Next year will see a modest continued improvement in the Wichita area’s housing market, according to a new forecast.
The Center for Real Estate at Wichita State University is calling for a 2.5 percent increase in home sales, and a dip in new home construction.
Wichita is still crawling out of the steep plunge in home sales and home construction in 2009-2011. It saw fairly strong increases in 2012 and 2013, especially in the sales of existing homes.
“I would characterize it as continued healthy steps forward,” said center director Stan Longhofer of the forecast for 2014. “Employment is growing, but not very fast, and there are some headwinds.”
He said a property tax rebate program in Wichita and some surrounding towns had artificially driven up new home construction, as shown in the number of building permits this year. He sees the number of new homes built falling a bit next year as that program expires.
The good news for those in the industry is that supply of homes is tightening, reducing sell times and pushing up prices.
He sees home prices rising 2.2 percent in 2014, the second year in a row, as the average time on market fell to five months.
“Good homes that are correctly priced and in desirable locations are selling very quickly,” he said. “They are seeing multiple offers again. But there are other homes where the seller hasn’t had the money to maintain it, or it was priced a little too high, and those are sitting.”
Longhofer said one of the bottlenecks in a stronger recovery in Wichita is tight bank lending standards on builders. Most new houses remain custom-built, which are ordered by individuals in advance, rather than built in anticipation of a buyer, which is common in normal housing markets.
Kansas City remains the state’s strongest market, with strong growth in both home sales, home construction and sale prices. Longhofer said that some builders in the Kansas City area say they have gotten money to build homes from sources other than banks.
Despite the rebound, the Wichita area still hasn’t returned to the long-term growth trend for housing construction and sales, he said.
The number of building permits would be closer to 1,500 if the market was back on track. That’s compared to the boom years of 2004 to 2006 when it was 2,000 to 2,500 permits.
“Long-term new home construction has to pick back up,” he said. “We’re getting closer.”