HAYS, Kansas — On the east edge of town, an empty sidewalk flanked by dirt and gravel curls around a bend into the shape of a cul-de-sac. Soon, it will lead to the front doors of three dozen new homes — the first houses in Hays built to sell for $225,000 or less in the past several years.
Doug Williams, who heads the local housing and economic development coalition Grow Hays, expects the first homebuyers to move in by the end of this year. And in his view, it’s not a moment too soon. Nor is it enough.
“We have what I would deem an extreme undersupply of housing,” Williams said. “And we’ve been fighting that for going on nine to 10 months now.”
In the space of one year from late 2019 to late 2020, Grow Hays’ housing report found that the number of homes for sale in the northwest Kansas town plummeted from 101 to 50. And it keeps dropping.
“I checked this morning,” he said, “and it was 41.”
Fueled by historically low mortgage rates and years of underbuilt housing supply, the American housing market has become increasingly strained. Nationwide, the housing deficit has grown more than 50% over the past two years and now stands nearly 4 million homes short of estimated demand.
In rural areas where lending, labor and materials are already harder to come by, the housing crunch puts towns like Hays in a bind.
Population forecasts from Wichita State University estimate that some western Kansas counties will lose more than 50% of their residents over the next 50 years. And if a town like Hays hopes to avoid that fate, Williams said finding ways to provide more quality, affordable housing options should be the priority.
But the town of roughly 21,000 people still has work left to do to reach that goal. Williams said he routinely hears stories from real estate agents about potential buyers who can’t get a bid in before a home has already sold. If they do make an offer quickly enough, bidding wars often run the price well above the asking price.
“I’ve never seen anything quite like this before.”
Supply and Demand
Several factors converged to create the current strain on housing markets in rural areas. Robert Dietz, chief economist with the National Association of Home Builders, said that housing was underbuilt pretty much everywhere from 2012 to 2019.
“So when housing demand took off in 2020 and there wasn’t a lot of additional capacity,” Dietz said, “the price skyrocketed.”
Dietz described the barriers that keep new homes from being built as “the five Ls”: labor, land, lending, laws and lumber. He said that for rural areas, finding land and friendly development laws usually aren’t a problem. But the other three factors can be even more challenging for small towns than big cities.
In rural markets, developers often get financing to acquire land from smaller local lenders. Dietz said those banks and mortgage companies have become more wary of taking big risks since the Great Recession. So, the loans are harder to come by and often have tighter lending conditions such as higher rates.
