Despite the pandemic, or perhaps in part because of it, Wichita new home sales thrive

As the coronavirus pandemic struck in March, there was a collective holding of breaths in many industries about what the impact might be. New home builders and developers braced themselves for potential catastrophe.

“I’m like, oh, great, is this going to be like the 2009 recession again?” said developer Jack Ritchie of Ritchie Development.

“We thought the world was going to come to an end, and we wouldn’t have any sales,” said developer Jay Russell of J. Russell Communities.

“It was scary,” said builder Paul Gray of Paul Gray Homes. “Everybody was projecting a downturn in our industry.”

There was a lull in business for a few weeks, “but then all of a sudden the floodgates opened,” said Craig Sharp of Craig Sharp Homes.

Amazed is the word he and Russell use to describe their reactions to the market. Ritchie goes a step further.

“The market is on fire, actually. . . . It is kind of crazy.”

Ritchie compares it to years when there have been harsh winters that kept people cooped up in their houses, which would lead to strong spring sales.

“It’s kind of like that on steroids.”

He said his sales are up 60% over last year. Gray said he’s doing double the business, which he calls a refreshing surprise.

“It was nice that it wasn’t our industry that took the beating this time.”

Numbers still aren’t up to the heyday of new home building before the economic crash of 2008. In the years before that, there were 2,400 to 2,600 new home permits a year. The industry began struggling in 2008, the lowest point coming in 2012 with only 498 new home permits that year.

“That was a big drop,” said Wess Galyon, president and CEO of the Wichita Area Builders Association.

He said a city incentive program “turned the tide” in 2013 with 697 new home permits, and numbers rose steadily but slowly from there.

“We have barely been 1,000 or more in the last seven years,” Galyon said.

This year will top 1,000, he said.

“It’s probably been the best year we’ve had at a robust level like this.”

From January through August of 2019, there were 679 new home permits in the greater Wichita area. For the same period this year, it’s 834. That’s a 23% jump.

“So significantly ahead,” Galyon said. “That’s excellent for Wichita. . . . If it were much higher, I think we’d have trouble meeting the demand.”

That’s because a lot of tradesmen left the area after the 2008 crash to find work elsewhere.

“Rebuilding that market takes years,” Galyon said.

“We’re happy with the market with the way it is today given all the dynamics we’ve had to deal with since 2008.”

Positive pandemic results

So why would the new housing business thrive in a pandemic?

“I don’t think it’s just one thing,” Gray said. “It’s a laundry list of very positive things.”

The first is an obvious one: interest rates, which are hovering around 3% and, as Ritchie put it, allowing people to buy a lot more house for their money.

“Interest rates are a key element,” said developer Marv Schellenberg of Schellenberg Development.

A close second is a renewed focus on home, where some families are now working and going to school.

“Home has never become more important,” Schellenberg said. “Everybody’s spending time at home.”

And what they’re concluding, Ritchie said, is, “If we’re going to spend this much time in our houses, let’s get one that we like.”

That includes ones with home offices, pools and outdoor living areas.

“They’re making their property more of a staycation type of place,” Sharp said. “It’s just kind of a phenomenon . . . that no one expected. It’s just really blown up fast.”

People aren’t traveling or spending on entertainment like they used to, he said, which frees up cash.

“Mindsets have changed in such a short period of time.”

Though the cost of lumber is high right now due to supply-chain issues brought on by the pandemic, Galyon said the low interest rates offset that.

“It won’t always be that way,” he said. “We tell people, if you’re interested in doing something, you ought to do it as soon as you can.”

A lack of housing inventory

Another major driver of new home sales is a lack of inventory in the resale market.

“There’s no resale housing to buy, and so that moves some people to new home construction,” Sharp said.

That even includes first-time home buyers, who don’t normally build.

Not only is there a lack of homes to buy in general, there’s also a lack of homes for the styles people are wanting today, Sharp said.

“We are crazy busy with modern and mid-century modern type styles.”

Schellenberg said contemporary homes, including ones with a modern country look, are in demand.

“It’s that new, shiny object.”

Ritchie, too, said the trend of a darker, old-world look is over, with buyers wanting open and bright spaces. That’s combining with the emphasis on home offices, sun porches and other new living areas. Russell said roof lines are changing, too, with single-sloped roofs becoming quite popular.

“There’s some new exterior looks on a lot of the houses,” he said. “We’re coming up with some very neat plans from the builders.”

The new looks are partly out of necessity, Sharp said.

“That’s kind of the inside secret of new homes,” he said. “We have to provide people with something different than what they’ve had.”

Will housing growth continue?

New home sales are so rampant, it’s often taking a couple of months longer to get in one than it normally would.

Builders and developers are confident the new-home trend will continue.

“I believe we will see a very robust market for the short term at least,” Sharp said.

He said the election could have an impact, but he thinks business will be brisk at least through the first half of 2021.

“Our sales and our prospect list is as long as it’s ever been since I’ve been doing this.”

Another bonus: “We’re getting a bigger percentage of the market share because there’s fewer of us,” Russell said.

He said that’s because the housing debacle that started in 2008 weeded out a lot of people.

“We’re the survivors.”

In years past, Gray said, “There were a lot of people building houses that had no business building houses.”

In the years before the crash, he said there were tradesmen such as painters and plumbers who took up house building “because it was so easy at the time.”

Ritchie said the housing boom is “across the board right now. East and west are doing equally well right now, and it’s not just one price range either.”

Gray said the “relatively strong” economy is helping.

“There’s so much negativity out there, it’s easy to overlook the fact that there’s a lot of good things happening around us,” he said.

“We’re building the right amount of homes that Wichita needs for the economy we have.”

This story was originally published October 4, 2020 at 4:47 AM.