News for the local real estate market is mixed with the expectation that sales will remain flat in 2011. However, things are stabilizing and not declining, and we’ll be looking at a mild recovery in 2012.

This was the message at our annual Residential Real Estate Forecast last week, when Dr. Stanley Longhofer, director of the Center for Real Estate at Wichita State University, and Walt Clements, CCIM, CRS, GRI and director of the Lewis White Real Estate Center at UMKC, visited the KCRAR classroom on Dec. 8 to provide insight as to where the market is, how we got there, and where we’re going next.

According to Longhofer, the depth of the “Great Recession” (during which the real estate market began its current downturn) is not outside the bounds of other recessions since World War II. Instead, the difference has been in the recovery. Recoveries after recessions in the 1950s and ‘60s were sharp, he said, but since then have remained more volatile and unsteady.

Adding to the slow recovery in the housing market, Longhofer said, is the tax credit for first-time homebuyers. Rather than encourage those who wouldn’t normally buy, the tax credit mostly changed the timing of those who had planned to purchase a home anyway. As a result, the stimulative effect of the tax credit was almost nonexistent, and the drop-off in sales following the tax credit’s expiration was larger than many expected.

Since the tax credit, it’s been difficult to get a clear picture of the market. “We’ll continue to suffer for another year before we have a better idea of where the market is going,” Longhofer said.

Other economic factors contributing to the expected “flat year” in 2011 include tight mortgage underwriting standards and unemployment in the Kansas City area.

Other interesting points from the Forecast:

• Clements presented information on how local agents are performing in the current market. Based on the number of sales and the number of agents in each of KCRAR’s four Regions, it appears that agents in the Rivers Region are averaging seven sales each for the first 10 months in 2010. Close behind are Show Me Region agents with an average of five sales; Northland agents with four; and Sunflower agents with two sales apiece. Also contributing to these averages are each Regions’ population, number of homeowners and number of homeowners per agent.
• Housing starts in the metro Kansas City area projected to increase, driven largely by custom home business.
• Prospects for residential property types in 2011 include senior housing and student housing at the top of the list for development and investment opportunities, while multi-family condominiums, second and leisure homes, and golf course communities are projected have low prospects for development and investment in 2011.
• People aren’t buying because: 20-somethings are living at home longer, college grads have huge debt and can’t find high-paying jobs, and people don’t have confidence in government, the job market or the economy.

There are strategies for survival in the current market and in the future, Clements said. Some of those options include expanding your market area, re-focusing your product type specialty, considering the competition in your area, and reviewing the timing of your marketing programs relative to the cycles in the market.

If you weren’t able to attend the Residential Real Estate Forecast, here are copies of the presentations for your review:

Dr. Stanley Longhofer
Walt Clements