September Lawrence Market Update

The dog days of Summer are over! Fall is nearly upon us and soon the temps will be cooling. Is the market cooling along with it? So far, the short answer to this question is yes. Most years in Lawrence we see a bit of a "September spike" in real estate activity. Last year the spike didn't really materialize. The rapidly rising interest rates shut everything down. Will we see the spike this year? Or will 2023's cooler market climate turn even cooler? 

While I am expecting more of a Fall Market to materialize this year compared to last year, I don't expect much heat from it. However, I Don't expect any immediate corrections either. Prices aren't going down, despite the gloomy atmosphere. Rather, they're staying pretty much even-to-slightly-above last year. That amounts to a 1.2% increase in price year-to-date.

With such a fragile increase, and with rates continuing a gradual upward creep, it's anyone's guess whether 2023 will end the year with a slight increase in overall prices or a slight decrease. One thing is certain: there are far fewer homes being sold this year. 

All of the stats that follow are sourced from the Lawrence MLS. What follows is a look at some numbers through the month of August 2023 within the city limits of Lawrence:

Month-over-Month

•  August home sales increased a 21.3% from the previous month (75 vs 91)
• Average price decreased by 0.5% in August vs. the previous month
• Average Days-on-Market increased 28% to 18 Average DOM
• 78 homes were listed August, an decrease from 96 listed in July
• List-Price-to-Sales-Price Ratio for July was 99.85%, down from 100.0%

Year-over-Year

• Home sales were down 22.2% in August '23 vs August '22, a drop of 26 homes sold 
• Average Price was down YoY at $331.8K; an increase of 1.3% compared to August '22
• Dollar Volume was down 23.2% vs August '22  for a total of $30.2M in the month
• The 78 homes listed last month was a decrease from 105 listed in August last year

YTD

• Home sales are down 26.7% for the year through August (617 vs 842)
• Average price so far in 2023 is up 1.2% to $334.0K vs the same period last year
• Average DOM is up 23.1% to 16 Days-on-Market
• Total Homes Listed this year equals 788; a decline of 23.9% compared to 2022
• Total Dollar Volume in 2023 is down 25.9%; At the end o fAugust last year the Lawrence market totaled $278.0M and so far this year we're sitting at $206.1M

Active Properties

• There are 102 "Active" properties in Lawrence as of this writing; an increase of 5.2% since my last market update. 
• There are 76 properties currently listed as "Under Contract." This is a decrease of 19.1% since my last market update

We shall see if we get a bump from Fall Market activity. But so much of that depends on things beyond all our control. Will rates plateau as they should? Go down? Or will the Fed continue its reckless behavior and continue to raise rates in an attempt to "even out the market?" If it's the latter, we're in for a bumpy ride. With low inventory still being a primary market driver, "housing affordability" as a concept remains out of reach. A productive solution to "even out the market" would be to build more houses. I don't hear anyone at the federal level proposing any real solutions addressing supply. 

With continued focusing on the demand side, we may be in real trouble. High rates and stable prices means there will be no relief to the increases of the past 3-4 years. Homeowners are sitting tight. Why move and take on an interest rate of 8% when you can stay where you are and enjoy the 2.0% you locked in when you re-financed in 2022?  Such is our current doom-cycle. The Catch-22, as I've said. And while many predicted inflation to be transitory (not me!), by now they've been proven wrong. So long as it's perpetual, rates will stay where there are.

What does all this mean? It adds up to a rough and unpredictable market to navigate for both home buyers and home sellers. While some homes still sell within days, others sit for months. Showing activity is extremely low. I get the very real sense that people are again entering a wait-and-see mode. But there is a small bright side: Buyers looking for opportunities can and should take advantage of less competition. If rates do down at some point, buyers will flood the market and we'll be back to rapidly increasing prices. But for now, the market moves along at a crawl. 

Back in January I predicted that this year there would be fewer than 1,000 homes sold inside Lawrence. Previously I had stated some optimism that there would, in fact, be more than 900 sales inside Lawrence by year's end. After these past few market update posts, I'm not so sure. With only 617 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