Wichita's housing market recovery slows

Wichita's housing market recovery slowed significantly in December, with home sales falling below numbers from a year ago.

And for the year, sales ended down 14 percent, a number that analysts said could have been worse without tax credits for first-time homebuyers.

"There was an anticipation locally that we were headed for a 20 or 25 percent decline," said Dave Neal, president of Dave Neal and Associates Realtors. "So, I'd say 14 percent is a pretty welcome number... and the tax credits helped that."

Sharon West, senior vice president at Coldwell Banker Plaza Real Estate, blamed the sales downturn on unemployment, particularly in the aviation sector.

"No one wants to see a decrease in sales, and I think everyone is saying it's employment," West said. "If we could get employment up, we wouldn't be on the down side."

New and existing home sales dipped to 560 in December, according to figures from the Wichita Area Association of Realtors and the South Central Kansas Multiple Listing Service.

That's 241 homes fewer than November and 87 fewer than December 2008.

"I've got to believe that most people thought the tax credit was expiring," said Jack Ritchie, chief executive of Ritchie Development in Wichita.

"November came in very strong because of that, and then it didn't expire. That's OK, because I believe it sets us up for a pretty good spring."

Dec. 1 first was the original deadline for an $8,000 tax credit for first-time homebuyers. The credit was extended and expanded in November.

New home sales dipped in December to lows unseen since the spring, with 73 units sold.

The reason, Neal said, was a competitive disadvantage many builders found themselves in as the tax credit heated up the local market.

New homes, many built with commodities like lumber and steel purchased at the height of prices in 2008, weren't competitive price-wise with existing homes, Neal said.

"There was a bunch of inventory built in Wichita, and around the country, that was started when commodity prices were quite high," he said.

"So those builders had a certain fixed cost associated with that product, real cash out of their account, and product that had to be offered for sale at a price representative of the pricing environment when they purchased those commodities.

Ritchie said any dated local new-home inventory has been at a market disadvantage against fluid existing home pricing.

"The builders who have been sitting on homes that have been there for a little while dating back to when supplies were higher, certainly," he said.