photo by: Chad Lawhorn/Journal-World

Construction crews work on new single-family housing on Oct. 27, 2023, just east of O'Connell Road on 26th Street Terrace in Lawrence.

Small is the word of the year in the Lawrence housing industry.

Nowhere is that more evident than in the the reports showing how many new single-family homes have been built in Lawrence. The community is on pace to set a new low for single-family building starts, which would be the second time in three years that the city has broken its record for building inactivity.

Through October, Lawrence has issued 44 single-family building permits, according to the city’s database of permits. That puts local builders well behind the pace of 2022, when the city issued just 79 single-family building permits, which was the smallest such number since at least 1956, according to research by the Journal-World.

But small also may be the solution to the city’s housing woes. At least that is the most recent bet Lawrence city commissioners and planners have made with the recent approval of a new land development code. That new code calls for future housing developments to become much more dense than the suburban-style neighborhoods that have dominated new construction for decades.

“It is going to be smaller homes and smaller yards,” Bobbie Flory, executive director of the Lawrence Home Builders Association, said of the direction the new code is pointing.

That theoretically means each new housing development will have more homes, which should lead to larger numbers of new home starts in the future. City leaders are hoping that if more homes get built, housing prices eventually will become more affordable through the forces of supply and demand.

Builders think that idea is going to work wonders — or perhaps not work at all. The variable, which is very much unknown at this point, is what will buyers think?

“Nationally, they are saying that homebuyers are buying smaller homes and smaller lots,” Flory said. “It may be this is the new normal, but I don’t know how local consumers will respond.”

The Home Builders Association was supportive of the code changes that allow for greater density in future neighborhoods, but they also wish the city would have approached the topic a bit differently. The new code will mandate that most land that is zoned for single-family development require a certain amount of density. In other words, if developers wanted to build a few large-lot homes in the neighborhood, the code would make that difficult without going through a complete rezoning process, which can be timely and uncertain in Lawrence.

The line the Home Builders Association has been using is they wish the new code would allow for greater density neighborhoods but not mandate them. A mandate is risky because if buyers really don’t like the idea of smaller houses and smaller yards, Lawrence may find itself building even fewer homes than it does now.

“From a developer’s standpoint, more density would be advantageous, if there is a market for it,” Flory said. “That’s the next big question to be answered — is there a market for it?”

If Lawrence is betting wrong and home construction doesn’t pick up, the city may be in for a significant period where its population — and likely its school enrollments, too — stagnate while communities just to the east of us produce significant growth.

The latest numbers show just how big of a gap there is between Lawrence and Johnson County communities when it comes to housing. The Home Builders Association of Greater Kansas City has released single-family building statistics through September. Those numbers, which include one fewer month than Lawrence’s totals, show many communities are building several hundred more homes per year than what Lawrence now routinely builds.

Through September, Overland Park and Olathe had issued permits for 310 and 267 single-family homes, respectively, compared to Lawrence’s 44 permits through October. Both Overland Park and Olathe are bigger in population than Lawrence. However, many smaller communities also are outpacing Lawrence. Lenexa, which has a population about 60% the size of Lawrence, has issued 210 single-family permits, Gardner, which has a population about 25% the size of Lawrence, has issued 98 single-family permits, and Spring Hill, which has a population about 10% the size of Lawrence, has issued 213 single-family permits.

Of course, keeping up with Johnson County has never been a requirement for anyone, especially Lawrence. There is a belief in many city planning circles here and nationally that new single-family housing often doesn’t pay for itself in terms of the amount of new services and infrastructure that a community has to add to serve the new residents.

The issue is a long-debated one between urban planners and builders, who often argue such studies shortchange the amount of new revenue that new residents bring to a community.

“I think single-family is viewed by some people as a drag on the taxpayers,” Flory said, saying she disagrees with that assessment. But Flory acknowledged that a study commissioned by the homebuilders showing single-family growth does pay for itself is not likely to convince those who argue otherwise. Conversely, builders often have not bought studies produces by urban planners who argue the opposite.

What will create some consensus in the community on that front? “If I had the answer to that …” Flory said.

Finding it, though, would be helpful because Flory said her experience in conversing with building professionals around the state and region leads her to believe that Lawrence policy makers spend more time on that question than their counterparts in other communities.

“I think Lawrence is different from other communities,” Flory said. “Lawrence is always the one that seems to be struggling with this issue.”

The results of those struggles show up in fewer subdivisions being created in Lawrence, which means builders have a smaller supply of building lots to buy, which depresses the number of homes built and increases the price of those that are constructed, builders argue.

“It comes down to the availability of lots. It really is that simple,” said Adam Williams, a Lawrence real estate developer. “If we had lots available, builders would be buying them and they would be building on them.”

Builders are now pinning their hopes on a westward expansion and a new City Hall mindset created by the new development code.

The westward expansion involves extending utilities across the South Lawrence Trafficway, which could open up hundreds and hundreds of acres of development west of the Bob Billings interchange.

After years of discussion, the city is starting to make its bets on that area. The current five-year capital improvement plan has more than $18 million worth of road, sewer and water projects planned for the area west of the South Lawrence Trafficway. Some utility work is underway as construction has begun on expanding the SLT to four lanes.

Those $18 million of city expenses — which won’t build any neighborhoods but rather will open the door for developers to start building with private dollars the smaller infrastructure needed for neighborhoods — are the type of dollars that fuel the debate that new single-family construction doesn’t pay for itself.

While both sides can go back and forth about that, what’s less debatable is that if the city spends the $18 million and then new housing development doesn’t come, that will put a strain on city finances. The city will have spent the upfront dollars for development without receiving the back-end benefit of new taxes that come from new homes.

That’s one reason that the prospect of the city setting another record low for housing starts is worrisome to some. If the city makes the investment for new neighborhoods and then the housing growth doesn’t come, the city’s finances almost certainly will be worse off.

That’s where developers are hoping the new land development code also will bring a new outlook to City Hall. Williams has had a new housing development on the drawing board since late 2022. Hunter’s Hill called for about 150 building lots on about 60 acres of land just south of Interstate 70, where Monterey Way would intersect with the highway, if that road were built farther north.

When I first reported on the development in December 2022, Williams had hoped to break ground on the project in the spring of 2023. Today, the ground remains unbroken and will remain that way for the foreseeable future.

Williams said that the development went through the Planning Commission process relatively well, as that group was receptive to the density of the project. However, when the development was going through the final plat stage — a spot where individual departments in the city start reviewing the plan in detail — the number of lots the development could have began to shrink significantly.

So, Williams put the project on hold to see whether it would fare better under the new development code.

“I do want the density,” he said.

Paradoxically, the new code that the city hopes will spur more housing in the future might be holding back some projects now, partially contributing to the new lows in building permit totals. The new code has been under discussion at City Hall for more than two years.

Flory said she didn’t have a definitive number on how many new development projects may be in limbo waiting for the new code to take effect, but she believes it is happening in multiple instances.

What happens once the code takes effect next year will be a big moment. Will the implementation of the new code create a surge in new building? Unknown. Will the smaller homes create more affordable housing, or turn off potential buyers? Unknown.

But one thing that is known, Williams said, is that there’s still strong interest from people who want to live in the community. In Kansas, that still puts the city in an enviable position.

“I could have sold 20 to 30 lots on Day No. 1,” Williams predicted of his housing development that he put on pause.