It’s a tired March Madness cliche, but the year 2011 for the city’s three largest residential real estate brokerages really was about “survive and advance.”
J.P. Weigand & Sons, Prudential Dinning-Beard and Coldwell Banker Plaza, Wichita’s three largest residential brokers, retained their spots in the annual Real Trends 500, the list of the nation’s most successful brokerages compiled by the Colorado-based real estate analyst.
But it wasn’t easy, as Wichita brokerages limped through an up-and-down year, the first 12 months outside the federal homebuyer tax credit that changed market dynamics for two calendar years by force-feeding sales.
Weigand again was the highest-ranked Wichita brokerage, at 147th in units sold and 230th in volume. Prudential Dinning-Beard finished 228th in units sold and 341st in volume, and Coldwell Banker Plaza finished 436th in units sold and 446th in volume.
“I think it’s a fantastic achievement that speaks to the underlying strength that has always been in the Wichita market,” said Tessa Hultz, chief executive of the Wichita Area Association of Realtors.
While coastal markets were rocked by wild price swings and foreclosures driven by speculation, Wichita home prices remained basically flat and builders carefully regulated inventories in a tight credit market. The result, Hultz said, was an unspectacular but steady market that didn’t crash hard as it did in Florida, Arizona or California.
“Despite the national news, despite the concern that things were worse than they really were in Kansas, we were doing OK,” Hultz said. “Sure, everyone suffered a little, but we suffered a lot less.” Hultz said brokers are still trying to figure out “what’s normal for Wichita?” in the wake of the federal homebuyer tax credit program, which compressed a year’s worth of sales into a few months in 2009 and 2010.
“Everybody was unmoored in 2011,” she said, and “2010 was so skewed with the tax credits that ... analysis was very challenging to figure out how things compared. Like it or lump it, everybody loves month-to-month and year-to-year, so for an entire 12-month period there, all of your numbers came with a ‘but.’ ”
Gary Walker, residential general manager for Weigand, hopes the suffering has ended in the Wichita market, with traffic and sales up, and new housing bolstered by a city property tax rebate program.
“My hope is that 2011 was a pivotal year,” Walker said, “the year Wichita turned around and began improving.
“For our company, and I’d assume John (Kihle) and Willie (McKenzie) would feel the same way, it was kind of a pivotal year. While the proof remains in our 2012, 2011 was the year that the downward trend in profitability was reversed. From 2008 through 2010, those were very difficult years for our entire industry and the new-homes piece was a huge part of that.”
New-home sales were devastated by the recession, with monthly sales dropping into the 20 to 30 range. The fall-off left the city of Wichita with more than $3 million in delinquent special assessments on unsold lots, and left some of the city’s biggest and most successful builders with major cash flow problems. As a result, the city of Wichita threw its hat into the new home building incentives competition locally, joining several area cities with a five-year offer to rebate property taxes on qualifying projects.
“New-home sales were the most drastically affected, and it wasn’t because there’s no market for those sales,” Walker said. “It was the combination of financing problems the builders experienced and the fear factor every night in the national news. Who wants to invest $200,000 to $400,000 in a speculative investment when the only option is to borrow it, and there aren’t that many sources loaning for construction in the first place?”
The fear factor
Kihle credited technology and innovation for Dinning-Beard’s success.
“While the past few years have brought many challenges and much change, our agents have worked hard to stay informed and well-trained,” he said. “As the public has demanded more services online, our agents have become very proficient in this area as well.”
McKenzie also cited the fear factor with buyers and sellers.
“The challenges we all faced was a market that lacked extreme confidence,” McKenzie said.
“Many of the people who purchased did so with value in mind. Because of the lack of extreme price fluctuations we experience in the Midwest, the only comfort we possessed was in a stable value market. It’s better to put one’s money in something with less volatility.
“What was interesting in 2011, and so far is 2012, is the number of all-cash transactions. Our company experienced more than 20 percent of its total volume in cash transactions, which tells us there’s a lot of money on the sidelines.”