Kansas home sales will begin to rise in 2012, but will remain below their 2009 level. So says the 2012 Kansas Housing Markets Forecast published Friday, Oct. 14, by the Wichita State University Center for Real Estate.

Stan Longhofer

"Most markets across the state have begun to recover from the 'hangover' that followed the expiration of the home buyer tax credit last year," said Stan Longhofer, director of the WSU Center for Real Estate. "Sales should rise by 8.8 percent next year, but will still remain well below their 2009 level."

Longhofer will present the forecast at the 2012 Kansas Housing Markets Forecast Conference at the Wichita Marriott at 8:30 a.m. Friday, Oct. 14. He will be available for interviews after his presentation at about 10:30 a.m. Other speakers at the conference, co-hosted by the Wichita Area Builders Association, include Dan Jones with Capitol Federal Savings and Robert Denk with the National Association of Home Builders.

The 2012 Kansas Housing Markets Forecast reviews current housing market conditions in markets across the state – including Kansas City, Lawrence, Manhattan, Topeka and Wichita – and forecasts housing market activity through the end of 2012. The title of this year's forecast is "Navigating the Turbulence," reflecting the array of forces that have been buffeting housing markets recently.

Highlights of the 2012 Kansas Housing Markets Forecast include the following.

Statewide forecast

• Home sales – Home sales across Kansas have fallen in each of the past three years. This trend will likely continue in 2011, with sales ending the year down 1.8 percent to 28,250 units. Sales should begin to rise in 2012, increasing by 8.8 percent to 30,740 units.

• Construction – Single-family residential building permits in Kansas rose by 3.9 percent in 2010 in response to the home buyer tax credit, but have declined since then. Home building activity will end 2011 down 11.4 percent at 3,370 units and then pick up again in 2012, rising 20.5 percent to 4,060 units.

• Home prices – Average home prices across the state will end 2011 down 3.6 percent, led by declines in the northeast part of the state. The pace of decline will slow in 2012, with average values falling 1.0 percent.

Kansas City market

• Home sales – Total home sales in the Kansas City area will rise slightly in 2011, ending the year up 0.5 percent at 23,060 units. Sales activity should rise again in 2012, up 6.7 percent to 24,610 units.
 
• Construction – After falling to historically low levels in recent years, new single-family residential building permits in the Kansas City metropolitan area rose by 11.5 percent in 2010. New home construction is poised to rise another 15.8 percent in 2011 to 2,465 units and then rise again in 2012 to 2,800 units.

• Home prices – Home prices in the Kansas City metropolitan area have continued to fall in 2011 and should end the year down 5.5 percent. Values will decline another 1.6 percent in 2012.
 
Lawrence market

• Home sales – The home buyer tax credit "hangover" in the Lawrence market has been deeper and longer than many anticipated. As a result, total home sales in the Lawrence area are on pace to end 2011 down 14.5 percent at 1,060 units. Sales activity should begin to pick up in 2012, however, rising 8.5 percent to 1,150 units.

• Construction – New home construction in the Lawrence metropolitan area has also declined this year, dropping 28.9 percent to 150 units. Permits should rise again in 2012, up 20 percent to 180 units.
 
• Home prices – Home prices in the Lawrence metropolitan area have continued to fall in 2011 and should end the year down 1.6 percent. Prices should stabilize in 2012, rising by a negligible 0.7 percent.
 
Manhattan market

• Home sales – Home sales within the city of Manhattan have fallen slightly from the strong years of 2006 and 2007, but Manhattan remains a much stronger housing market than most across the state. Sales in the city of Manhattan will fall by 2.4 percent in 2011 to 570 units, but should rise modestly in 2011, up 1.8 percent to 580 units.

• Construction – After a strong 2010 in response to the home buyer tax credit, new home construction in the city of Manhattan fell off sharply this year. The number of single-family residential building permits issued by the city should end 2011 down 25 percent at 165 units. Construction activity will stabilize in 2011, rising 3 percent to 170 units.
 
• Home prices – Home prices in the Manhattan metropolitan area have finally begun to fall slightly after holding up well through the recent housing downturn. Prices should end 2011 down 1.6 percent and then flatten in 2012, rising a negligible 0.1 percent.

Topeka market

• Home sales – Total home sales in the Topeka area should rise by 2.8 percent in 2011 to 2,610 units. Sales will rise to 2,760 units in 2011, a 5.8 percent increase.

• Construction – After a modest bump last year due to the homebuyer tax credit, new home construction should fall 26.7 percent to 245 units in 2011, the lowest figure on record. Construction activity will rebound slightly in 2012, rising by 8.2 percent to 265 units.
 
• Home prices – Declining employment continues to put pressure on Topeka home prices, which will likely end 2011 down 4.2 percent and then fall another 2.6 percent in 2012.
 
Wichita market

• Home sales – Home sales in the Wichita area fell to their lowest level in a decade last year and are on pace to fall another 5.6 percent in 2011 to 7,390 units. Sales should begin to rise in 2012, increasing by 10 percent to 8,130 units.

• Construction – New home construction activity in the Wichita area has continued to decline, and single-family residential building permits should end 2011 down another 24.8 percent at 715 units. The market should stabilize somewhat in 2011, with permits falling by 0.7 percent to 710 units.

• Home prices – Home price appreciation in the Wichita metropolitan area will fall 2.2 percent in 2011 and then remain essentially flat in 2012, falling a modest 0.2 percent.
 
For more information and a copy of the entire 2012 Kansas Housing Markets Forecast, visit the Center for Real Estate website at http://realestate.wichita.edu, or contact Longhofer at (316) 978-7120 or realestate@wichita.edu.