Home sales in Lawrence fall by 13% in 2022, but home prices jump by 10% nonetheless
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Homebuyers, for the most part, are doing their share to battle rising Lawrence home prices. For the third time in four years, home sales in Lawrence have fallen.
It still wasn’t enough, though. The median selling price of Lawrence homes posted a double-digit percentage increase in 2022.
Lawrence home sales fell 13% to a total of 1,121 homes in 2022, according to the year-end report from the Lawrence Board of Realtors. Compared to 2020, home sales were down about 16%, a decline of about 220 homes.
Yet, the median selling price of a home increased by 10% nonetheless in 2022. The midpoint for home sales in Lawrence finished 2022 at $290,000, meaning half of all homes cost more than that and half cost less. Going back farther, at the end of 2020, that median selling price was $236,400. In other words, the run of the mill Lawrence house costs approximately $50,000 more than it did two years ago.
I’m sure many of you are going to your bookshelves now to retrieve your favorite economic text books to confirm what you think you know about supply and demand. Normally, as demand for a product drops, its price does too.
Unless something else is happening, which, of course, it is.
Remember how I said homebuyers for the most part are doing their share to battle rising home prices? Well, Lawrence homebuyers in 2022 did do one thing that didn’t help at all — they kept paying more than what home sellers actually were asking.
According to the Board of Realtors report, the average homebuyer in Lawrence in 2022 paid 100.6% of the home’s original listing price. That means, for example, if a home was listed for $250,000, on average, it ultimately sold for $251,500.
Why? Because Lawrence homes remained hard to find in 2022, and people who wanted one usually had to compete with several other buyers who were interested in the same house. So, the law of supply and demand is not broken in Lawrence.
However, the supply of housing might be.
The number that best illustrates that is the median number of days a home sits on the market before it sells. For 2022, that median was four days in Lawrence. The best that can be said about that number is it at least didn’t get worse. The median in 2021 also was four.
But maybe Lawrence home prices are on the verge of moderating. I say that because demand is falling more than it has in recent memory. The 13% drop in Lawrence homes sales in 2022 was far greater than past downturns. In 2019, home sales dropped by 2% and in 2021 they dropped by about 4%. In between, in 2020, they rose by 11%.
The December numbers are much starker. Home sales fell by nearly 45% for the month — from 89 in December 2021 to 49 in December 2022. And, indeed, the selling prices of those homes did moderate. The median selling price for homes in December was up 2.5% from December 2021.
It is never a good idea to try to predict a trend on just one month of sales, though. However, the December numbers make sense. Banks raised their mortgage lending rates as the Federal Reserve raised interest rates in an effort to cool inflation. Cooling the price of housing is one of the key ways to cool inflation. Higher interest rates surely are impacting what Lawrence buyers can afford to pay for a home. That likely will be the big story in the Lawrence real estate market in 2023: Will rising interest rates be the thing that finally tames Lawrence housing prices?
Here’s a look at some other facts and figures from the year-end real estate report:
• Overall it was a down year for the local real estate industry. Sometimes the number of homes sold can fall, but the selling prices of the homes increase so much that the total dollar value of all sales increases. That was the case in 2021, but not in 2022. Total sales volume in Lawrence was $367.8 million, down 4% from the $383 million mark in 2021.
• The Lawrence market ended 2022 with 102 homes on the market. That’s up from 80 homes at the end of 2021 and from 81 homes at the end of 2020. That is another sign that the market may be moderating some as an increase in the number of homes on the market should put downward pressure on prices, if the number of buyers remain roughly the same. To be clear, though, the numbers still suggest a really tight market that favors sellers over buyers.
• The number of pending contracts at the end of December — those are sales likely to become official in January or February — was down nearly 45% from a year ago. In other words, at the end of December 2021, there were 87 home sales ready to become official in the coming weeks. At the end of 2022, there were 48. Another sign that demand is starting to slow significantly.
Several other communities also had their end-of-year reports published recently. The Kansas City Regional Association of Realtors puts out a report for the entire KC metro area. It shows the picture in Kansas City wasn’t dramatically different than Lawrence. Homes sales were 12% for the year, but the median selling price was up 10%. The median selling price in the KC metro checked in at $286,008, which is just a few thousand dollars lower than the Lawrence median.
The Kansas City Regional Association also publishes more specific numbers for several of the counties in the region. For this list, I’m going to use the average selling price, which is different than a median, because the average numbers are more widely available:
• Johnson County: $486,854
• Cass County, Mo.: $352,894
• Miami County: $333,777
• Clay County, Mo.: $330,462
• Lawrence: $328,136
• Leavenworth County: $314,677
• Jackson County, Mo.: $285,817
• Jefferson County: $265,407
• Wichita/South Central KS: $236,552
• Wyandotte County: $215,845
• Franklin County: $208,805
• Topeka Metro area: $204,080 (through November)
As the list shows, despite what you hear in certain circles, Lawrence does not have the most expensive housing market in the state. But what the prices don’t do is give a glimpse at affordability, since average income totals vary a lot from community to community. But that’s a math exercise for another day.