The Wichita real estate market has some very good reasons to be optimistic heading into the new year.
While housing prices nationally are not predicted to recover until at least 2013, Wichita was recently named the No. 2 market on the Top 10 Real Estate Markets to Watch in 2012 by Inman News.
The report ranked metro markets with a population above 150,000 based on key metrics like housing affordability, above average year-over-year median price performance, lower than average foreclosure and distress sales, and higher ratio of total sales per capita. Wichita took the second-highest spot behind only Raleigh, N.C..
Area brokers are not surprised to hear that the Wichita market is being recognized nationally for strength and solidity. Agents and brokers are reporting increased activity at every stage of the home selling/home buying process from showings and open houses to offers and signed contracts. Some of the increased activity for January and February is directly attributable to the unseasonably warm weather that has held back the seasonal slowdown, but the weather is not the only factor driving the market.
Buyers at all price levels are reporting similar factors motivating the timing of their home purchases, leading to the current uptick in the market. Buyers are saying they are tired of waiting while watching inventory reduce. Buyers that were looking for a drop in home prices have seen prices remain stable. The interest rates that have been in the news for the past year are motivating some buyers to lock in at the current rates, and the overall improvement in the economic signals over the past few months has led many buyers to think the worst is over.
The annual residential sales numbers for the Wichita market were at the lowest point in the preceding 10 years in 2011 with 7,479 sales recorded through the South Central Kansas MLS. That was down 3.2 percent from the 2010 sales figures.
The annual median home price for 2011 remained strong relative to markets across the country at $114,000, down only 3.3 percent from the 2010 median. The highest annual median recorded through the South Central Kansas MLS was in 2008 at $121,445, only 6.1 percent higher than the 2011 median.
I have spoken with brokers of large, medium and small companies and all are projecting increased growth in the Wichita market compared to 2011. The industry projection for increased sales in 2012 comes despite the known challenges facing the local housing market.
Consumers are facing a residential mortgage lending environment that continues to lag behind demand due to increased regulation and strict underwriting standards. The new construction segment of the industry is stymied by record-low inventory levels and increased capital requirements for building loans. Realtors, builders and homeowners are pushing back against another plan, this time at the state level, to eliminate the mortgage interest deduction for homeowners, which has the potential to reverse the recovery taking place in Wichita.
There are challenges facing the market, but there are opportunities going forward as well. The national economy is recovering, although at a slower pace than most people would like. A pent-up demand for housing has been building since the start of the recession and will emerge as economic conditions become more favorable.
Contrary to the old adage that Wichita is always a year behind the rest of the economy, Wichita appears to be on the front end of the housing recovery this time.