The worst is over in the Wichita housing market. Or is it? Six months into 2011 — a period marked by slow-but-steady seasonally adjusted sales growth and relatively steady home prices — brokers and analysts say they're cautiously optimistic that the tide has turned.
Sales and dollar volumes remain off 2010 levels by as much as 20 percent but only slightly off 2009 paces, with the first two quarters of 2009 the last comparables that didn't include federal homebuyer tax credits.
And over the past six months, seasonally adjusted sales figures are working their way up slowly, said Stan Longhofer, director of Wichita State's Center for Real Estate.
"Once you get past the drop-off last July when the homebuyer tax credits ended, we've really seen almost a year of slow, steady growth when you take away the normal seasonal fluctuations," Longhofer said.
"We were down a little in February due to the weather, down a little in May due to schools out, but the overall trend has been good. It's at a really low level, but we're moving in the right direction, and we should be pleased with that."
Sales figures for June should be out this week, but the first five months of 2011 were slightly off of 2009, according to the Wichita Area Association of Realtors.
Through May, 2,752 homes were sold in Wichita, down from 2,967 sold in the first five months of 2009.
"I'd say that's average for the nation," said Ken Fears, an economist for the National Association of Realtors.
"I think that what we've anticipated nationally, and what's developing locally in Wichita, is a weaker earlier half compared to 2010. But we think the potential is there for a much stronger year as the economy gets its legs back."
There's even a little local spurt in custom new home construction, an industry riddled by the lack of available capital to build speculative homes.
"Right now is one of those little spurts," said Jack Ritchie, president of Ritchie Development. "It's been going back and forth and whether this is another head fake or the real thing, who knows?"
Any improvement in new home sales is badly needed, said Greg Fox, owner of Realty World in Wichita.
"In 2005, we were selling 1,500 to 2,000 new homes annually," Fox said. "At just over 200 in the first six months this year, even a slight rise, while encouraging, is still so far off.
"The tax credit did a lot to stabilize all home sales, but we are still so far under what new homes were producing, we have a long road to go."
The immediate threat to the Wichita market's slow recovery is political, analysts said.
If the White House and Congress fail to reach an agreement on raising the debt ceiling, the Wichita housing market will be plunged back into the chaos of late 2008 and early 2009 after the economic collapse — no one buying; no one selling.
"You bet we're worried about that," said Gary Walker, Weigand's residential general manager.
"I don't really see that happening," said Willie Kihle, president of Prudential Dinning-Beard, "but it's like taxes or jobs or anything else that goes bad. Nobody's going to take a gamble."
Impact of tax credits
Three of Wichita's biggest residential brokerages say sales remain stronger than anticipated but still off or near the 2009 pace.
According to unit sales statistics through June that each brokerage provided The Eagle, J.P. Weigand has 1,169 transactions, Prudential Dinning-Beard 1,016 and Coldwell Banker Plaza 551. Weigand has the city's largest agent roster at about 300, with Prudential not far behind. Plaza has about 100 agents.
"Right now, if it wasn't for the heat, I'd say the market is actually a little healthier than what we'd expected," Walker said.
"The heat is killing us this month. Who wants to look in this kind of weather."
Fox said existing home sales have been erratic at his firm.
"It feels like we sell in spurts, without the consistency and the monthly timing that was predictable four years ago," he said. "I think that resale is picking up from the last three quarters."
But the market is skewed, said Coldwell Banker Plaza president John McKenzie, by the federal government's homebuyer tax credits, which began in the second half of 2009 and continued through the first half of 2010.
"We don't have a benchmark, really," McKenzie said. "I feel like we're building a benchmark in 2011."
Longhofer agreed, crediting the tax credits with propping up the Wichita market in 2010 at a price, although the 7,825 homes sold last year was 10 percent below 2009 and well off the 10,048 sold in 2008.
"When I look at the patterns, when you see the spikes for the tax credits, it looks like it left us worse off otherwise," he said.
"When you're artificially impacting people's decisions to get in and out of the market, then maybe absent the tax credit, the downward sloping line would have bottomed out around July of 2010. Maybe that's where we would have been.
"I have no notion that we are better off than we were before the tax credits."
Fears said he remains bullish on 2011.
"We're anticipating improvement in June, July and August," the NAR economist said.
But the locals say it's too early to tell what the rest of 2011 will offer, cautious optimism aside.
"When the market comes back, it won't come back all of a sudden," Ritchie said. "It'll be in baby steps. I'm cautiously optimistic we're seeing those baby steps."
Walker doesn't see the record sales of 2006 and 2007 returning anytime soon.
"I don't think this is going to be a record-setting year," he said, "but I'm becoming increasingly optimistic that a slow but steady recovery in unit and dollar sales is under way."
Said Ritchie: "We've got several deals in the hopper, so for a July I feel pretty good about it. But not to the point that I'm jumping up and down about it.
"I kind of thought by this time we'd be feeling a recovery. I've got my fingers crossed that it's happening, but none of us really know yet. It's too soon to tell."