Lawrence Real Estate Market Predictions for 2024
The past few years have been a wild ride in the local real estate market! There was some significant cooling towards the end of 2022 that dragged into and throughout 2023. So, what does 2024 have in store for real estate in Lawrence? I have some thoughts and predictions to set the stage for the coming year, and here they are!
Home Sales: The primary market driver locally and nationally has been low inventory. Specifically, very low housing inventory. And this situation continues to persist into the new year. The situation has loosened just a little bit though. Months-of-supply had previously dipped as low as a 1/2 month. But late last year and into this year we're sitting at 2+/- months-of-supply. A significant increase indeed, but still historically low: a "balanced" market would see 4-6 months-of-supply. As it stands, we're still firmly in a "Seller's Market" and we will remain so through 2024 and beyond!
Early last year I predicted fewer than 1,000 home sales on the Lawrence MLS inside the city limits of Lawrence, KS. Early in the year, I adjusted my prediction downward to fewer than 900 home sales. I was dead-on: we clocked exactly 888 sales of single family, townhome, and condominium sales in town.
Prior to last year, the number of transactions had been largely climbing every year since the downturn of the Great Recession. While sales in 2022 declined slightly from 2021, the decrease was low enough to call it flat. 2023 departed significantly from this trend. The 888 home sales equates to a 23% decline from 2022.
Prediction for 2024: Home Sales inside the city limits of Lawrence will increase but not enough to reach the peak levels seen from 2020-22. I predict a 10-15% increase in home sales and we should come close to exceeding 1,000 sales again. Interest rates will determine whether we break the 1,000 mark or come in just under. More on Interest Rates below.
Home Values: Sale prices for homes have climbed a staggering 40% since 2018! However 2023 was a much more modest increase, but an increase nonetheless. Prices rose 1.3% last year. A rise in interest rates following historically low rates was enough to cool a red hot market just a little bit.
While the days of a dozen offers on a single property within 48 hours seems like a distant memory now, a shadow of those days persists. Multiple-offer scenarios are still common in cool, updated, houses in the desirable locations and with certain preferred layouts (think main-level living, open plan, etc.). Sellers should go into the market with more realistic expectations these days. Don't get carried away and over price your home!
Home prices will almost undoubtedly continue to increase in 2024. Sorry for the bad news if you're one of those thinking you're going to wait for values to come down before jumping into the housing market. I've been saying it for years and I'm going to keep saying it: It's not going to happen anytime soon! In fact prices should rise at a higher rate than last year.
Prediction for 2024: Prices should rise 4-6% this year. Again, much of this hinges on interest rates. If rates come down significantly, my prediction will get blown out. Buyers will flood the market and values will reach double-digit increases. If they stay where they are or come down only slightly, my prediction should hold.
Time-on-Market: Seems like really not that long ago, selling a house inside of 3 months felt like a big success. Some homes didn't sell at all! Time-on-market had been declining pretty steeply since the dark days of the Recession and its aftermath. We reached a point in 2020-21 that homes literally sold within 48-72 most of the time.
We are now pretty firmly out of that craziness! Time-on-market has been on a slow-but-steady increase since early 2022. But not by much. By the end of 2023, average DOM was sitting at around just 19 Days.
Prediction for 2024: Average Days-on-Market will remain largely flat this year. It will dip some in the Spring Market and rise again starting in June. Happens every year! But I doubt we see much change at all in this figure in 2024. It may swing a few days in either direction, but should close out the year within a couple days of 3 weeks on market, on average.
Interest Rates: Now to discuss those pesky interest rates! Obviously there's only so much I can do to predict interest rates. There are so many moving parts in a modern and dynamic economy. However, at the moment everything seems to be pointing to a mild, slow decline in rates this year.
Right now rates are hovering in the high 6's. This is after a peak at over 8.0% in mid-2023. In 2022 I predicted that reaching 8% interest rates would be enough to cool Lawrence's red-hot real estate market. And that's precisely what happened. Appreciation dropped from double-digits down to just over 1%. If rates continue a slow decline and settle in the low 6's by year's end, all of my predictions should hold true. A drop into the upper-to-mid 5's will trigger a flood of buyers into the market.
Prediction for 2024: Interest Rates will close out the year around 6%, give or take a couple tenths of a point. Most likely just over the 6.0 mark. Look for rates to continue to come down in early 2025, most likely into the mid 5's. Everyone should forget about the 2% and 3% interest rates. We never should have even seen them in the first place and they were kept artificially low for far too long. We're feeling the pain from that poor decision-making now.
Number of REALTORS: It's getting harder and harder to be a "part-time" real estate agent. There was a modest list of membership drops in the Lawrence Board of Realtors after last year. Dollar volume was way down. That's a huge reduction in the amount of commission money to go around. It is extremely difficult to make a living as a REALTOR.
Out of the total number of agents, there aren't many who actually do. Some back-of-the-napkin math tells me that the average income of a real estate agents in Lawrence last year was around $25,000 BEFORE the commission is split with a broker. While the market's dollar volume should rebound this year, I expect more and more people to give up and move onto another career.
Prediction for 2024: Downward pressure on real estate commissions will fuel an exit from the industry in 2024 and beyond.
General Predictions: I have a general feeling for how this coming year is going to play out and this is what I'm thinking. Buyers and sellers are going to get used to a "post red-hot" market. A "new normal," but one that's still got some serious heat driven by low inventory. Interest rate volatility will go down and everyone will settle into a slightly more balanced market place.
Most home owners either bought a home or refinanced with a very low interest rate. They've been very hesitant to let it do, especially for a 7-8% rate. Most have been staying put and that's part of the pickle that's led to so few home sales in town. However, life moves on. Some who have been hesitant previously will be less so with better rates. They'll be able to buy that larger home or move to a different neighborhood. Some will get new jobs. Indeed, many people who had transitioned to remote work are being transitioned back to the office.
Life situations will change. People have to moved eventually. There will be far less hesitation this year. This will make more homes available for buyers and lower rates will mean buyers getting off the fence and into the market. Overall, a more balanced market should come as a bit of relief to many buyers and even some sellers too!
If you're interested in selling this year, listing w/ R+K Real Estate will save you a ton of money. As the only brokerage we know of who aggressively negotiates commission, we produce results and save our clients many thousands of dollars! Find our more about all that on our Home Seller Services page.
Thinking about buying a home? We can help you there too. Our ability to negotiate commission gives us a huge advantage over other Realtors. Find out more about that on our Home Buyer Services page.
And of course, stay tuned to our monthly Lawrence Market Updates to find out how well I do on my predictions as the year goes on!
-Ryan Desch, Broker/Owner R+K Real Estate Solutions
