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It may sound like hyperbole at first, but if the current real estate trends in Lawrence continue at the current pace, soon it may be nearly impossible to buy a single-family home in Lawrence for less than $200,000.
The reality facing home buyers in Lawrence reflects a similar reality nationwide: extremely low housing inventory. Historically low inventory is driving prices to never-before-seen levels in Lawrence.
Here’s a look at what the sales numbers are looking like so far in 2021, focusing only on single-family homes here in town.
It’s long been a reality in the Lawrence market that it’s nearly impossible to find a single-family home priced under $100,000. If one were to travel just 20 miles to the west in Topeka, that’s not a hard thing to do. Same for KCK to the east. If the fire fueling the current trends in Lawrence continues apace, we will reach the point where it’s just as impossible to find a single-family home priced under $200,000.
So far in April of 2021, there’s a total of 54 single-family home sales. Of these, only six homes had a purchase price under $200,000. Equally shocking is that the average sales price in April is over $323,000! This year has totalled a mere 47 single-family home sales under $200,000; during the same time period last year, there were 68. If the pace in 2021 reflects the same of 2020, we will end the year with only around 200 home sales under $200,000. If this continues, those home sales will fall below ¼ of total single-family home sales for the year for the very first time.
On average in April 2021, single-family homes are selling almost 2% over list price. But if we focus on the housing market priced under $400,000, the average price of these homes was still remarkably high: $254,000. In this price range, homes are selling for nearly 4% more than list price. In other words, homes under $400,000 are selling for almost $10,000 over list price! Competition among buyers in this price range is fierce, and multiple offers is now the new normal. Many properties have had as many as 10, 15 and even more than 20 offers in as little as two days.
Looking at year-over-year, it’s not hard to see that the availability of homes priced under $200,000 is beginning to rapidly decline. Years of steady appreciation appear to be switching over to a pressure-cooker situation as supply plummets and demand continues to rise.
Most years, Lawrence has had plenty of available homes priced under $200,000. This graph shows how quickly that reality is fading into the past.
Although 200-some houses might not seem like a low amount, in a market that should sell at least 1,000 single-family homes, it’s a painfully small percentage of the overall market. Housing affordability was already an important part of the discussion prior to this year. What will happen to the discussion when there are even fewer homes that would be considered affordable?
Home buyers are frustrated. At the moment, it’s hard to say what will alleviate those frustrations. Rising rates stand very little chance of cooling the market. New construction, beset by continually rising costs, is unlikely to provide any real solution in the short term. For one reason or another, homeowners are deciding not to sell. For many, having to turn around and buy in the same market is plenty of incentive to stay put. Right now, we’re in a vicious cycle, and it’s likely to get worse before it gets better.
Lawrence is a desirable town to live in. We are undoubtedly experiencing influx migration from other areas of the country as COVID and remote work continue to drive demographic shifts. These population shifts will quite possibly produce greater impacts and housing trends than the Great Recession.
Lawrence should benefit from these population changes. Lawrence deserves to be a great community that many people want to live in. A variety of housing options and an ability to find an affordable single-family home will ensure that our community remains a great place to live. Let’s make sure we don’t lose it!
— Ryan Desch (he/him) is a local Realtor and broker/owner of R+K Real Estate Solutions, a family-focused Lawrence real estate company owned together with his wife, Katie Desch. Together they are working to make change in the real estate industry work to the benefit of the Lawrence community.