The 2008 housing crisis is part of the reason
Demand for homes in Kansas is high, but construction of new homes has been slow for more than a decade. Kansas saw a significant drop in home construction after the Great Recession, contributing to a housing shortage today that drives up prices.
OVERLAND PARK — Real estate agent Natalie Moyer has helped Kansas residents purchase homes for the past 16 years. But the housing market is so tight right now, it’s been very difficult for first-time homebuyers to find a house within their budget.
The demand for a home has been much higher in recent years and there simply are not enough homes to go around.
“It’s been heartbreaking,” Moyer said. “I call it a knife fight.”
That shortage of supply is pushing up the costs of homes on the market, making it even more difficult for buyers to purchase an affordable or middle-market home. The trickle-down effect of the tight market is believed to be contributing to a lack of affordable housing and rising homelessness in the state.
That likely won’t be changing any time soon. A new Kansas real estate forecast by Wichita State University shows the average home sale price has risen to $300,000. That’s nearly $40,000 more than the average cost of a home in 2021.
Stan Longhofer, director of Wichita State’s Center for Real Estate, presented his forecast to Kansas relators at a statewide conference in Overland Park on Thursday. While he said several factors affecting the housing market are improving — like falling mortgage rates — the lack of housing supply is continuing to create a very tight market in Kansas.
Longhofer said the rising cost of homes is largely due to a housing shortage that stems from more than 15 years of slow building activity. The construction of new homes dropped significantly as a result of the 2008 housing crisis, showcasing how the long-term fallout of the recession continues to affect Kansas residents today.
According to U.S. Census data, developers built nearly 12,000 single-family Kansas homes in 2005. That dropped to just under 4,000 in 2010. Home building production has not fully recovered. In recent years, construction in Kansas has produced around 5,000 homes each year. Longhofer expects that to remain the same through 2025.
The loss of homes built since the 2008 housing market collapse means there are fewer homes available in the middle market, which are typically purchased by young and first-time home buyers.
“Homes that would have been built 15 years ago,” Longhofer said, “would be the housing that would really be the middle-market housing today.”
Building more homes — particularly in the middle price range — could help fill that gap.
However, Longhofer said construction costs are still too high to make that feasible, and builders are not able to get homes down to an attainable price. Most new homes are listed for sale between $350,000 and $400,000.
“We're still not building enough,” Longhofer said, “but it's hard to build at that middle-market price.”
Longhofer said there are several other factors pushing up the prices of housing. Younger people are now less likely to live with roommates and fewer first-time home buyers are willing to buy a fixer-upper home.
Meanwhile, advocates for affordable housing argue federal and state governments need to invest in home construction to address the housing shortage. Even then, Longhofer said he doesn’t expect the lack of housing inventory to be resolved soon.
“We can't expect that we can just somehow pass some magic policy,” Longhofer said, “and all of a sudden have enough homes to resolve the inventory shortage. It's really a matter of years of addressing it.”