Real Estate News

Builders see slow but improving demand for new houses in 2015

New model homes under construction in the Fontana development in northwest Wichita, near the area of 29th and Maize Road.
New model homes under construction in the Fontana development in northwest Wichita, near the area of 29th and Maize Road. The Wichita Eagle

Last year was a good year for sales of new houses in the Wichita area.

And this year looks to be a bit better than 2014.

Expectations for the area’s new homes market are tempered.

There will be growth.

But it won’t be gangbusters, like it was at the height of the housing boom in 2006, when 2,119 new houses were sold.

Those kinds of numbers are a distant memory, and probably not realistic for Kansas’ largest city, barring an influx of new companies relocating here, bringing with them thousands of new jobs.

“I think we’re seeing a gradual upper trend,” said Wess Galyon, president and CEO of the Wichita Area Builders Association. “We’re using a conservative approach, and I think that’s what we’ll see (in 2015).”

Galyon and other real estate officials said they don’t expect a lasting impact from last week’s announcement by Bombardier that it was laying off 620 workers in Wichita.

“I think we’ll adjust to that and continue to move upward,” Galyon said, adding that he typically receives a lot of phone calls from his group’s builder members if they perceive an economic event to be harmful to their business.

Double-digit growth

Data released last week by the South Central Kansas Multiple Listing Service showed sales of new homes in 2014 increased 13.5 percent from 2013.

The 624 new houses sold in 2014 also was the most in five years, according to MLS data.

The latest figures from the builders association showed a 15 percent increase in housing permits in the metro area between November 2013 and November 2014: 65 permits compared with 75 permits.

November 2014 permits were also at their highest in five years, according to WABA data.

Galyon thinks the market for new houses mirrors the slow recovery of the local economy over the past few years.

Scott Lehner, a partner in Perfection Builders, said business for his company in 2014 was “slightly better” than 2013. Growth at Perfection may be at a higher pace than in 2013 and 2014, but that’s mainly because Lehner said the patio homes that his company began building a couple of years ago are in more new developments that are starting to come online.

“That concept has been the best thing we’ve done in the last few years,” Lehner said.

Lehner added that the traditional, single-family homes that his company builds – but in smaller quantities – “were probably a little stronger (in 2014) than they were the year before.”

Wade Wilkinson, owner of G. J. Gardner Homes in Wichita, said 2014 started out slow for his company, which is currently building houses in the $250,000 to $325,000 range. But the last three months of the year “was a lot more steady … looking a lot better.”

“So far (2015) is looking really good,” he said. “What I’m looking at, in March I think it is really going to start taking off.”

Gary Walker, vice president and general manager of J.P. Weigand & Sons, the area’s largest real estate firm, said new home sales for his company last year were the best they have been in seven years.

“Last year was, by far and away, the best year for our new homes division since we opened it in 2007,” he said. “I look for 2015 to be another banner year for new home sales in Wichita.”

Walker said demand is returning, builders are more confident about the market, and they are able to access financing to build new houses.

Galyon agreed for the most part.

“It’s not as readily available for spec homes, but we feel that (financing) is improving,” he said.

If there is one barrier to growth in new home sales this year, Galyon and Walker said, it could be that as demand for them continues to increase, there may not be enough new homes built to satisfy demand.

Galyon said it’s not a huge issue, but there could be situations in which there isn’t enough available new housing for instances when people are relocating to Wichita, and they will opt for an existing home, instead.

“That’s what we have to have: a little more inventory standing to move forward,” Galyon said.

Reach Jerry Siebenmark at 316-268-6576 or jsiebenmark@wichitaeagle.com. Follow him on Twitter: @jsiebenmark.

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