As the year continues to draw into the final months, the picture of the 2021 real estate market in Lawrence, KS is painting its final strokes. If you're wondering what sort of colors October added to the painting, let's just say they were deep shades of blue. As in signing the blues, Blue October, and dark blue days of rain showers!
That is to say, after a red hot year of home sales, this past month was perhaps the first to truly splash a bucket of cold water on the market. I've been predicting for a number of months now that the average home price has plateaued for the year and will not exceed $300,000 in 2021. That prediction is holding true as the average price in October was $294,000. Average days-on-market and median days-on-market are holding steady at 15 days and 3 days, respectively. Homes continue to sell at about 101% of List Price. And we continue to sit at a historically-low .8 months-of-supply.
Through last month, the Lawrence market is now down 27 home sales versus last year. As I've stated before, if this trend continues this will be the fist year in many that we see fewer home sales within the city limits as the previous year. October saw 23 fewer home sales this year versus last. Is this an anomaly? Or does it foreshadow a longer trend that will define the end of the year? It will be very interesting to find out the answer to that question. Consider the following graph:
Half of the months in 2021 have seen fewer home sales compared to the same month in 2020. October saw the 2nd largest decrease for the year. The largest decrease was in March, and if you recall, February brought us some of the coldest weather in more than a decade. Fewer sales in March might have reflected lower buyer activity from those frigid temps. Fewer sales in October can't be blamed on any weather happenings. Rather, it may be an indication that the hot market is finally beginning to cool off.
While unit volume has been largely flat-to-negative, dollar volume has soared. This is mostly due to the lack of inventory. Think back to Econ 101 and the basics of supply-and-demand.
October is the first month since March that we've seen both a decline in unit and dollar volume. It bears repeating, however, that there are no outside events that can share the blame for this decline. That's not all bad news! A healthy market can't keep up the level of appreciation seen earlier in the year. And it certainly doesn't do home buyers any favors when it comes to housing affordability. Long story short, home sellers expecting the same level of market intensity that raised prices earlier in the year would be wise to temper their expectations. For now, anyway.
We feel that our boots-on-the-ground experience backs up these figures. Even the past couple of weeks have become increasingly quiet compared to the beginning of the Fall Market in September, which seemed to still be running off quite a bit of steam from the previous months. As of today, there are 124 homes under contract. Last November and December saw 213 home sales. Will the Lawrence market end up with fewer home sales in 2021? Is the market cooling off only for the remainder of the year? Or longer? Stay tuned, and we'll be here to answer those questions in a future market update!
-Ryan Desch, Broker/Owner
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