The most expensive homes in the Wichita area are selling fast and the number of them available has fallen to levels not seen since before the Great Recession, according to a real estate analyst at Wichita State University.
Stan Longhofer, director of WSU’s Center for Real Estate, said the demand for homes that cost more than $500,000 and a limited supply of them were standouts of the 2021 Kansas Housing Markets Forecast, an annual report released this week. The change comes despite a pandemic and global recession that hasn’t yet negatively impacted home sales but could catch up in the next couple of years, Longhofer said.
For now, the housing market is booming, often causing “bidding wars.”
During the pandemic, labor and service sector jobs have seen bigger layoffs than office jobs that have more flexibility, he said. And people in those more flexible, usually higher-paid roles have been driving the demand for higher-end homes.
“It’s just sharpened and made even more extreme the separation between those in very fortunate economic situations with those who are not, “ he said. “And it’s those that are in the fortunate situation that are driving the housing market.”
Historically low interest rates and the economic environment of the fortunate people have dropped the supply of higher-end homes for sale to under six months, Longhofer said. It’s the first time the supply has been this low since the 2007-2009 recession, he said.
Shortage of homes
The housing market is considered balanced when there’s a four to six month supply of homes. The supply is calculated by dividing available homes by average homes sold each month.
For example, if 1,000 homes are available and on average 200 homes a month are selling over a year’s time, 1,000 divided by 200 equals a five-month supply —