Lawrence home sales fell by biggest amount yet in 2022; housing prices certainly did not
photo by: John English
Lawrence’s housing market is in a slowdown — in every way except one. Housing prices aren’t falling at all, according to the latest numbers from the Lawrence Board of Realtors.
Lawrence homes sales in June fell 13.5% compared to June 2021 numbers. For the year, Lawrence home sales are now down 7.8%. At the halfway mark of 2022, home sales have now posted year-over-year declines in all six months of the year.
But the slowdown in June was the steepest yet. The 13.5% decline was worse than the 11% decline in May, which previously was the low water mark of 2022.
Despite the declining number of sales, the median selling price of homes has been steadily increasing. In June, it didn’t just increase. It soared. The median selling price of all homes for the month jumped 11.8% to $301,750.
Rising selling prices have been a trend throughout the year. But the May numbers had suggested perhaps the increases were moderating some. In May, the median selling price increased by a more modest 4.7%. Then June came and blew that theory out of the water.
Year-to-date, the median selling price of a Lawrence home is up 13.3%. The average home is now selling for an even $300,000, up from about $265,000 a year ago. Even if you aren’t looking to buy a house, you should care about these rising numbers. Remember when you got your change of value notice from the county appraiser? Many of us saw increases of 10%, 15% or more. That was because the selling prices of homes last year increased the fair market value of all of our homes. If these selling prices continue to soar in 2022, it is likely that next year we are going to get a change of value notice from the county that reflects another big jump in all of our homes’ values.
If you haven’t yet figured out that those rising home values lead to increases in the amount of property tax you are required to pay on your home, you soon will. Property tax bills come out this fall.
But what is going on that is causing the number of home sales to decline but the price of homes sold to increase? Normally, when demand falls, prices are supposed to fall too.
The answer for a long time is that demand for Lawrence homes hasn’t really been falling. There just haven’t been enough homes available for sale to allow everybody who wants to buy a home to do so. That’s how you have fewer sales but higher prices.
While that situation is still generally true, it was less so in June. There were 127 active home listings in Lawrence in June. That was up significantly from just 86 listings in May. The 127 listings also are up from 98 in June 2021. Both of those numbers are signs that the market is becoming less tight. Theoretically, that should help moderate prices.
But there are other glaring signs that the market is still fiercely competitive. The median number of days a home sits on the market before selling was three in June. That’s unchanged from a year ago. Importantly, homes in June sold for 102.8% of their asking price. In other words, buyers still felt the need to pay more than what sellers were asking. In this case, almost 3% more. Last year at this time, they were paying a little bit more than 1% above asking prices.
In sum, there are signs that Lawrence’s housing market isn’t quite as tight as it was, but it is a bit like my wallet at a movie theater concession stand — still quite tight. (I will sneak in an actual popcorn popper before I pay those prices.)
Realtors often look at how many homes are available versus how many homes are selling and then calculate how long it would take to sell all available homes. A balanced market generally has five to six months’ worth of homes available at any given time. Lawrence is still a long way from that, Lawrence Board of Realtors President Lindsay Landis said.
“For the first time in 7 months the inventory of homes climbed past one month to 1.2 month’s supply, the highest level of inventory since October of 2020,” Landis said in the organization’s monthly report. “However, with an ideal market at 4 to 6 month’s supply, inventory levels remain a real constraint in the market.”
But Landis said she is starting to see some signs of a softening on prices.
“We are seeing price reductions on some listings that were priced too aggressively to begin with,” Landis said in the report. “Sellers continue to be rewarded with increased values, but the craziness has waned a bit.”
Higher mortgage interest rates were starting to have some impact on July sales, and are expected to have more in the future. The Federal Reserve on Wednesday again raised its federal funds rate by three quarters of a percentage point. Such increases by the central bank almost always result in higher mortgage interest rates.
Higher mortgage rates usually mean higher monthly payments, which will price some buyers out of some homes. Landis said that was starting to become evident in June.
“Those buyers who are using financing are well advised to communicate continually with their lender and real estate professional,” Landis said. “While rates remain historically low, this uptick does impact the range in which a buyer can shop for a new home.”