Soft home sales and discount priced properties are troubling the housing recovery in Kansas as the center of the Mid-West encounters long term issues over the economy. Employers have been hiring more workers in parts of Kansas, but unemployment in some areas of the state is higher than the national average. High joblessness has put a hold on any sort of real housing recovery for the time being.
In hard hit Kansas City, Kansas home sales plummeted after the federal tax credit for home buyers expired amid falling home prices. The drop in home values could be devastating for the region, which saw one of the highest levels of foreclosures in the U.S. at the peak of the crisis. Another wave of foreclosures is anticipated soon, which is projected to make a larger impact on home prices.
As more homeowners see the value of their homes decline in Kansas City more mortgage holders will lose confidence that they’ll ever see prices recover and walk away from their homes. Kansas City could produce the largest number of foreclosures for any major city in the Mid-West, second only to Chicago in the foreclosure crisis. Tight mortgage underwriting standards and a weak government program to modify home mortgages are hurting the local marketplace, despite gains in employment in some sectors over the last year.
Home prices were rising as a result of the government incentive, but those days are over and so is any sort of housing appreciation for the time being. Kansas City home prices are forecast to deflate an average of 7.2% in 2011 on greater fears of a weakening economy.
Overland Park has made headlines for being one of the places in the country with a massive surplus of low priced foreclosures. Investors swooped in to buy up many of the homes at discounted prices, but more foreclosures are in lenders’ pipelines for the region that have not yet been officially foreclosed.
The shadow inventory pressures home values in the marketplace, which is forecast to see home prices decline an additional 6.4% by years end. The signs of a real estate depression moving into a recovery aren’t yet developing.
Across the state, in Wichita foreclosures have pulled at the market’s strengths as homeowners come to grips with declining home values that have been falling for more than three years. Any sort of uptick in home sales is fully dependent on hiring workers in the region and the community is working at driving more employers to the area.
The inventory of homes listed for sale has fallen as a result of lower prices, but a slowdown in sales is impacting Wichita and is likely to have a long lasting impact on the region. Average home prices are forecast to decline 5.8% for the year.
Employer hiring led to an increase in home sales in Topeka tied to the tax incentive through local banks, but the troubled economy in smaller Topeka is hurting and needs more incentives to recover from the worst financial crisis since the Great Depression. Weaker than expected home sales during the summer season are having an impact on Topeka, which is forecast to witness average housing deflation of 6.4% for the year.