6.2 percent
— Hays: down 12.7 percent
— Hutchinson: up 4.4 percent
— Junction City: up 0.2 percent
— Kansas City: up 5.8 percent
— Leavenworth: up 4.7 percent
— Lecompton: up 7.8 percent
— Manhattan: down 0.3 percent
— Olathe: up 4 percent
— Ottawa: up 4.7 percent
— Overland Park: up 2.9 percent
— Shawnee: up 3.9 percent
— Tonganoxie: up 8.9 percent
— Topeka: up 1.4 percent
— Sedgwick County: up 3.3 percent
One other thing I like to do is see how much Lawrence retail sales have grown after being adjusted for inflation. That exercise shows something important has happened. On an inflation-adjusted basis, Lawrence sales have again reached the level they were at prior to the recession. In other words, we finally have gained back our losses. Here's a look at the actual sales totals, with the number in parenthesis adjusted to 2013 dollars, based on the consumer price index.
2013: $1.38 billion
2012: $1.35 billion ($1.37 billion)
2011: $1.29 billion ($1.34 billion)
2010: $1.23 billion ($1.31 billion)
2009: $1.25 billion ($1.36 billion)
2008: $1.28 billion ($1.38 billion)
We'll have an even clearer picture of 2013 in the next few weeks when the report showing sales activity for late November and December is released. We'll have to wait and see what that shows about the true holiday shopping season. In the meantime, I have a lot of old candy corn left to eat.
If you haven't gotten your annual roller coaster ride in yet, don't worry. You can always spend a little time with the city of Lawrence's retail sales numbers. They've been up and down and up and down.
The city has received its latest sales tax check, representing sales made roughly from mid-June to mid-July, and the trend continues. Sales for the month were down 2.1 percent compared to the same period a year ago. The city now has received eight of its 12 sales tax checks for 2013. Four of them have been up from the same period a year ago, and four of them have been down.
So far the net result has been OK. Total year-to-date sales in the city are up 1.5 percent from the same period a year ago. But that number is beginning to look a little weaker all the time. That's because the city's roller coaster has been on a more downward path than upward. During the first four months of the year, retail sales were growing at a 3 percent clip. In the last four months, sales totals have been stagnant from a year ago.
When you factor inflation into the equation, Lawrence's sales totals aren't quite keeping up. Here's a look at taxable sales made in the city thus far in 2013 compared to the same period in past years. The numbers in parentheses are the numbers adjusted for inflation. You'll notice that 2012's sales adjusted for inflation are slightly higher than 2013's sales. So, that's a sign that retailers may be having a bit of a ho-hum season thus far. But the numbers also show sales are much better than they were during the recession. On the flip side, sales still have quite a ways to go to reach pre-recession levels.
2013 sales: $922.3 million
2012 sales: $908.7 million ($924.5)
2011 sales: $844.3 million ($876.7)
2010 sales: $814.6 million ($872.6)
2009 sales: $831.0 million ($904.8)
2008 sales: $861.4 million ($934.5)
Town Talk will be off on Monday for the Labor Day holiday. Enjoy your three-day weekend. Heck, ride a roller coaster. My wife has been urging us to cross that activity off the summer list. I've resisted. I can't figure out why my seat is the only one without seat belts.
With this recent batch of rainy weather, it is hard to believe that earlier this year we were all buying sunscreen, flip flops, mosquito netting, shark repellent, harpoons and 55-gallon drums of margarita mix. (What? Isn't that your standard list of items to take to the beach?)
Regardless, we were buying summer items, and according to a new sales tax report from City Hall, we were buying them at a pretty good clip.
The city has received its July sales tax check from the state, but because of a lag time in processing, the figures actually represent sales made from about mid May to mid June.
Sales for the period were up 4.3 percent from the same period a year ago.
So far, 2013 has been an up-and-down year for sales tax, unlike 2012, which was pretty much a steady upward climb that produced one of the city's better sales tax performances in recent memory.
But as it stands now, year-to-date totals for 2013 are up about 2 percent from the same period a year ago. That rate of growth isn't nearly as fast as the city experienced in 2012, when sales grew at a 5.2 percent rate, or in 2011, when they grew at a 4.5 percent rate. But the city is on pace to have its third straight year of sales tax growth after declines in 2009 and 2010. Plus, this year's rebound is occurring at the same time that housing sales are on the rise. Historically, strong home sales and improving retail sales have created a propitious cycle for the Lawrence economy. (Propitious cycle? They're hard to come by. Just try to find one at a local bike shop.)
Here's a look at the year-to-date taxable sales totals for the city since 2008. The numbers in parentheses are the totals adjusted for inflation.
- 2013: $800.9 million
- 2012: $784.6 million ($797.9)
- 2011: $745.2 million ($773.5)
- 2010: $708.7 million ($758.9)
- 2009: $734.1 million ($799.0)
- 2008: $750.6 million ($814.0)
Those numbers show that our recent sales tax growth has been outpacing inflation, but we still have a little bit to go to get our spending activity back to the pre-recession levels. Adjusted for inflation, our spending is down about 1.7 percent from our 2008 levels.
Considering where we once were at, a 1.7 percent shortfall isn't worth worrying too much about. It is not like sharks at Clinton Lake or anything. (What's that? There's no megaladon at Clinton Lake. Curse you, Shark Week. Shark repellent is expensive.)