Kansas City Housing Closes Down Year in 2008

Kansas City Housing Closes Down Year in 2008

January 19, 2009 – (RealEstateRama) — Metro Kansas City housing permits fell more than one third in 2008, according to statistics compiled by the Home Builders Association of Greater Kansas City (HBA). The metro region finished the year with 5,072 total housing units permitted, down from 7,909 total units in 2007.

Among single-family homes, a total of 3,242 single-family units were permitted last year, a decline of 49 percent from the previous year and the lowest single-family total since 1982 when 2,553 homes were started. During the final month of the year, a seasonally adjusted total of 155 single-family units were permitted, down from a revised total of 196 units in November.

Multifamily rental construction was up sharply, however, soaring 64 percent to 1,681 units. That marks the second-best performance for rental apartments, townhomes and condominiums since 2002, trailing only the 2,605 multifamily units permitted in 2006. The rental construction performance more than offset a 64 percent decline in for-sale multifamily homes, which fell from 408 units in 2007 to 149 during the past year. Total multifamily construction was up 20 percent for the year.

HBA Executive Vice President/CEO Tim Underwood said current trends favor multifamily construction and renewal of older multifamily residential properties.

“There remains a demand for housing and in recent years much of that demand has gone toward homeownership,” Underwood said. “We’re now seeing consumers shift more toward rental homes and apartments, and we will need more choices to fill that need.”

While the housing market fared worse than expected in 2008, Underwood said significant progress has been made in reducing new-home inventories. Local new-home listings have fallen more than 40 percent from their peak and shed more than 1,200 listings during the past year alone. The latest report from housing research firm Landmarketing showed a similar decline, with the number of homes under construction down 35 percent from a year ago. The number of homes finished and unoccupied is at its lowest level in four years.

“Local builders have been battling both declining sales and overstocked inventories for the past two years,” Underwood said. “Builders have done their part to reduce inventories, and the local housing market is in a position to improve quickly when sales begin to increase.”

According to national forecasts, that should happen by mid-2009. Builders say the recent drop in 30-year fixed mortgage rates to around 5 percent has stoked an interest in new homes. Home builders are also backing a housing stimulus plan that would further help boost housing values by expanding the current $7,500 first-time homebuyer tax credit and provide qualified homebuyers with a 30-year fixed mortgage of 2.99 percent on homes purchased before June 30, 2009 and a 3.99 percent rate on loans closed before Dec. 31.

“A housing stimulus plan is critical to helping existing homeowners maintain value while underlining the opportunities available in the current market,” Underwood said. “The new-home market will not rebound until we stabilize home values, provide existing homeowners with assistance in avoiding foreclosures and encourage consumers to re-enter the housing market.”

Despite the slowdown in construction, the local new-home market saw some major shifts in 2008. While Johnson County remained the metro market share leader accounting for 29 percent of all new home starts, Clay County jumped from a 17 percent share a year ago to 25 percent during the past 12 months. Along with an 8 percent market share for Platte County, home-building in the Northland eclipsed Johnson County for the first time on record. Since 1999, Johnson County’s market share has fallen from 43 percent to 29 percent while the Northland’s share rose from 21 percent to 33 percent during the same time.

Jackson County’s market share fell from 23 percent to 17 percent, while Cass County fell one point to 7 percent. Leavenworth and Wyandotte counties held steady with 6 percent market share followed by Miami County at 2 percent.

While the metro as a whole saw housing permits fall 49 percent overall from a year ago, Clay County posted the best performance with a drop of just 26 percent, followed by Leavenworth and Miami counties with a 45 percent decline and Platte County down 48 percent. Johnson County fell 50 percent followed by Cass and Wyandotte counties down 56 percent and Jackson County down 63 percent.

Kansas City, Mo., led the list of top-permitting cities for the seventh straight year. The city permitted a total of 811 single-family homes in 2008. The top five cities remained unchanged from a year ago with Olathe ranking second with 379 units, followed by Overland Park with 186, Lee’s Summit with 151, and Kansas City, Kan./Wyandotte County with 144.

Rounding out the top ten were unincorporated Platte County with 130 units, moving from eighth to sixth; Shawnee with 102 units up from No. 10 to seventh; and Blue Springs with 97 units at No. 8, down from sixth last year. New to the top 10 were Raymore with 91 units and Independence with 87. Falling out of the top 10 were Gardner with 83 units and Lenexa with 79.

The Home Builders Association of Greater Kansas City (HBA) is the voice of the housing industry and the source for housing information. Comprising more than 1,000 member companies, the HBA represents an industry that contributes more than $2.5 billion to the Kansas City economy and supports more than 36,000 jobs in the Greater Kansas City metropolitan area.

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