Let’s talk 2025 Lawrence real estate market predictions! In contrast to the end of 2023, the Lawrence market ended strong in 2024. Instead of steep, sudden declines in sales and average price, December of last year saw the year end on a consistent note with more sales than what we saw both in November of the same year and in December of the previous year. Despite that, the market did see some indications of cooling here and there. Success wasn’t shared equally among home sellers. How will the market play out in 2025?
Home Sales: Back in 2023, I predicted there would be less than 1,000 home sales inside the city limits of Lawrence. For perspective, the most recent year prior to 2023 that saw fewer than 1,000 home sales was all the way back in 2012 (and that year the market was beset by the aftermath of the Great Recession). We’ve now seen two years under 1,000 sales in town.
However, 2025 should be the year that we see the market exceed the 1K mark, even if it’s going to be a tough climb. As of this writing, there is only 0.8 months-of-supply of homes on the market. This should increase heading into the spring market, but the “lock-in effect” of home sellers staying put because of the interest rate environment will continue to exert some effect here locally.
Prediction for 2025: There will be a 2-4% increase in home sales in Lawrence.
Home Values: Related to the above discussion on the “lock-in effect” is the behavior of buyers in the market. Less homes to choose from means a continuation of a low-inventory market climate. This is no “buyer’s market”, so prices continue to rise.
Last January I predicted a 4-6% increase in home prices in 2024. This figure ultimately came in at a 4.1% increase. Pretty good, huh? This one wasn’t too difficult to predict and the same should be said for the coming year.
The average sales price for all homes, townhomes, and condos in Lawrence last year was just over $347,000.
Prediction for 2024: Home prices in Lawrence should increase 3-5% this year. At the moment, I do not see anything on the horizon that’s going to rock the boat too hard. Nothing to bring values down, and nothing to push them much higher than the increase we saw last year.
Time-on-Market: If we look at the increase in average days-on-market in 2024, it looks like a scary number: an increase of over 33%! However, it only increased from 18 to 24 days. But an increase is an increase nonetheless and 2024 was the 2nd year in a row to see an increase in days-on-market.
A year ago I predicted that average days-on-market for 2024 would be a few days either side of 3 weeks. So, I was pretty close on that one. Average days-on-market sways throughout the year. It’s typically lower in springtime and higher at other times. But the year can be sprinkled with consecutive months that see steep increases and decreases in this metric.
This translates to one of those things an experienced Realtor can feel “on the ground.” The market seems “hot” one week and “cold” the next. The same trend can often be viewed in increases and decreases for new mortgage applications nationwide. It can be hard to counsel home sellers about what to expect when these figures can fluctuate so widely.
Prediction for 2025: Average Days-on-Market will increase yet again in 2025. However, it will not increase by much. Expect a 5-8% increase in average days-on-market. I predict it will take about 26 days to sell, on average, this year.
Interest Rates: I’m so sick of talking about interest rates. They go up, they go down, and then they go back up just as fast as they went down. Unfortunately, despite lots of talk of higher interest rates being temporary, they are pretty much sticking as close to 7% as they can. Lots of upper 6’s.
If you are one of those people, either a seller or a buyer, who is waiting for interest rates to come down I want you listen to me. I want you to listen to me very closely and believe me when I say this: INTEREST RATES ARE NOT COMING DOWN IN ANY MEANINGFUL WAY, ANYTIME SOON.
And I want everyone to hear me when I say this also: it’s OK. Rates in the upper 6’s are perfectly fine, perfectly normal interest rates. So if you’re sitting on the fence waiting for them to come down, now is the time to get off that fence. Life moves on, and 2025 should be the year that people get used to where we are. As people get further accustomed to the current rate climate, the “lock-in effect” should begin to loosen.
Prediction for 2025: Interest Rates will bounce back-and-forth in 2025, but will not go below 6.5% at any point. By the end of the year, rates are as likely to be over 7% as they are to be under 6.5%. Rates will remain in the 6.5-7% range.
New Construction: I think I read a recent LJ World stating that 2024 set a record for the lowest number of new single family homes. I think they quoted something like a 40% drop from the previous year.
Prediction for 2025: This trend will continue this year. The city government is doing next to nothing to address this issue.
Housing Affordability: The previous topic leads straight into this one and the outlook is grim. The cost of living and the cost of housing in Lawrence continues to ascend beyond the reach of what any rational person would consider affordable.
Home prices have risen well over 40% since prior to the Pandemic. They continue to increase despite interest rates more than doubling in the past couple years and remaining around double what they were in 2020. Buying the average home looks drastically different today than it did just 5 years ago.
Taxes have sky-rocketed and there is unlikely to be any relief there. Instead of mobilizing resources to create any real solutions to this issue, the city of Lawrence intends to spend millions of dollars for small projects that are unlikely to help all but the fewest among us. Let be clear: until the city of Lawrence does something to address the supply of homes in Lawrence, the ability of Lawrencians to buy homes will continue to decline.
Prediction for 2025: Housing affordability can only and will get worse from here.
General Predictions: There is much that just isn’t known yet about the coming year. Most elements of the larger, nation-wide economy appear positive. Election-related anxiety, as it relates to the behavior of home buyers and sellers, will dissipate by February. My sense is that there is optimism in markets, generally. And that optimism should drive moderate activity in real estate.
So much of that is hyper-local. One person’s optimism is another’s doom. A good market for a seller isn’t always a good market for a buyer. And some sellers have to buy in the same market they sell in. Overall, I think most people will understand that this is all normal, and there’s no reason to wait to make a move if you’re able and willing to do so.
Another concept to keep in mind in 2025 is unpredictability. Things may appear good on paper, but past market activity may not clarify anything. Your neighbor’s house across the street selling for X amount of dollars does not guarantee you the very same results. The market, for no apparent reason, may deliver a sales price $15K or $20 less than your neighbor. Sellers should be prepared to listen to what the market is telling them and always carry a degree of patience.
Also, there should be much clearing of the murky waters surrounding the National Association of Realtors class action lawsuit and settlement. The coming spring market will test the waters and is likely to result in downward pressure on commissions. Consumers should look to benefit from an emerging power to negotiate their agents commission in new ways.
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 out more 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 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
