The housing market in Iola can be summed up in one word — unique. Driving down any given road, you will come across houses of varying values and sizes situated in the same neighborhood. A multiple bedroom two-story Victorian home could be a neighbor to a bungalow.
Despite the town’s eclectic charm, the number of building permits for new housing construction remains low, with only two filed in 2023. According to Iola Code Enforcement Officer Gregg Hutton, the primary culprit behind this phenomenon is the continued high cost of construction.
Land for housing in Iola was originally platted in 50 foot by 110 or 120 foot parcels. Today, lots are required to be 70 feet wide in R-1 zoning. If a buyer purchases one of the original smaller plots, they are still able to build on the land. “The code goes off of what it was originally platted,” noted Hutton. The only exception is if a buyer wants to rezone the plot of land for another purpose. “If someone buys a 50 foot by 110 foot plot, but then wants to rezone it from R-2 to R-1… they wouldn’t be able to build on it after it is rezoned because it doesn’t meet the size requirements for that zone,” Hutton said. Properties zoned as R-1 are single-family dwellings, while R-2 zoning is for duplexes.
Hutton said the city is beginning to see a slight trend of more people purchasing properties, renovating them, and then putting them back on the market. “I wish we had even more of that,” he said. “A lot of it has to do with the cost.” Hutton explained it can be a gamble to invest that much money into a property, only to then not be able to turn around and sell it for a profit. “The average cost of a 50-foot by 110-foot lot is around $1,250,” he noted. “Here recently, some of these same-sized lots have sold for up to $5,000.” Hutton believes that Iola’s 2024 Neighborhood Revitalization Program (NRP) has played a part in encouraging people to purchase property and renovate.
The NRP offers a tax rebate to Iola property owners who make improvements, such as new structures or remodeling efforts, to their properties. The rebate is equal to the amount their property taxes increase because of the improvements.
Currently 198 properties are in the program, with approximately 40 more to be added this year. The city, county, school district and Allen Community College participate in the revitalization program by agreeing to dedicate funds from their mill levies to encourage local homeowners and business owners to improve their properties.
As far as houses being demolished, Hutton said there were 15 homes in total for 2023. “That would be four homes demolished by the city; two homes lost to fire; one home demolished by the school system; and eight homes demolished by owners,” said Hutton. “I’ll be starting my process of condemning four more houses at tonight’s city council meeting. There are four resolutions to be considered. If they are passed, a hearing will be set for Feb. 26 to discuss the plans for condemning them.”
This past June, Allen County held a delinquent property tax auction where 56 properties sold for a total of $136,000. The goal of the tax sale is to either bring taxes current, or sell the property to someone who will pay property taxes. The county hopes to have a delinquent tax sale every two or three years to ensure taxes are paid promptly. Purchase of properties at a tax sale is a way for potential buyers to buy affordable housing. Properties at the sale were sold for as little as $100 and as much as $20,000.
REALTOR Dena Daniels pointed out that a major challenge in the housing market is the shortage of affordable homes. Houses priced below $100,000 often fail to qualify for rural development or government loans, resulting in a limited pool of potential buyers. Daniels added lower-priced homes tend to sell quickly, while those above $100,000 linger on the market.
Currently, Daniels has been seeing more interest in the Humboldt and Chanute housing markets. She believes this is due to more affordable housing and job opportunities in these areas. Daniels predicted the new Lehigh Portland State Park will draw more people to Iola. “Also, there are a lot of factory jobs in Iola,” she said. “During the pandemic, we saw a lot of people moving to the area for work.”
Housing interest rates have also played a big role — perhaps the biggest — in the current state of the housing market. “With interest rates around 7 or 8 percent, this has really hurt,” said Daniels. The Federal Reserve has indicated that there will likely be cuts to the short-term federal funds rate in 2024, which will put downward pressure on mortgage rates. Rates are expected to remain above 6% throughout 2024. However, Daniels noted observing some rates dipping down into the 5% range in the Iola area, providing a potential silver lining for the local housing market
Realtor Kent Thompson agreed that interest rates have been the biggest hurdle for the housing market. “I’ve been in the business for 35 years and I’d say about 85% of the housing loans I’ve seen were in the 7% interest range,” Thompson said. “For a few years recently, we saw historic lows in interest rates. Now that they’ve gone back up to what has always been typical, it’s been a shock.” Thompson added that a lack of adequate housing in all price ranges has also been a challenge for the area.
According to Wichita State University’s 2024 Kansas Housing Market Forecast, home sales activity across Kansas continued to decline in 2023, constrained by the shortage of inventory. Sales are expected to remain essentially flat in 2024. Kansas home prices are expected to increase by 3.5% in 2024.
“I really think the NRP will be an encouragement here locally,” said Hutton. “And hopefully we will start to see a bit more of people buying homes and renovating old ones.”
