Union at Purple Heart Trail in Wichita, Kansas

Affordable Housing Developers Find Opportunity in Wichita

by Channing Hamilton

Wichita has grown considerably in the past few decades while still maintaining the small-town charm the city is known for. With a population of 397,532 as of the 2020 U.S. Census, Wichita is the largest city in Kansas. The city has grown 4 percent since 2010, when the U.S. Census reported the population as 382,368.

The many changes in the city’s demographic makeup and economy have notably changed the multifamily rental housing landscape. Farming remains prevalent in this area, which is tucked into the heart of the Midwest. However, other industries also have flourished, stretching the size of the city and increasing the retail, dining and entertainment options found around town.

Total nonfarm employment in Wichita increased 7.6 percent from 295,400 in May 2014 to 317,900 in May 2024, when the unemployment rate came in at 4 percent.

The aerospace industry is a major driver for employment in Wichita. The city is known as the “Air Capital of the World” and is home to multiple aircraft manufacturers such as Textron Aviation, Spirit AeroSystems and Bombardier. Manufacturing accounts for 17.5 percent of employment in the Wichita metropolitan area, according to the Greater Wichita Partnership.

Wichita’s economy is further bolstered by Wichita State University and McConnell Air Force Base, which attract students and military personnel alike.

Skyrocketing Affordable Housing Demand

Forbes magazine placed Wichita fourth on a list of the best places to move in 2024. The article cited high employment rates and nice weather. However, affordability was also a key factor. Of the top five cities included on the list, Wichita had the lowest median monthly housing cost, at only $930. The median annual family income was $60,856.

Affordability is a major component of Wichita’s appeal. However, while demand for affordable housing remains high, supply is beginning to dwindle. Most existing affordable rental housing in Wichita is already occupied, with vacancy rates sitting below one percent for most communities. 

The Annex Group recently conducted a market study as a precursor to breaking ground on Union at Purple Heart Trail, an affordable housing development. Despite bringing 250 units to the market upon Union at Purple Heart Trail’s completion, The Annex Group’s report indicated that 95 percent of the affordable housing demand in Wichita remains unaddressed. As of late 2023, the market was in need of approximately 4,000 additional affordable units to meet demand.

Once completed in early 2026, Union at Purple Heart Trail will encompass two four-story buildings surrounded by landscaping and open space. Union at Purple Heart will offer apartment units for residents whose income level is at or below 60 percent of the area median income.

The development team for Union at Purple Heart Trail also includes HDJ as the architect, Baughman for civil engineering, surveying and planning, and Summit LIHTC Consulting.

The City of Wichita provided $45.4 million in tax-exempt bonds. Kansas Housing Resources Corp. issued the tax credit award. Aegon Asset Management provided $26.8 million in federal tax credit equity and $18.4 million in state tax credit equity, and Bank of America provided $45.5 million in construction financing. Merchants Capital provided $14.4 million in loans for the project.

Wichita’s Calling Card: Affordability

Renting is common in Wichita, and generally affordable. In fact, a report from December 2023 by apartment rental company RentHop ranked Wichita as the most affordable city for a single renter in the country. 

According to the report, the median rent for a studio apartment in Wichita was $565 per month. With a median individual income of $38,412, a single renter in the city can expect to spend less than 18 percent of annual income on rent.

Affordable rental rates have been appealing to people who want to avoid or cannot afford the high interest rates that they would incur if they were able to purchase a home. In 2022, 42 percent of Wichita households rented their homes, according to U.S. Census data. This is an increase from 36 percent in 2018. Vacancies have dropped to become nearly non-existent at many affordable housing communities, leaving many potential tenants stuck on the wait list.

The existing stock of affordable housing in Wichita is also aging rapidly. According to Costar Group, the average age of apartment buildings in Wichita is 48 years old. The newer communities that are coming online are going to be at rent premiums significantly above the older stock.

Like many markets, the most popular units in Wichita are those with studio, one- and two- bedroom floor plans. But unlike some other markets that do not often have the demand for larger apartments, Wichita has a significant need for three-bedroom configurations to accommodate a larger number of people per unit, according to the Annex Group’s market study.

Projects like Union at Purple Heart, which allocates 25 percent of its units to three-bedroom layouts, are helping to fill this gap. However, more opportunities remain for rental units of all sizes both in the affordable and market-rate categories. This will likely remain the case so long as interest rates remain relatively high, keeping would-be home buyers in the rental market longer.

Developers Need to Play Catch-Up

Wichita is an ideal environment for rental housing development. The high demand for affordable housing alone makes the city an appealing market. In addition, Wichita’s growth trajectory, attractive amenities and aging rental stock further underscore the city’s viability for new housing developments.

Both the public and private sectors in Wichita are enthusiastic about bolstering the supply of rental housing options in the city. The Wichita Housing Authority (WHA) is experiencing a high demand for housing vouchers, and currently administers more than 3,000 vouchers, with a value of approximately $17 million, according to the City of Wichita website.

Under the Housing Choice Voucher program, participants pay approximately 30 percent of their adjusted income directly to the landlord. WHA subsidizes the balance of the rent. The tenant-based rental assistance program is funded by the U.S. Department of Housing and Urban Development.

The Kansas Housing Rescue Corp. (KHRC) provides a state low-income housing tax credit to offset the costs of construction for affordable housing projects across the state of Kansas. Additionally, the City of Wichita itself offers various programs to make projects more viable, like tax exempt bonds that allow for a sales tax exemption on construction materials.

Nevertheless, with the cost of construction remaining high since the COVID-19 pandemic and interest rates still set at relatively high levels, developing any kind of new housing is extremely difficult nationwide. Wichita is no exception to the rule.

The development of affordable housing can be particularly challenging, as the rents are oftentimes not high enough to offset the costs of development. This is where partnerships with organizations such as KHRC and the City of Wichita come into play as crucial dealmakers to provide relief in making new projects viable.

As Wichita continues to evolve, developers have a golden opportunity to grow with it and sustain new communities. Developers and investors alike can find a home within the city by prioritizing diverse housing types and unit sizes, working with local agencies and planning for housing in various neighborhoods throughout Wichita.

With support from both state and local agencies, the city’s rental housing landscape is poised for strength, and the opportunity to create impactful housing is clear.

Ryan Clark is senior vice president of development for The Annex Group, a developer that creates affordable,workforce, student, active-adult and market-rate housing communities across the United States.

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