New numbers out Tuesday from Wichita State University show that there are some serious constraints on the Kansas real estate market right now, but it’s doing really well in spite of them.
In many ways, it’s a very, very strong market,” said Stan Longhofer, director of WSU’s Center for Real Estate. “The demand is extremely strong in most markets across the state. The side that’s having difficulty is the supply side of the market. We just don’t have enough homes available for sale. That’s holding back the number of transactions that are taking place.”
The other issue is new construction is not happening as fast as the market needs it to.
“We would expect as the supply constraints became very tight and that’s causing home price appreciation to accelerate and home prices are rising at a very nice clip, ordinarily we’d expect that would lead to additional new home construction,” said Longhofer. “The challenge is that the cost of new home construction has been rising even faster than existing home prices.”
Materials costs and labor costs have continued to rise over the last several years.
“It’s still very difficult for a new home to compete with an existing home at any given price range,” said Longhofer. “If you come in at a $250,000 price range, the amount of home that you can buy in an existing home tends to be much more than if you were trying to build at a $250,000 price range.”
The housing market across Kansas is expected to grow in spite of interest rate increases by the Federal Reserve. At this point the demand for houses is actually increasing as people are trying to get into the market before the interest rates get too expensive to join.
Kansas home prices should rise by 6.3 percent next year according to the 2019 Kansas Housing Forecast published by the Wichita State University Center for Real Estate.