When Corey Pella first started looking for his home in Wichita this June, he didn’t expect to find so few of homes move-in ready. Even more so, he expected to get a nice home for a good price.
But it wasn’t that easy.
“It was a struggle to find what I was looking for that fit my criteria,” Pella said. “I was surprised at how everything was priced compared to what I thought it was worth.”
What he needed was a move-in ready home with three bedrooms priced under $150,000 and within 30 minutes of Spirit AeroSystems, his place of work.
Pella finally closed on his home in August, three months after he started looking, but he had to settle for less than he had hoped.
He purchased a $125,000 home just south of Pawnee and east of Rock, but it needs a lot of work — enough work to reach the high end of his original $150,000 budget and enough work to keep him from moving in anytime soon.
“Once it is said and done, it will meet my criteria,” he said, “but it’s been a nightmare.”
Pella’s situation isn’t unique.
The hunt is on
“The hunt is on” is the theme of the 2018 Kansas Housing Markets Forecast, presented by Wichita State’s Center for Real Estate.
“We chose ‘the hunt is on’ because there is an incredibly tight supply for homes on the market causing a lot of competitions for homes,” said Stan Longhofer, director of the center.
This year, almost 37 percent of all Wichita homes sold in 10 days or less. That is up from 22 percent of homes selling in 10 days or less between 2011 and 2015.
Tim Holt, president of the South Central Kansas Multiple Listing Service, said people are willing to pay much more to get a home because of this seller’s market.
“The price range is going up because of demand, and people are willing to pay for them,” he said. “Homes are selling for more than they are listed for because of bidding wars. There has been more of that than I’ve seen in the last 10-15 years.”
But before you get ready to sell your home for a high price, Longhofer warns that not all homes will do so well.
“Not every home is the typical home, so we do have a lot of homes sitting on the market for a long time,” he said, “but those homes usually fit in one of two categories.”
The homes are either very expensive and in a specialty market, which Longhofer said is about $400,000 and above, or the homes are not in good condition and have not been well maintained.
For most homes, though, quick sells and tight competition are expected to continue into 2018, and Longhofer said the hunt for homes in the $150,000 to $200,000 range is most intense.
This tight housing market is putting pressure on Wichita home prices.
Home prices rose 5.6 percent in 2016, and the forecast predicts 2017 will end with an additional 4.1 percent in home appreciation. And in 2018, Longhofer said there will be a “solid gain,” with prices increasing another 3.7 percent.
“This is real, solid, meaningful home appreciation,” he said.
Wichita home prices rose faster last year than any year since the late 1990s.
Why is there a home shortage?
Longhofer attributes the tight market to a few reasons, including potential sellers being afraid their homes will sell too quickly with no time to find another home.
“Potential sellers are saying they’d rather stay where they are and remodel instead of move,” he said, calling it a nationwide trend and not just a Wichita trend.
He said there are also potential sellers who would sell their homes, but their home value would have to go up 10 percent from when they bought it before they could sell their existing home without having to write a check when they close.
“But that should ease in the coming year,” he said.
Buying a new house
Holt said he thinks prices of existing homes will be up for a while, which helps the new-home segment.
“New construction will benefit from a lack of re-homes since people are not able to find them because of low inventory on the resale side,” he said. “People can’t find a resale home, so they look for a new one.”
For potential buyers looking to buy a Wichita home during a seller's market, Wess Gaylon, president and CEO of Wichita Area Builders Association, said newly constructed homes may be the better deal.
“The market (of new homes) is pretty well balanced, with an equal amount of buyers and sellers, and that’s when it’s healthiest,” Gaylon said. “It’s a pretty equitable position when the market is balanced with equal inventory and buyers.”
As a result of the balanced market, Gaylon said new homes are a great value.
“This means demand for houses are set at a level right now where people are motivated to buy a new home,” Gaylon said. “The reason for that is there is a decent supply of housing, a strong demand for housing, and people can buy homes of their choices in the area of their choice.”
Will new homes impact the market?
Longhofer said there are not enough new homes to offset the tight market with existing homes.
“Construction prices have gone up, so it makes it hard for new homes to compete with resales on a value perspective,” he said. “I think it’s a year or two away to offset the imbalance, but it’s movement in right direction.”
Parade of homes
Those looking to buy a new home can tour 102 single-family, model homes in the Wichita area ranging from $150,000 to $1.5 million during the Fall 2017 Parade of Homes.
The event continues Oct. 14, 15, 21 and 22 from noon to 6 p.m. A magazine with a list of homes in the parade along with a map can be picked up at area grocery stores.
By the numbers
- Home prices are expected to rise 4.7 percent this year, and 3.7 percent in 2018
- About 10,300 Wichita units should be sold this year, which is 0.7 percent less than last year
- Sales are expected to rise 1.8 percent in 2018
- 37 percent of Wichita homes have sold in 10 days or less
- The market is most competitive for houses valued between $150,000 and $200,000