By CRISTINA JANNEY
Hays Post
Housing prices are remaining strong, but Hays is not keeping up with demand, said Doug Williams, Grow Hays executive director, at a quarterly luncheon on housing in Hays on Tuesday.
Hays had 232 housing transactions in 2023, which has been on a steady downward trend from 337 in 2020, when the nation saw historically low interest rates.
Interest rates went from 3.5 percent to 6.5 or 7 percent. Costs of building have also increased.
"Fortunately, in our market, we don't have bubbles and bursts," Williams said. "We have little peaks and valleys, but they are pretty gentle, as opposed to the coasts, where you can have really, really highs and really, really lows."
The total dollar volume of sales was also down from a high of almost $70 million in 2020 to $57 million in 2023.
This did not include the Heart of America Development's second phase of the Tallgrass Addition, which accounted for 17 homes for a total of $3.8 million in 2022 and 19 homes for a total of $4.27 million in 2023.
"It's not an easy time to build homes in this environment," Williams said. "You've got lots of competition for subcontractors. They've dealt with material shortages and fluctuating prices when they started this."
Hays home prices have continued to rise since 2019, from an average of $182,000 in 2019 to $246,000 in 2023.
Williams said this is an issue of supply and demand. A lack of housing stock in specific price ranges is increasing prices.
"It has priced some people out of the market," he said. "However, it's always amazing to me how resilient our market is."
The number of year-end home listings in Hays was slightly up in 2023 to 70, compared to 50 at year-end in 2020, 40 in 2021 and 48 in 2022.
Real estate agents also consider months supply of housing. Less than six months supply of housing is considered a seller's market, and more than six months supply of housing is considered a buyer's market. Hays was at 3.5 months as of 2023, which was up from a low of 1.8 months in 2021.
Williams said the "sweet spot" for housing has been homes in the $150,000 to $250,000 range. Forty percent of the homes sold in Hays in 2023 were in this price range, and the homes in the Tallgrass Addition have also been in this price range.
To sustain population growth of 1 percent for the city of Hays, the community needs to add 88 living units per year, according to a study. One percent growth would be adding about 220 new residents per year.
The community was 400 units short over the last 10 years of that goal, Williams said.
In 2023, Hays added 68 units, 55 in 2022 and 71 in 2021.
2024 outlook
Williams made some predictions for 2024.
He anticipated Hays would have 20 or fewer single-family housing starts in 2024. The community has run out of lots.
The Tallgrass Addition should have 12 more lots under development in 2024.
"We have identified some multi-family lots that we think will happen this next year. I would say there will be 40 or more of those," he said.
He said he expects housing prices and rents to remain stable, with the possibility of rents increasing slightly.
Rental occupancy is at 95 to 97 percent.
Property taxes
Although many Hays residents have recently complained about property taxes, Williams said the city's property taxes are lower than those of similar Kansas communities.
The city of Hays mill levy was lower in 2023 than Pittsburg, Emporia, Garden City and Dodge City.
Hays' median home price in 2023, $235,000, is lower than Garden City and Dodge City.
Property tax based on the median home price is lower than Garden City, Dodge City and Emporia.
Tallgrass Addition
Phases one and two of the Tallgrass Addition, adjacent to the NCK Tech campus, are complete. All 36 homes in phase one are occupied, and four or five homes in phase two are now occupied.
Wheatland Drive will be redone this spring, and the Tallgrass phase three homes will be built along that road. Once the sewer, water and road are completed, home construction will begin in that addition.
The Grove
Grow Hays is also working on The Grove housing addition, which will be on Canterbury north of HaysMed. This addition is meant to appeal to older residents.
Engineering contracts for the infrastructure have been approved. The addition will include 50 single-family residences, eight duplexes and six six-plexes.
The development will include a community center, which will be the new home of the Hays Senior Center, house a child care center and provide multi-use meeting rooms for the community.
Grow Hays has raised $5.75 million of the $6 million needed for the community center. Construction will begin this summer and be completed in about a year.
The house on the corner of what used to be a wheat field will be relocated.
Needs
Williams identified several needs he sees in the Hays housing market.
The city does not have housing lots available in the northwest portion of the city or housing in the mid-price range in the eastern portion of the city.
The city also needs more diverse rental options. Although the city has many two-bedroom rentals, it doesn't have many three-bedroom rentals or three-bedroom rentals with two-car garages.
Challenges
One of the challenges of development is the cost of infrastructure. It's difficult for developers to make any money without some kind of incentives, such as Rural Housing Incentive Districts, Williams said.
Developing a street costs $1,200 to $1,400 per linear foot. To make that math work, there need to be homes on both sides of the street, he said. If you figure 100-foot lots, that is $60,000 to $80,000 per lot.
Some owners are not willing to sell or not willing to sell at a price that would make it affordable for a developer to develop the lots, Williams said.
"There just aren't many people who want to get into that game and make no money, which is basically what you're looking at. The question becomes why," Williams said.
The city also has other physical barriers to expansion, including the interstate, state-owned land to the south and the Big Creek floodplain.