Look for an explosive trend in Kansas City area construction in the past five years and two words will leap out at you: Empty Nest. As baby boomers see off their children and gear up for retirement, their housing needs have drastically changed, seemingly overnight. And area contractors have been there to meet those needs.

"We're seeing the demographics of the market change," said Mike Brown, General Managing Partner of Brown Midwest, LLC, and Kansas Council Chairman for the Home Builders Association of Greater Kansas City. "We're seeing empty nesters purchase story-and-a-half homes and ranches from us, which nobody was asking about – even out of mild curiosity--as early as five years ago."

JoAnne Nero, owner of Aristocrat Homes, Inc., has seen the same outcry from baby boomers for smaller homes. "The buyers are willing to accept less square footage, but they want more quality," she said. "The empty nesters want to get rid of their larger homes, their finished basements, their empty bedrooms. They're not interested in heating and cooling all that extra space. So now they're more into open, flexible floor plans, the clad windows, zero maintenance exteriors, the stronger roofs--a quality home that lasts. These buyers don't plan on selling the homes they're building now, and that's reflected in the plans they're asking us to draw up."

From the new luxury ranches dotting the eastern stretches of I-70, to the new townhomes and villas of Overland Park, to the Plaza condos and downtown lofts, the idea that bigger is not necessarily better has made its presence felt in the metro area. These home designs are suddenly so popular, in fact, that large master communities are now geared specifically toward this new home style. As the area demographics change, empty nester communities will become more and more common.

"There is a large empty nester community that we're working on in the next few years," said Melanie Roben-Osterhaus, Market Analyst for Pulte Homes of Greater Kansas City. "They're looking for something that is more convenient to live in and comfortable for their lifestyle."

A Steady Midwestern Approach

The national trends for home construction are currently at record levels. Sales of new homes jumped a whopping 9 percent in March alone--the largest monthly increase in nine months. Kansas City has been almost on par with national levels for new home starts and sales. A record 10,742 single-family permits were issued in Greater Kansas City last year. A total of 1,153 single-family permits were issued in March metro wide, ranking as the second busiest month on record for local new home activity. Forecasts continue to call for 2004 to be on par with the numbers posted in 2003. But in terms of sheer numbers, new home sales in the area are not quite as impressive as they are nationally--and area contractors wouldn't have it any other way.

"The Kansas City market is generally more stable," said Nero. "We don't completely dry up, but we also don't spike drastically, either. I think it's probably the Midwestern mindset; the conservative nature of people here makes our market very steady. We're not like Silicon Valley, where it spikes and then crashes. We don't do the feast and famine thing. If you're a good businessperson, you can do well in a market like Kansas City."

Brown agreed, and went on to say that the economic turnaround is a pleasure to see, since construction was one of the few bright spots during the recent financial crisis.

"The construction industry has helped carry our economy through what was potentially a very devastating recession," he said. "Dollars spent in construction roll over 11 or 12 times in the overall economy, and that's a huge impact. If you took construction out of the equation, it would be devastating to the Kansas City economy, and we feel fortunate to have been working in one of the industries that carried the region through a very tough time."

How true. New home construction is one of the largest and most vital industries in metro Kansas City. HBA studies show that new home construction in the metro area directly supports more than 36,000 jobs and contributes more than $2.5 billion to the local economy. New home construction also has other indirect impacts on the local economy. The availability of new housing in Kansas City helps the area attract new employers and new jobs. Residential construction also paves the way for other forms of development, as retail and other industries follow the rooftops.

Vibrant Traditionalism

Even while the empty nesters have drastically changed the face of the vigorous new home construction market, they haven't destroyed the tried and true market for larger homes.

"While there is a much larger demand for a luxury ranch or villa type home today than there was in the past," said Jeff Robinson, President of J.S. Robinson Fine Homes, "there's still a strong family market in Kansas City, and people still like larger lots. We have a new development out in western Shawnee where lots are up to two acres each, and the prices for the land are higher than ever, but the demand for it is amazing. So the notion of the large, traditional single family home is alive and well here. People are still building big two story homes on the biggest lots they can find. Nobody has ever asked me for a tiny lot."

Higher prices for lots in the area are becoming a fact of life, because, as Robinson pointed out, Kansas City is beginning to run out of developable land. "We're seeing niche areas in between these huge master-planned communities get gobbled up," he said, "and customers are willing to pay a premium to get in those niches."

The numbers echo Robinson's thoughts. HBA studies show that while there is a tendency to simply build bigger, what Kansas City needs is to build smarter. While conventional development has its place, current building patterns will continue to place a strain on budgets and resources to provide infrastructure in new locations. What to do?

"A significant portion of this demand can be reduced by opting for higher densities," said Matt Derrick, HBA of Greater Kansas City's Director of Communications. "A study commissioned by the Housing Choices Coalition of Greater Kansas City showed that at the current pace of development, metropolitan Kansas City will develop nearly 400 square miles of land during the next 30 years. Increasing residential density by just one unit per acre would help save 58 square miles of development--an area the size of San Francisco."

Derrick said the Housing Choices Coalition of Greater Kansas City is a partnership among home builders, realtors, economic development councils, government representatives, civic leaders, housing professionals and other community leaders.

"The mission of the coalition is to expand the availability of housing choices throughout metropolitan Kansas City," he said. "The Housing Choices Coalition will help to educate public officials, private industry and home consumers on the need for new housing choices, and promote their development throughout metro Kansas City.

Nero said another reason lots will get smaller is that developers need more density to make the land affordable. This was another sentiment echoed by Brown, who outlined another HBA initiative to help public servants to live where they work.

"From the HBA standpoint, one of the things we focus on is being able to provide housing to people in our community (teachers, firefighters, policemen), so they can live in the city in which they work," he said. "No matter what kind of subsidy it is, we're looking for the cities to allow for higher density zoning, so that you can put more houses on the same amount of land. That way, you can build each house for less money."

Tech Friends

Yet another factor adding to the boisterous building market today is technology and business model shifts, which have helped the industry streamline its processes and build more efficient homes. The result? A sustained building boom.

"Cell phones, fax machines, e-mail, accounting software and the like have allowed us to build 8 to 10 times the number of houses we could've built in the same amount of time as recently ago as the 1970s," he said. "Technology allows us to do much more with much less."

Another newish trend in the world of construction is the all-in-one construction firm, the Home Depot before the Home Depot, if you will. Some firms cover as much as land development, home building and real estate services. Roben-Osterhaus points to Pulte's home building process as a sign of how builders are trying to offer customers more control than in times past. "Pulte Home Sciences is our division in Michigan that continually studies the construction process and tries to make our homes more energy efficient and more efficiently built. Such a division was uncommon a generation ago."

Brown's firm has adopted the all-encompassing strategy for his business, too. "We were once just builders, but now we've got residential land development, home building and real estate sales, all under one roof," he said. "This trend is becoming more common and less individualized. It's an effective strategy for selling land, homes and real estate – there's more control. I'm a third generation homebuilder. We're the first generation to do it this way and it's much more effective."

The Lay of the Land

Upscale home developments, with obvious topographical attractions for homeowners, offer their own special brand of headaches to builders. The best lots in the area, by and large, are either situated around golf courses, lakes, or sit on high ground with downhill views.

"Lots in subdivisions today have steep dropoffs in the back, and we have some soil concerns building homes in this part of the country," said Harry Roth, President of Roth Construction Co, Inc. "We focus on upper bracket, custom homes, so we want to make sure we get everything just right. Many of these lots are steeper, and that makes construction a little more difficult."

That's not to say that Roth doesn't enjoy a challenge, though. "We enjoy working with the unique home ideas and building according to custom specifications," he said. "Each project is somewhat a work of art."

So with all these choices and in the midst of a tricky economic climate, when is the right time to a build a new home? Right now, according to Robinson.

"There should be a sense of urgency to buy now, not just because of interest rates, but because time just has to be running out on this boom," he said. "How can you speculate that home construction can be better in two years than it is now? Who knows? It could be a risky bet to speculate that rates will be better next year, or building costs will go down."