The year 2010 in Wichita home sales will forever be known as the "Year of the Tax Credit," according to analysts who presented the state's housing forecast on Wednesday.
New and existing Wichita area home sales will end this year down 5.5 percent to 8,140 units, said Stan Longhofer, director of Wichita State University's Center for Real Estate. Longhofer presented his 2011 housing forecast at the Wichita Marriott.
However, Longhofer sees a rebound in 2011, with sales up 6.6 percent to 8,680 units. Meanwhile, new home construction, which plummeted as the local economy slowed in the fall of 2008, will remain relatively flat next year.
"And that's to 2009 levels," Longhofer said about the 2011 forecast. "We're a long way from the days when the market was hopping."
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Sales this year will largely be front-loaded into the first six months, before deadlines to acquire the $6,500 or $8,000 tax credit, Longhofer said.
As a result, comparing Wichita's monthly housing sales year-over-year just went out the window, Longhofer said.
"The hangover from the tax credits has been a little deeper and larger than we anticipated," Longhofer said.
"So, as a result, the year-over-year percentage changes in home sales in Wichita are going to be skewed by the tax credits. November of 2010, for example, is going to be much lower than November of 2009 because of deadlines."
Local sales will rise by 6.6 percent in 2011, while new home construction activity will remain relatively flat, rising by 0.9 percent, Longhofer said.
"As a whole, home sales across the state appear on pace below 2009 figures, but we think we see the bottoming out of that; 2010 will be down a little bit, but we think there will begin a slow but measurable recovery in 2011."
The forecast, Longhofer said, was compiled before Hawker Beechcraft and Gov. Mark Parkinson agreed on an incentives package Tuesday to keep most of the company's jobs in Wichita.
This is the first year that the Center for Real Estate has surveyed every major metropolitan market in Kansas — Wichita, Kansas City, Lawrence, Topeka and Manhattan.
Longhofer said several common themes emerged from his research in each city.
"Sellers, particularly in upscale areas, have been slow to adjust to the realities of the market," he said. "Prices have gone down slightly, and some sellers have been unwilling — or unable because they don't have equity — to price their homes to sell.
"And some buyers have shown the expectation that they should land top homes at an extreme discount," Longhofer said. "'This home is worth $180,000, but the market is tough so I'll just bid $60,000.' "
Residential investors armed with cash are still active in the state market, Longhofer said, but it's increasingly difficult to borrow money to buy an investment house.
And in college towns like Lawrence and Manhattan, parents of students have largely curtailed buying houses for their kids, he said.