In Wichita’s housing market, is it time for you to sell, buy or refinance?

Thinking of buying or selling a house? Maybe refinancing? Or are you perhaps worried about how property taxes may soar as home valuations continue to rise in Wichita?

A number of real estate experts have advice to walk you through all of those situations, even if some of that advice may sound a tad self serving, as real estate agent Cindy Carnahan put it.

“You need to pull the trigger and get in the marketplace,” she said of anyone wanting a new house.

“I don’t think there’s any question these interest rates aren’t going to stay where they are.”

The cost of building supplies is rising — in part due to supply-chain issues — and there’s a shortage of skilled labor that’s affecting prices as well.

“It really isn’t rocket science,” said Carnahan, who is with ReeceNichols South Central Kansas.

Last year, real estate experts said there was never a better time to buy or sell a house in Kansas.

Not much has changed since then, though demand for houses has cooled a bit, some of which is seasonal.

As one agent put it to John Beckman, Meritrust Credit Union’s director of residential lending, “Instead of 14 offers, now we’re only getting four.”

In other words, it’s still a white-hot market, said Stan Longhofer, director of the Center for Real Estate at Wichita State University.

“Any other year, we would have said where we are right now is just absolutely nuts, just flying through the stratosphere,” he said.

That actually makes buying and selling a bit more nuanced, Carnahan said.

“Everyone right now needs representation. Period. Because it’s so complicated with escalation clauses and bidding wars, and sellers need to be represented so they can take advantage of multiple offers and know how to manage that. It’s a dance. And buyers need to be schooled on what is the effect of these escalation clauses. . . . It’s just a lot more complicated than it has ever been before.”

Houses aren’t languishing on the market.

Typically, a balanced market is one in which there is four to six months of inventory available. That’s calculated by taking how many houses have an active listing and dividing that by the pace of sales in the past year. So if 1,000 homes are listed, and 200 a month are selling, there’s a five-month supply of inventory.

Currently in Wichita, there’s just over a month’s worth.

“So what we have is that it is still a very, very strong sellers’ market, and that’s something we don’t think is going to be changing for the near future,” Longhofer said.

“You want to have some inventory out there — things for people to look at,” he said. “Well, we haven’t had a four-month supply in the Wichita area in six or seven years. We’ve been whittling down this inventory of homes available for sale ever since we came out of the financial crisis.”

Bummed-out buyers

It might be easy for buyers to despair right now.

Chris Abdayem, a commercial broker with InSite Real Estate Group, put in offers for two houses in the College Hill neighborhood in 2020. He offered the full asking price and was willing to buy the houses with no conditions, “and it still wasn’t enough to get the deal done,” he said.

“You understand the market, but you’re also kind of bummed out because you’re like, this could be the one.”

Abdayem decided to stop looking for a while, and he said it was a relief.

“Every time the phone rings from the agent, you don’t have to hold your breath.”

He’s now thinking of shopping around again.

“It would be nice to get a house while rates are so low.”

Beckman has seen a lot of people in Abdayem’s situation.

“What we call that is buyer’s fatigue,” he said. However, Beckman added, “It would probably be a good time to get back in the market.”

Interest rates are hovering around 3% for a 30-year fixed-rate mortgage. They’re at about 2.25% for a 15-year mortgage.

With rates like that, Beckman said, “You just have so much more purchasing power.”

Three years ago, interest rates were at 5%. Someone buying a $250,000 house at that rate can now buy a $300,000 house for the same payment thanks to lower rates.

Beckman advises that if you’re wanting to buy, “you must be pre-approved” for a loan.

“This is a market where you have to have a good lender behind you,” he said. “You have to make a decision a little bit quicker.”

Longhofer said the Mortgage Bankers Association predicts rates will rise to 4% by the end of 2022, “but they’ve been making that forecast pretty much every year for the last 10 years.”

The bottom line, he said, is no one knows what may happen.

Still, Longhofer said, “It’s hard to imagine them continuing to go down, and it’s easy to imagine them going up.”

To refinance or not

There’s been more purchasing than refinancing in 2021, and that’s because a lot of people have already refinanced.

Beckman said he’s worried about the people who haven’t.

“It’s a shame to see some of these people just not taking advantage of it.”

He said he understands that “you get busy in life, and it’s just not a priority.”

If people make it one, Beckman said, “They’re going to save money.”

Ben Drouhard, community bank president for Citizens Bank of Kansas, said it’s not a hard process. A banker can walk people through the information they need to collect in order to refinance.

“It would certainly be worth someone’s time, effort and energy.”

It may not make sense for someone who is relatively close to paying off a mortgage to refinance, but Drouhard said there’s a lot to consider. For instance, a lot of people refinance to be able to do remodeling or add a pool, which he said has been especially popular.

“There’s a variety of reasons that may make sense to explore.”

Even for those who don’t formally make a change to their mortgage terms, Longhofer said that “doing things to pay off your loan earlier is a fantastic thing to do.”

He said a financial adviser can help you assess your situation, such as how much you should put toward your house versus how much to put toward your retirement. If you have other debt, an adviser can help you factor that in as well.

Longhofer said paying off your house is a “great protection hedge against inflation.”

“Free-and-clear real estate is . . . one of the best investments you can have in your life.”

‘What if?’

Following all the bidding wars and years of tight inventories, Longhofer said that “home price appreciation has really picked up.”

In Wichita, he said, home prices will have increased 10.9% by the end of the year. That doesn’t mean each Wichita home increases by that much. It’s the overall number. Longhofer said the expectation for 2022 is that Wichita home values will increase another 6.8%.

“This is just a lot faster appreciation than we’re used to seeing in this part of the country.”

He said he thinks Wichita has probably been a bit behind where it should be for a while.

For Wichitans fearful of what the increased valuations may mean for their property taxes, Longhofer suggested they consider a couple of different scenarios.

“The right frame of mind is really a question of is the underlying assessed value . . . a reasonable number?”

To determine that, Longhofer said, ask yourself what you’d do if someone showed up at your door with that amount of cash for your house.

“If you’d say, ‘Great, I’m going to go call the moving company right now,’ you’re probably overvalued, and you should appeal.”

On the flip side, he said, consider if you saw your home listed for that amount.

He said if you answer, “Oh, yeah, I’d buy it in a heartbeat,” then the valuation likely is too low.

Longhofer said don’t focus on the appreciation rate, focus on the number.

Also, he said, consider that if your home hasn’t been on the market for some time, the county assessor’s office may be behind in keeping up with its value. As the valuation catches up, it may be upsetting to home owners, but Longhofer said that’s not how they should look at it.

“While it’s kind of a shock, you have to remember what that really means is you’ve been getting a really good deal for the last several years.”

‘A life decision’

Longhofer said that as potential home buyers try to weigh whether buying in a hot market is smart or if they’re trying to time when interest rates will be at their lowest, they should ask themselves one question: Is it the right time for you and your family to move?

“Because at the end of the day, it’s a life decision.”

Longhofer said if people try to time their moves according to financial markets, “They’re destined to make bad decisions.”

Wichita Area Builders Association president and CEO Wess Galyon said the pandemic has had an impact on the housing market as people re-evaluate what they want in their homes.

“That’s driving a lot of the market.”

There’s a demand for home offices now. Open floor plans with vaulted ceilings, which make rooms appear bigger, are still trendy, Galyon said.

“People do a lot of entertaining in their homes,” he said.

“What we do see is more and more integration of the outdoor with the indoors.”

That includes door and window systems that can open up whole walls to the outdoors.

“People really like that,” Galyon said. “It expands the capacity of their house.”

The last day of WABA’s Fall Parade of Homes is Sunday. There are 92 homes ranging in price from $151,000 to just under $1 million.

“So it’s a pretty good parade,” Galyon said.

“What I always tell people,” he said, is “go look and see what’s out there.”

A happy ending

For everyone like Abdayem who has just about given up on finding a new house, consider the experience of his InSite colleague Jake Ramstack and his family.

Ramstack and his wife, Angela, were expecting their third child last year when they decided they needed more room. They wanted to remain in College Hill.

“It definitely makes the pool of homes a lot smaller when you’re only looking for one specific area,” Jake Ramstack said.

Following several frustrating attempts to buy a house — and coming very close but then losing it — he said they “decided we were going to sit on the sidelines and just wait.”

They had started remodeling their 1920 home and were pretty happy with it when one of Angela Ramstack’s five favorite Wichita houses came up for auction.

“We fell in love with it,” Jake Ramstack said. However, he said, “Our expectations were pretty low since we were beaten out so many other times.”

On the day of the auction, he said, “We were on a beach in Florida somewhat intentionally because if we didn’t win, we were going to be on a beach in Florida.”

Turns out they didn’t need the consolation. They won the bid. Then they got lucky and were able to sell their house without listing it thanks to a friend who said another friend was interested. Jake Ramstack noted that’s how a lot of deals are happening these days.

The Ramstacks have been in their new house — a 1953 English cottage with a Colonial feel on the inside — for two months.

At the time of the auction, Ramstack said, he and his wife thought, “This isn’t perfect today, but we can make it really great and grand when we’re done.”

They’ve already done some of that work, and Ramstack said his family is settling in.

“Every day it feels a little more like it’s ours.”

This story was originally published October 17, 2021 at 5:15 AM.