By Than Merrill
Kansas City, like San Diego and Houston, was subjected to incredible rates of appreciation. While prices are up from last year, the rate in which they are increasing is beginning to temper. With the slow down, the current median price for a home in Kansas City is $164,300. As a comparison, the national average is $212,267.
Homeowners in the Kansas City housing market have become the beneficiary of three years of appreciation, serving to drive up equity. The following highlights how much equity has been gained relative to the year of purchase:
- Homes purchased in the Kansas City housing market one year ago have appreciated by an average of $7,398, whereas the national average was $12,731 over the same period.
- Homes purchased in the Kansas City housing market three years ago have appreciated by an average of $33,477, whereas the national average was $51,204 over the same period.
- Homes purchased in the Kansas City housing market five years ago have appreciated by an average of $30,937, whereas the national average was $48,225 over the same period.
- Homes purchased in the Kansas City housing market seven years ago have depreciated by an average of $20,882, whereas the national average increased $1,750 over the same period.
- Homes purchased in the Kansas City housing market nine years ago have depreciated by an average of $28,538, whereas the national average increased $5,043 over the same period.
Employment levels in the Kansas City area have held their own since the recovery began to gain traction. Of particular importance, however, is the third consecutive year of employment growth that has followed the recession. In fact, the job sector has returned to its pre-recession levels. Conversely, the U.S. as a whole remains more than 1.5% below its employment level at the end of the last expansion.
Sales of single-family homes, condos, and townhomes make up the majority of the Missouri housing market. These types of properties make up nearly 60% of all listings in the region. The same can be said about Kansas City. Kansas City Residents are more interested in buying family homes than any other type of property in the area. Sellers, on the other hand, noticed the trend and met the demand. This would explain the overwhelming majority of single-family homes up for sale.
While we have just entered into 2015, the entire Missouri housing market appears ready to make sizable strides towards recovery. For the foreseeable future, experts like the direction the state is heading However, current conditions don’t necessarily favor sellers. Even if most transactions run smoothly and the number of transactions steadily increased over the past few years, buyers still expect to get a lot of value for little money.
There is a relatively small amount of homes available for sale in the Kansas City housing market. “The prices are coming up,” said realtor Cynda Rader, owner of Cynda Sells Realty Group. “We’re in a good, strong sellers market.” Perhaps even more importantly, data suggests that Cynda is correct in her assertion. As of October 2014, the market started to improve. Prices are going up because the number of homes on the market is dropping. This is just one prominent example of a housing market that is poised to make a significant rebound.
In addition to rising home prices, the number of new home starts remains encouraging. According to reports, homebuilding activity reached its highest level for October in seven years. The Home Builders Association of Greater Kansas City said “465 permits for single-family home construction were issued” in the record setting month. That was the most permits the area has seen since 2007, before the recession took hold of the entire housing sector. Of the eight area counties surveyed by the association, six have increased their permit counts from the previous year. Platte County and Miami County were the only two regions to not exhibit increased permit counts.
However, the recent boon in real estate is not only thanks to single-family houses. Both apartment buildings and multifamily units continue to aid in the region’s current recovery. In October, 78 multifamily housing units were added, bringing the yearly total to 3,246. That’s up from 2,493 units through the first 10 months of 2013.
One more factor contributing to the recent success seen in Kansas City is the demand for what locals are calling “industrial underground space.” The underground real estate occupies more than 21.8 million square feet in the city, and is the largest of its kind in the U.S., comprising more than 7 percent of the metro’s total industrial area. Perhaps even more importantly, demand for the underground space is increasing. Manufacturing and expanding distribution centers are only making the demand for underground real estate more prevalent. The potentially lucrative, yet nontraditional, real estate may be a great niche for new investors to consider.
While the cost of leasing underground space has long been lower than above ground space, the gap is narrowing. According to CoStar, “the cost of above ground industrial space in metropolitan Kansas City fell 1.7%, to an average of $ 3.99 a square foot in the 12-month period that ended in September.” Underground space, meanwhile, rose 5% to $3.43.
Kansas City Housing Market Summary:
- Current Median Home Price: $164,300
- 1-Year Appreciation Rate: 2.9%
- 3-Year Appreciation Rate: 19.9%
- Unemployment Rate: 6.3%
- 1-Year Job Growth Rate: 0.2%
- Population: 467,007
- Median Income: $56,248