Lawrence housing market saw 18% jump in prices in July; look at 2020’s top building projects
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Hot, fast, and increasingly expensive is a pretty accurate summary of Lawrence’s housing market in July.
Home sales were up by nearly 13% in July, while the median selling price was up by 18% compared to the same month a year ago.
Historically low mortgage rates certainly are playing a part in the rising number of home sales. Rising prices, however, are being greatly influenced by a trend that Realtors have been pointing to for months now — a low supply of homes on the market. In July there were 144 active listings on the market. That was down from 286 — almost a 50% drop — from July 2019, and down 247 in July 2018.
“Supply of available homes in Lawrence is critically low,” Ryan Desch, president of the Lawrence Board of Realtors, said in the group’s recently released monthly report.
In some ways, it is kind of a perfect storm for housing prices to rise. As demand outpaces supply, upward pressure is put on prices. Normally, though, buyers have a hard time meeting those higher prices, so downward pressure on prices follows. Desch, though, said historically low mortgage interest rates are allowing homebuyers to meet the higher prices, since the lower interest rates mean monthly payments may not be much more than they would have been in a more typical interest rate environment.
And, oh, all of this is happening during the middle of a pandemic, which has created great economic uncertainty in many other industries. Unlike the last economic crisis of 2008, the housing market remains largely undented.
“So far, the good news is that the economic downturn related to the COVID-19 pandemic has not resulted in a housing crash similar to the Great Recession,” Desch said in the report.
That’s not to say that the pandemic won’t have an impact on the market. Usually as housing prices rise, more owners begin thinking about selling their homes. But is the pandemic creating enough uncertainty that a sizable number of existing homeowners won’t consider making a change in homes, even if their home’s value has risen rapidly? July’s really low housing inventory number would indicate that’s the case. If that is so, the most interesting question becomes: How high can prices go?
Here’s a look at some statistics from the July report from the Lawrence Board of Realtors.
• Yes, the median selling price in July was up 18.1% to $254,900. But it is never a good idea to rely too heavily on one month’s worth of numbers. Remember, that number doesn’t mean your house went up in value by 18%. It is impacted greatly by the types of houses sold in the month. For instance, if a bunch of five-bedroom homes sold in July 2020, while a bunch of three-bedroom homes sold in July 2019, that alone would account for a significant difference in the median price.
The year-to-date numbers are a better gauge at this point. They show a more modest increase of 7.6% in the median selling price compared to the same period a year ago. That is still a high rate of growth, but it is not the highest in recent memory. At this point in time through 2018, home prices were up 15% for the year. Last year at this point, they were up about 2.5%. So, this is an in-between year, but that may be beside the point. The bigger picture is we are in a multi-year trend of significant price increases. At this point in 2018, the median selling price was about $209,000. Now, it is about $231,000.
• One area of the housing market is actually seeing lower housing prices — newly constructed homes. Through the first seven months of the year, the average selling price on a newly constructed home is $336,000. That’s down 3.4% from a year ago. Again, the types of houses on the market have a lot to do with that number. But it also is worth noting that new homes are the one part of the market that has seen an increase in inventory. There have been 112 listings for newly constructed homes thus far in 2020. That’s up from 99 at this point in 2019.
• Thus far in 2020, the median number of days a home sits on the market before selling is seven. That’s down from 10 at this point in 2019.
• It was a great month for the Lawrence real estate industry by one key measure. The sales volume totals show the impact of both a rising number of sales and rising home prices. In July, the industry saw Lawrence sales volumes increase by 30%. There were about $46 million worth of homes sold in the month, compared to about $36 million in July 2019. For the year, sales volumes are up about 14%, or about $25 million, to about $200 million in homes sold.
A quick look at the Kansas City metro real estate totals shows Lawrence is still outperforming that market in some key areas. July also was a hot month for the KC real estate market, with home sales 8.6% and median sales prices up 11.1%, according to the July report of the Kansas City Association of Realtors. Both those numbers, though, were below Lawrence’s totals.
For the year, the differences are even greater. Home sales are actually down by 1.3%, compared to the same period a year ago. Median selling prices also aren’t up as much as they are in Lawrence. The K.C. median is up 5.7% to $230,000.
While we have the abacus out, we might as well do a quick check of some Lawrence building permit totals. The latest figures are for June, which gives us a tally at the halfway point of the year.
The city’s numbers show there has been a slight uptick in the number of new single-family homes constructed in the community. The city has issued permits for 73 single-family homes through June, up from 67 during the same time period a year ago.
Apartment construction is also up slightly. There have been 37 new apartment living units that have received permits through June, up from zero during the same period a year ago.
The really big number in the report is the total value of all construction projects issued permits thus far. It is way down from a year ago. But that is not unexpected. In 2019, permits were issued for the Lawrence High School renovation and several other school district projects. Once those projects are factored out of the equation, ordinary construction in Lawrence is about at the same level. Thus far in 2020, the city has issued permits for $59.4 million of construction. At this point in 2019, the city had issued permits for $114.6 million, with Lawrence High and two other public school projects accounting for about $56.6 million of the total.
Here is a look at the five largest projects thus far in 2020 that have been issued building permits:
• Interior remodel of Target, 3201 Iowa Street: $3.5 million
• USD 497 addition and renovation of district offices, 110 McDonald Drive: $2.1 million
• Multi-tenant shop and office building 2460 Fairfield Drive: $1.8 million
• Casey’s General Store, 3111 Nieder Road: $1.5 million.
• Interior remodel of the Chi Omega house, 1345 West Campus Road: $1.2 million.