Higher employment rates in Kansas are helping to produce the early stages of stabilization in some housing markets even as homeowners are swamped in negative equity and slower home sales. A surge in sales of existing homes produced by the federal tax credit wound down after the credit’s expiration. But housing price erosion is beginning to slow, and that’s good news for Kansas.
Farming rich Kansas is being strengthened by some of the best employment rates in the nation, and the manufacturing sector should follow suit towards the end of the year as employers increase hiring in the Midwest. Housing markets slowed to a crawl as the financial crisis impacted the regional economy, but saw healthy increases in home sales with the federal tax credit.
The shake out from the tax credit’s expiration should last only a few months in Kansas City, where home sales should improve slightly towards the latter part of the year. More than a third of all homes selling in Kansas City are either foreclosures or bank assisted short sales, providing bargain prices for home buyers.
However, restrictive mortgage financing requirements are slowing the market’s recovery, but as mortgage rates remain close to near record lows financing standards should improve in the Kansas City metro area. As a result, Kansas City is forecast to see less housing deflation for the year at an average of just 3.6% by year’s end.
In nearby Overland Park foreclosures supplied a large inventory of lower priced homes for investors, but the much sought after marketplace will have to sustain more bank assisted short sales and foreclosures before reaching a balance. Homeowners stuck in negative equity are walking away from their homes in rising numbers, which will slow the market’s recovery.
As many as one in six mortgage holders were making late loan payments in the area, but with improving employment opportunities Overland Park should see a stronger housing market develop, and is now forecast to deflate an average home’s value just 3.8% in 2010.
Home sales volume in Wichita leveled off after the federal tax credit expired, but housing price deflation is projected to be contained at low levels as a result of growing employment. The flaw in the federal program to stimulate home sales is that the tax credit drove an increase in home sales, but only temporarily. Tight mortgage credit standards hamper Wichita from a full recovery, but at least the market is moving towards stabilization. Wichita home prices are forecast to deflate an average of just 3.3% for the year.
Job hiring in manufacturing and retail is strengthening the home market in Topeka, where the inventory of homes has risen, but remains below areas of the country that are troubled more by the financial crisis. Bank assisted short sales and some foreclosures priced low to get them off the market are helping Topeka move towards stabilization. Topeka home values are forecast to decline an average of only 3.2% for the year.