Lawrence sales tax collections, home sales both start slowly in 2024

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I know the most important numbers in Lawrence at this time of year are the single-digit variety (A No. 2 seed? A No. 3 Seed? Gulp, a No. 4 Seed, and how do I stop this sky from falling upon my head?) Regardless, let’s take a look at a couple of local economic numbers, which also haven’t given fans a whole lot to cheer about.

• First, sales tax numbers. After now seeing two months worth of sales tax reports from 2024, a clear question has emerged: Why didn’t anyone tell me the New Year came with a snooze button?

Lawrence and many other retail markets in the state have been slow to get going in 2024. Lawrence’s sales tax collections are up just 0.1% for the year, which is a far cry from what Lawrence has come to expect. City Hall budget-makers generally count on an annual sales tax growth rate of 5% to fund the city’s capital improvement plan and other big ticket items.

But as we’ve been noting for awhile now, there is reason to question whether that 5% sales tax growth is realistic for Lawrence going forward. In 2023, the city posted a 3.9% growth rate for sales taxes and use taxes, which are a special type of sales tax charged primarily for online purchases. That was well below the 8% growth Lawrence posted in 2022 and the 9.1% growth rate posted in 2021.

In other words, Lawrence has posted a declining growth rate for two consecutive years. That’s not shocking, given that 2021 was the largest growth rate in the city’s history, as shoppers came out of their pandemic vaults to start buying again. The following year was strong too, as inflation helped boost those numbers. The 3.9% growth rate of 2023 also was a historically acceptable one. There are many years Lawrence City Hall would look at that number as above average.

However, that’s not the case anymore. In order to make the budget for the city’s five-year capital improvement plan work, it makes a key assumption of 5% sales tax growth each and every year. When the city missed that 5% mark in 2023, it resulted in about a $3 million shortfall. Given that the city’s overall budget is around $400 million, that shortfall isn’t reason to hit the panic button. But, it is a good reason to watch 2024 sales tax returns closely.

While the sample size is small — just two of 12 reports for the year are in — the city can’t be thrilled with what it sees thus far. The city is up just 0.1 for the year, and the city knows it will have some sales tax challenges later in the year. When KU moves its football games to Kansas City due to construction issues at the stadium, that surely will have a negative impact on sales tax numbers for those fall months.

But, we are getting ahead of ourselves. Here’s a look at the numbers through February for Lawrence and several of the state’s other large retail markets:

• Kansas City, Kansas: up 5.3%

• Olathe: up 3.2%

• Shawnee: up 1.9%

• Lawrence: up 0.1%

• Topeka: up less than 0.1%

• Salina: down 1.0%

• Overland Park: down 1.5%

• Lenexa: down 1.6%

• Sedgwick County: down 2.0%

• Statewide: up 0.9%

As you can see, the state as a whole has kind of hit the snooze button for 2024. But that’s not the case in every community. In case you are wondering whether a $4 billion economic development project has any impact on local spending in a community, we are starting to see the answers in De Soto. That town, just 20 minutes or so from Lawrence, is the home to the new Panasonic electric vehicle battery plant, which will open next year.

Sales tax collections in De Soto are up 66% for the year. With just two months in the books, the community of about 6,000 people and growing has collected about $135,000 in extra sales taxes for the year. This should be a fun number to watch in 2024.

• Now, a look at Lawrence home sales. We only have one month’s worth of data for home sales, but they too are sleepy.

Home sales in Lawrence were down 6.8% in January compared with January 2023, according to numbers from the Lawrence Board of Realtors. On one hand, the numbers aren’t overly meaningful. January is a slow month for home sales, and that 6.8% drop amounted to just three fewer home sales happening in the city.

On the other hand, it is worth remembering that 2023 was the slowest year in recent memory for Lawrence home sales. Sales fell by 21.9% in 2023, marking the third straight year home sales declined in the city. So, January 2024 started out slower than a historically slow year. If you like your coffee with a teaspoon of pessimism, that is one way to look at it.

There also was some hope in late 2023 that the market was rebounding. December was a big month for home sales, with local totals up 35% from December 2022. There was a belief that buyers had started to get more comfortable with mortgage interest rates and were returning to the market in larger numbers.

That may still be the case for 2024. January homes sales shouldn’t be relied upon as a predictor of what’s to come.

“We remain optimistic about 2024, despite a slow start in January,” Jill Ballew, president of the Lawrence Board of Realtors, said in the group’s monthly report.

Ballew noted that written contracts in January were up 27% in Lawrence. Many of those contracts should become finalized sales in the weeks ahead.

Other numbers of note from the report include:

• The median selling price for homes in January was $270,000, down 1.5% from a year ago. If this trend holds, it would be a meaningful one, but the small sample size makes it hard to read much into this number.

• The median number of days a home sat on the market before selling was 13, up from nine in January 2023 and five in January 2022. This trend, if it continues, also should help housing prices moderate.

• There were 104 homes on the market in January, up from 94 in January 2023 and 75 in January 2022.


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