Wichita Kansas home sales rebounded this year and are forecast to rise another 6.3 percent in 2013 as the economy improves and pent-up demand brings buyers back into the housing market, economic researchers at Wichita State University said Thursday.
The forecast, "Picking Up Steam," released by Wichita State's Center for Real Estate shows home sales in Kansas are on track to rise by nearly 13 percent this year led by strong growth in the northeast of the state. Meanwhile, home prices are appreciating by nearly 2 percent on average statewide this year, with a projected 1.5 percent increase in home values next year.
New home construction is on pace to rise only slightly his year as declines in Wichita offset strong gains in Kansas City, Lawrence and Manhattan. The report predicts construction in Kansas will fall by 7 percent in 2013, driven in part by high building costs; Buyers can purchase relatively new homes for far less than it costs to build new houses.
"All of the major markets are seeing increases for this year and projected into next year for home sales," said Stan Longhofer, director of the Center for Real Estate. "It is a broad-based recovery of the housing market that really reflects, I think, a solidifying of the underlining economic environment and the fact that people's lives move forward."
Most housing transactions are driven by need — a growing family, a job change — Longhofer said in a phone interview.
"The underlying economic challenges that have been really pressing down on the housing market here in recent years have eased ... so the fundamental forces that bring people back into the housing market are starting to take hold again," he said.
On the upside, inventories of available homes have whittled down to the point that there is about a six-month supply of homes on the market, driving up home prices that have been flat or falling for the past couple of years, Longhofer said.
"We are moving from what might have been a buyer's market, not into a seller's market but at least a balanced market," he said, adding that this could lead to "some price appreciation."
Nowhere in the state is the housing turnaround more evident than in metropolitan Kansas City, where home sales this year are on pace to grow nearly 18 percent. And that growth is expected to continue, but at a slower pace of about 5 percent, next year.
In other major Kansas cities, the report outlines a mixed recovery:
— Topeka, the state capital where ongoing budget cuts have had the most impact on employment, remains on track for a 4 percent rise in home sales this year although those sales are forecast to fall below 1 percent in 2013. Prices are stable and are expected to end next year at 2010 levels. New home construction is expected to hit the lowest level in Topeka on record next year.
— In Wichita, home to the state's aviation manufacturing industry, home sales are expected to rise by more than 7 percent this year and by another 4.2 percent next year. Prices were expected to appreciate by 1.3 percent in 2013. New home construction continues to languish, despite a program that offers property tax incentives for new home buyers, with construction permits at a record low. This situation is not expected to improve much next year.
— Manhattan's housing market is an anomaly in the state because expansion is limited by the city's boundaries — an army base, a river and a state park. Sales grew by almost 13 percent this year and are forecast to grow another 3 percent to hit a record high in 2013. New home construction should end the year up 26 percent but is anticipated to fall next year due to the limited number of desirable building lots available for sale. Home values are up 1.7 percent in 2012 with another 3.3 increase anticipated in 2013.
— Home sales in Lawrence rebounded this year by more than 13 percent and are expected to strengthen even more in 2013 with a nearly 16 percent increase. Prices have stabilized and are forecast to rise 2.1 percent next year. Construction of new homes was forecast to go up 3.1 percent, but financing constraints for new home construction are anticipated to prevent a full rebound.
Longhofer cautioned that the 2013 Kansas housing forecast does not account for major economic disruptions such as the concerns that the U.S. economy could fall off a "fiscal cliff" at the end of the year when tax increases and deep spending cuts will take effect unless Congress reaches a budget deal. A recession could follow.