Lawrence home sales surge in October, but selling prices rise even more rapidly
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I’m not sure that there is universal agreement that my home has become more valuable as I spend more time in it, but home prices in Lawrence certainly have been soaring as the pandemic produces more homebodies.
The latest report from the Lawrence Board of Realtors shows home sales increased in October, but the real eye-popping figures are a rise in median selling prices. The median selling price for a home in October was 21% higher than it was in October 2019.
Always take one month’s worth of figures with a grain of salt, but the year-to-date numbers for Lawrence also are showing a big jump in selling prices. With 10 months in the books, the median selling price for homes for Lawrence is up a full 10% from the same time period a year ago.
The median selling price for a home in Lawrence thus far in 2020 is $235,000. That’s up from about $213,500 in 2019 and $200,000 in 2018. If the 10% increase in prices holds for the rest of the year, it would be well above normal, but not a record. The Lawrence real estate market finished 2018 with an increase of 13.6% in the median selling price. Last year, prices rose only by 4.6%, which was a more historically normal rate for Lawrence.
Here’s a look at where median selling prices of homes in Lawrence have landed since 2015. All numbers, except for 2020, are for the end of the year (the numbers quoted above are where median selling prices were in October that year.)
• 2015: $169,000
• 2016: $178,000
• 2017: $180,000
• 2018: $204,500
• 2019: $214,000
• 2020: $235,000 (through October)
Those numbers represent a 39% increase in median selling prices from 2015 to 2020. Think about that for a moment. Say you were considering buying a house in Lawrence in 2015 but decided you weren’t quite in the right financial spot to do so. If you waited much past 2017, the chart above suggests your situation may have become more difficult.
In other words, Lawrence’s income numbers don’t suggest that most families have seen a 39% increase in their incomes during the same time period. The U.S. Department of Housing and Urban Development puts out median family income estimates each year. In Douglas County, that estimate was $74,100 in 2015. By fiscal year 2020, it had grown to $88,800. That’s an increase of just under 20% for the time period. In other words, the median selling price of a home has outpaced the median family income by almost 20 percentage points.
But one thing the 2020 real estate market has shown is that there are still lots of people figuring out how to buy a house in Lawrence. Home sales for the year are up 8.4% from a year ago, to 1,123 sales. October was a particularly strong month for Lawrence home sales. For the month, they were up 17% compared to October 2019.
To be clear, these increasing home prices aren’t entirely tied to the pandemic. As the chart shows, the trend was underway before the virus struck early this year. The big factor has been a multi-year lull in the number of new homes that are either being built or placed on the market for sale. The demand by people wanting to buy a house in Lawrence has outstripped the supply of people willing to sell a Lawrence home for several years now.
Those trends likely will remain in place through at least early 2021, Ryan Desch, president of the Lawrence Board of Realtors, said in the group’s monthly report.
“Inventory shortages should mean that there will be very little seasonal slowdown entering the holidays, and for home sellers that should come as great news,” Desch said. “Homebuyers, on the other hand, continue to face rapidly rising prices and fewer homes to choose from.”
At some point, you would think the low inventory and rising prices would cause a slowdown in the number of buyers. But real estate leaders aren’t yet predicting that, in part, because mortgage rates remain near historic lows.
At some point, you would think high demand and low supplies of homes would spur a jump in new home construction. That has been the case for several years, yet such a building surge has not materialized in Lawrence. The city’s home construction industry is simply much smaller than it was prior to the Great Recession, plus there may be some concern that the cost of new construction doesn’t match up well with what average Lawrence incomes can afford.
Thus, a tight, seller-friendly market continues in Lawrence.
Here’s a look at some other figures from the October real estate report:
• Sales of newly constructed homes did have a good month in October. There were 14 sales compared to just 5 during October 2019. For the year, there have been 129 newly constructed homes sold, up from 84 at the same point a year ago.
• The median selling price for newly constructed homes is not rising as fast as the existing home market. For the year, the median selling price for a brand-new home is down 2% from a year ago, to $329,800.
• Homes continue to sell very, very fast. In October, the median numbers of days a home sat on the market before selling was six. For the entire year, the median is seven days.
• The combination of higher selling prices and more total sales is producing a good year for the local real estate industry. The industry has now made $289.7 million worth of sales in Lawrence in 2020. That’s up from $250.7 million — or about 15% — compared to the same time in 2019.