Cost of Living

 

Look at what the Kansas City region has going for it: Access to world-class amenities and health care. Top-flight public and private schools. A wealth of transportation networks, and a nearly unmatched centrality for nationwide shipping and distribution.

Those are solid factors behind any decision to do business in this region, but here’s one that may trump many other cost considerations: Greater Kansas City features one of the lowest costs of living for any comparable metropolitan area in the nation.

That status starts with the states of Missouri and Kansas. According to the Missouri Economic Research and Information Center, the final quarter of 2010 placed both states in the Top 10 for affordability for combined costs of groceries, housing, utilities, transportation, health care and other goods and services. Those statistics mesh almost exactly with longer-term measures of price affordability compiled by the Council for Community and Economic Research with its highly regarded C2ER Cost of Living Index.

And, since the pain of higher energy prices tends to spread the pain of higher costs evenly around the country, the Kansas City region has retained its competitive edge during the 2010–2011 run-up in oil and other energy costs.

As the circle is drawn in closer to states in this region, Missouri and Kansas again emerge in competitive positions: In an immediate eight-state region, Kansas ranks fourth and Missouri 5th in cost of living, according to MERIC’s data.

The Greater Kansas City metropolitan area itself, also enjoys a lower cost of living than many comparable cities, weighing in at 97.6 on the Council for Community and Economic Research’s COLA index for the first quarter of 2010. This index assesses inter-city differences in the cost of six major components of consumer expenditures: grocery items, housing, utilities, transportation, health care, and miscellaneous goods and services.

The Home Front

When one has moved here the Kansas City region shines in particular in housing affordability, which results in levels of home ownership that would be unthinkable in many areas of the nation, especially the East and West coasts.

While real-estate values have been driven down nationwide since the financial-services crisis of 2007, they have held up better in Kansas City than in many areas of the country. But even with the calculus refigured on a nationwide scale, the National Association of Realtors says that, in the first quarter of 2011, the median sales price for a single-family home in KC was $130,700—fully 21 percent below the U.S. average of $166,100.

That affordability translates into the kind of stability often associated with home ownership. In Clay County, for example, approximately 70 percent of the residents own their homes. When average salaries are factored in, nearly 80 percent of Clay County residents can afford an average home, compared to as few as 20 percent in areas such as California or New York.

In Denver, by contrast, the same family would find its selection limited to only 60 percent of the homes in the market. In New York, that drops to 50 percent, while in San Diego it falls to 22 percent.

Overall, housing in Missouri also comes in at 20 percent more affordable than the nation as a whole, while the Kansas side figures are at least 15 percent lower—again, figures that place the two-state region in the Top 10 for housing affordability.

Some Exceptions

Some areas within Greater Kansas City, however, do show considerable variation skewing many of the home-price statistics up is Johnson County, Kansas. Because it is home to some of the most affluent communities in the two-state region, it includes some of the most luxurious homes available, figures which tend to deceptively skew the county’s average home value upward and mask the affordability of many homes there.

But the higher home prices are also a reflection of another positive: Johnson County’s average household income is one of the highest in the country.

In general, the picture here is one of outstanding affordability. Stories of transplanted residents from the East or West Coast who are almost shocked at low housing costs are not uncommon.

Only a few unique cost/use categories produce notably higher average costs in the Kansas City region. Transportation, for example, averages a higher percentage here than in many locales because of the relatively expansive metropolitan region and lack of mass public transportation. Yet even taking into account such factors, the overall costs remain comparatively low.

Food costs also tend to be lower here, one benefit of living near the nation’s breadbasket and the meat-production value chains for beef, pork and poultry.

The Bottom Line

Overall, the Kansas City region’s affordability translates into bottom-line successes for business as well, in several important ways—labor costs, for one. Even when companies here pay workers at below national norms, those same employees can enjoy a higher quality of life in the Kansas City area—with more disposable income each month—because their own costs of living are sharply lower than in regions of the country.

Setting aside the outlier costs of New York City, easily more than double the national average of 100—and coastal communities that are often one-third more expensive, the Kansas City region’s overall score of 95 handily beats figures of cities such regional centers as Minneapolis (115), Chicago (113) or Denver (101).