Real Estate Values



With Plenty Of Room To Expand, Kansas City Has A Real-Estate Market That Is Defined By Low Cost, Multiple Options And Price Stability.

Lewis and Clark get a lot of the credit for taking the first tentative steps to explore what is now the Kansas City region when they arrived and started making detailed notes of the Missouri River valley on their famous expedition in 1804. A few years later, Clark became what you might consider the area’s first developer when he headed up construction of Fort Osage in 1808.

But 30 more years would pass before the trailing wave of settlers started to overcome their reluctance to venture into what they called the Great American Desert—anything west of the Mississippi. The definition of a “desert,” it seems, was a lot different back then.

Screen Shot 2016-05-31 at 10.31.39 AMFar from being a desert, the Kansas City region would become a center of national agribusiness, uniquely positioned among major metro areas in a place where the value chains of row crops and grains, livestock and poultry production would all intersect. And from that small outpost on the river would grow a series of ever-widening concentric circles—some part of a growing Kansas City, some emerging as suburbs—packed with businesses, homes, schools and churches. 

Until comparatively recent times, the city never really did get too vertical—costs of building out were always a lot lower than the costs of building up, and in any case the people moving into this area were motivated by the dream of finding spaces they could call their own. And the dynamic of cheap land, always just a little outside the lines of developed property, has been in place for more than 165 years of Kansas City history.

That, in many ways, still plays out today as the suburbs of Kansas City push out in all directions. The result? Homes that would astound residents of America’s costal population centers, for both their quality and affordability, and low costs of doing business that have contributed to a diverse, recession-resistant economy.

This has real-world implications that augur well for the greater Kansas City region’s future. Bloomberg.com, for example, has recently calculated the additional amounts that members of the Millennial generation would need to earn, on average, to afford a home in 13 major markets where they’re effectively priced out.

Those range from $4,000-$6,500 in eastern cities to eye-popping five-figure deficits in California, home to many of the tech companies that Millennials consider pinnacle employers. In San Diego, the average 18-to-34-year old needs to earn an additional $36,084 a year to afford a home, Bloomberg calculated. That rises to $45,761 in Los Angeles, $60,975 in San Francisco and an astonishing $80,162 in America’s tech capital, San Jose and Silicon Valley.

Not so coincidentally, each of those areas was hammered—hard—in the real-estate crash that spawn-ed the Great Recession. And while values there are climbing back faster than they’re recovering in the Midwest, many wage-earners have no hope of buying a decent home. Even in Denver, Millennials come up $2,620 short.

Kansas City, happily, is on no such list, for good reason. Even among the higher level of median family income, as opposed to the average for an 18-to-34-year-old, residents of Kansas City earn more than twice what’s needed to pay the costs of an 80 percent mort-gage. Compare that with LA, where the median gets you 77.8 percent of the way toward making a mortgage payment on those terms. That’s only a few points better than New York’s 72.4 percent, San Francisco’s 71.4 percent, or San Jose’s 68 percent, according to the National Association of Realtors.

Screen Shot 2016-05-31 at 10.31.47 AMBut there’s more to hme ownership than making mortgage payments, which is why the aisles of Home Depot and Lowe’s are packed on weekends. The costs of maintaining a home, not surprisingly, go up as the properties age. 

According to Realtor.com, the median age of a home listed in the Kansas City area is roughly 57 years. And the American Community Survey of 2011 placed the metro area at 23rd among 50 select MSAs in terms of percentages of homes built before 1940.