Hays real estate market is extremely tight, despite slowing sales
By CRISTINA JANNEY
The Hays Market may have hours of housing supply, according to local realtors at an economic conference Thursday at BriefSpace.
A four- to six-month home supply would be a balanced market, but Kansas has not had a balanced market since 2015.
After increasing steadily for about three years, home sales in Ellis County began to decline at the end of 2020. Simultaneously, the number of homes for sale also declined, said Stanley Longhofer, director of the Center for Real Estate of Wichita State University.
Year-to-date, Ellis County home sales are down about 16% from 2020.
Tim Cossaart, a local real estate agent, said the stimulus payments brought buyers into the markets and when those markets ended, sales began to plummet. However, he said the very low housing supply also discourages buyers.
“When you mentioned the supply hours, we see it on occasion,” he said. “If it’s in the right price range and it’s the right house, we have hours of supply for those kinds of houses.”
Robert Readle, Chairman of the Board of Hays, said, “When a home comes on the market, you can get five to ten phone calls from buyers who are willing to buy that particular home. If you don’t take action, it is simply too late. “
The forecast for Kansas home sales is a 3.1% increase for 2021 and a 6.2% increase for 2022.
Hays is in what would be considered a sellers’ market.
The median price of homes in Hays is just over $ 150,000. However, Longhofer noted that the number can be skewed depending on the type of homes being sold at any time. If more cheaper homes sell, that number will decrease – if more expensive homes sell.
Mortgage rates have been incredibly low for a 30-year fixed-rate mortgage, around 3%, Longhofer said.
The Mortgage Bankers Association forecast recently released a forecast that the fixed rate mortgage would stay below 4% until at least the end of 2022. Their forecast for 2023 to 2024 is 4.1 to 4.3 %.
Readle said he believes a hike in mortgage rates could have a big effect on the home buying market over the coming year. Some buyers are considering more expensive homes and find that they can retrofit without increasing their payments, by using the lower mortgage rate.
Readle said that in the tight market, some buyers are choosing to take out bridging loans. This covers the mortgage on their current home and their future home until their current home sells. You make two payments for a short time.
Fewer buyers are entering into conditional contracts on the sale of their current home.
Due to the tight housing market, pre-approval is preferable to pre-qualified loans, Readle said.
Readle said he sees buyer fatigue. Buyers, especially those who have gone the extra mile to obtain VA or FSA guaranteed loans, may be outbid by a buyer with a lower cash offer or who has no contingencies.
Errol Wuertz, real estate agent and appraiser, said he had had problems with some appraisals that matched sale prices. This has been especially true more recently at Ellis.
Real estate agents have said that buying and building new homes is comparable in terms of cost. However, few developers are currently building in Hays.
“We haven’t met the demand for new home construction for some time,” said Doug Williams, executive director of Grow Hays. “It has contributed significantly to this sub-inventory problem that we have.
“The only way to add inventory to a market is to build it. If you haven’t done so in several years, you’re going to be playing a catch-up game for a long time.”
Readle said he is seeing more and more people from eastern Kansas moving to Hays as they are able to sell their homes in that part of the state. Cossaart said he is seeing retirees moving to Hays to be closer to their families.
Those from more rural areas tend to feel the shock of the stickers when they see local home prices, but those in metropolitan areas like Denver see prices here as low, realtors said.