July is here and that means the year is half over! Summer is in full-swing. Is the hot weather coupled with a hot real estate market? The short answer is "no." A better answer would be that the market is very lukewarm. In fact, compared with May, it's decidedly cooled off.
Why is this? Wider economic issues persist. Mild activity in most marketplaces, coupled with continually rising rates and stubborn inflation woes continue to hold the real estate market back from the hot market climate that's dominated the past few years. Some say this may be a return to normalcy, and that is probably correct in some respects. There was no way we could continue at the pace we were going! So, overall that translates to both good and bad news for both home buyers and home sellers.
The good news for buyers is that there is far less competition in the market today than a year ago. But prices aren't yet going down overall, as the numbers will show below. Despite a decrease in home prices in June, the YTD numbers are still positive compared to 2022. But the home buyers who remain in the market today aren't fooling around. They know what it takes to land a home and they know that the market is still favoring sellers.
The good news for sellers is reflected in the above comments about home prices. But June did take a steep dive in average price compared to May. And the average sold price for homes that closed in June were well below the average for the year so far. Does still signal a significant cooling in the market heading into the 2nd half? It's too early to tell for sure, but my educated guess is yes. Things are going to stay lukewarm for the remainder of 2023.
All of the stats that follow are sourced from the Lawrence MLS. What follows is a look at some numbers through the month of June 2023 within the city limits of Lawrence:
Month-over-Month
- June home sales increased 4.2% from the previous month (124 vs 119)
- Average price decrease by 8 in June vs. the previous month
- Median Days-on-Market was flat compared in homes closed in June at 3 DOM
- 126 homes were listed June, an increase from 110 listed in May
- List-Price-to-Sales-Price Ratio for June was 102%, up from 101.4%
Year-over-Year
- Home sales were down 12.8% in June '23 vs June'22, a drop of 17 homes sold
- Average Price is down significantly YoY at $327K; a decline of 6.3% compared to June '22
- Dollar Volume was down 6% vs June '22 for a total of $40.5M in the month
- The 122 homes listed last month was a decrease from 169 listed in June last year
YTD
- Home sales are down 23.4% for the year through June (451 vs 589)
- Average price so far in 2023 is up 2.1% to $338.7K vs the same period last year
- Median DOM is roughly flat vs a year ago: 4 Days-on-Market
- Total Homes Listed this year equals 606; a decline of 22.8% compared to 2022
- Total Dollar Volume in 2023 is down 22.8%; At the end of June last year the Lawrence market totaled $195.3M and so far this year we're sitting at $152.8M
Active Properties
- There are 92 "Active" properties in Lawrence as of this writing; an increase of 4.5% since my last market update.
- There are 100 properties currently listed as "Under Contract." This is a decrease of 16.7% since my last market update
With such an obvious cooling of the market continuing as we enter the 2nd half of the year, it's going to be a bumpy ride through the late Summer and early Fall Markets. However, I do believe there's reason for optimism! With a more even marketplace, buyers may be less intimidated. If they've previously left the market, they may find renewed opportunity to jump in now. What remains to be seen is if interest rates come down a little to help them out. So far, all indications from the Fed point to that being unlikely until later this year at the earliest.
A simple prediction: if rates stay where they are or go down, we'll have a robust Fall Market this year. Recall last year the market froze in the rising-rate environment. Without dramatically rising rates, things should stay more steady into the 2nd half and particularly Q4. If rates rise, we're in more trouble than we already are. . .
If you like these market updates, be sure to check out my next post which will be a deeper dive into the 1st half numbers of 2023! Back in January I predicted that this year there would be fewer than 1,000 homes sold inside Lawrence. At our current rate, even if things improve substantially, we're well on pace to sell fewer than 900! Previously I had stated some optimism that there would, in fact, be more than 900 sales inside Lawrence by year's end. After this market update post, I'm not so sure. With only 451 in the books, and likely fewer 2nd half sales than seen in Q1 and Q2, the trend is leaning towards fewer than 900 home sales for the entire year. OUCH!
Stay tuned to R+K Real Estate for great new content, updates, advice, opinions and more in 2022. We plan to continue our advance of transparency, consumer advocacy, and empowering our clients with alternate business models designed to provide high levels or real estate service with drastically reduced commissions!
-Ryan Desch, Broker/Owner R+K Real Estate Solutions
