Print edition: 
The Wichita housing market will continue its painfully slow rebound in 2012 amid high unemployment headwinds, two economists said Friday. In his annual Kansas Housing Markets Forecast, delivered at the Wichita Marriott, Stan Longhofer said he's optimistic that the worst is over in the Wichita housing market.
Longhofer, the director of Wichita State's Center for Real Estate, said that optimism is fueled by "slow but steady" growth in seasonally adjusted home sales figures since July 2010, when the second round of federal homebuyer tax credits lapsed.
"We have a long way to go to say that the market has recovered, but it looks to me like we're heading in the right direction," Longhofer said.
"I can see the clouds parting. There may be some turbulence ahead, but there are clearer skies in our future."
Longhofer forecasts 8,130 homes will be sold in the Wichita market in 2012, up about 10 percent from the anticipated 7,390 figure this year.
The turbulence lies in continuing high unemployment in the Wichita area, the general lack of good jobs news and the negativity that breeds in potential buyers and sellers.
That turbulence means that housing inventories will remain high, suppressing prices locally for a second straight year.
Inventories are almost twice historical norms in the Wichita area, Longhofer said. And he doesn't see any immediate reductions.
"It's still relatively high, and I believe we'll see quite a bit of shadow inventory — houses that people would like to sell, but they're prompted to stay out of the market," Longhofer said.
That's despite sales numbers that have increased slowly on a seasonally adjusted basis —adjusted for natural downturns in sales in the fall and winter — since the 559 new and existing homes sold locally in July 2010.
"It's fear and uncertainty that led us to where we are today," Longhofer said.
Even historically low mortgage rates, hovering currently around 4 percent and unlikely to rise more than a percentage point over the next three years, can't overcome that fear.
"Low interest rates aren't doing anything to move people into the market here," Longhofer said.
Robert Denk, assistant vice president for forecasting and analysis at the National Association of Home Builders, said Kansas is positioned to recover from the housing crash, thanks to the mild appreciation of its homes during the housing bubble versus the wild, investor-fed appreciation of housing on the coasts.
"In terms of the recovery, the bubble states are a very different experience on the downside than the states with more mild housing appreciation," he said.
With comparatively low foreclosure rates — about twice the norms compared to five or six times in California, Arizona and Florida — failed mortgages should be no more than a recovery speed bump, Denk said.
"Foreclosures are a crisis coming in the bubble states, as opposed to an impediment to recovery in most areas of the country," he said.
Both economists agreed that new housing starts will continue to lag until existing home sales improve.
"When the tax credits expired, since the middle of 2010 they've been bouncing along the bottom," Denk said of the housing starts. "They haven't gotten much better, and they haven't gotten much worse."
But like Longhofer, Denk is optimistic that the worst is over — thanks to an index he assembled that measures the ratio of home price to household buyer income.
That number, Denk said, historically sits around 3.2 — or homebuyers on average buy a home worth 3.2 times his annual income.
"That number sat consistently at 3.2 times income until the prices blew up in the housing boom," he said. "Then, it went to 4.7, or rose 150 percent of the national average.
"Now, it's declined back to 3.2, and with all the developments we've seen, that gives me some indication that prices may be back to normal."
