Cost of Living

Blessed with sharply lower costs for housing and groceries, Kansas City residents have more disposable income than many of their peers nationwide.

No community aspires to be slightly below average, with perhaps one notable exception: Cost of living. And that’s where the numbers favor the Kansas City region, relative to many other large metropolitan areas in the United States.

Comparatively speaking, we’re a low-cost community straddling a line that divides two low-cost states: Missouri and Kansas. The combined costs of groceries, housing, utilities, transportation, health care and other goods and services put Kansas 8th nationally and Missouri 12th, according the C2ER Cost of Living Index for the first quarter of 2013.

Kansas scored a reading of 91.6 compared to the national average of 100, while Missouri was close behind at 92.7. On a more granular level, Kansas City’s overall cost of living index of 97.5 sits 2.5 points below the national average of 100, according to the Census Bureau’s 2012 Statistical Abstract.

A big driver in that overall affordability is housing. With a reading of 89.2 against that national average of 100, Kansas City residents enjoy a significant advantage over residents of Midwestern communities like Chicago, Minneapolis, Milwaukee or Cleveland. That contributes to levels of home ownership that are unheard of in coastal communities. The figure for Boston, for example, is 152.7. For San Diego, it’s 194.4. And then there’s an over-the-top score of 386.7 for New York.

The reason the housing piece is so important is that, for most households, payments for mortgage and rent account for 20 percent of income—and that’s before you factor in insurance, maintenance, appliances, decorations and other factors. Areas with low overall home prices, then, give residents a decided lifestyle advantage, since more disposable income is available for other expenses.

That category goes a long way toward holding down Kansas City’s overall index. An overlooked aspect of lower housing prices here: They weren’t driven to those levels by a bursting bubble, as has been the case in other areas of the country.

While real-estate values have been devastated nationwide since 2007, they have held up better in Kansas City than in coastal regions. And they’re rebounding. According to the National Association of Realtors, the median sales price for a single-family home in the Kansas City MSA in early 2013 was up 7 percent from the previous year, to $133,100—yet still more than 25 percent below the U.S. average of $176,600.

That affordability translates into the kind of stability often associated with home ownership.

In Cass County, for example, a remarkable 80.1 percent of the residents own their homes—a full 10 percentage points higher than the statewide average. Directly to the west across state line, the figure for Miami County, Kansas, is nearly identical—79.9 percent. If those figures are outliers, they’re not outliers by much: Johnson County to the north is the region’s most affluent and second-most populous; it sports a home ownership rate of 71.9 percent.

By another measure, when average salaries are factored in, nearly 80 percent of the residents in Clay County, on the northern suburbs of Kansas City, can afford an average home, compared to as few as 20 percent in areas such as California or New York.

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.

How does Kansas City hold up in other cost-of-living categories?

One significant factor in the lower costs here is, quite simply, the proximity to places that grow our food. You won’t find many orange groves or avocado trees nearby, but Kansas City sits smack in the middle of the primary food chains: Beef, pork and poultry production is all around us, as is grain production.

We’re nearly break-even with respect to utilities and health-care costs, at 99.8 for the former and 97.2 for the latter. And in two of the six categories, we top the national average. Transportation, for example, averages a slightly higher figure here (100.8) than in many locales because of the relatively expansive metropolitan region and general lack of public transportation.

The biggest disparity, fortunately, is one that accounts for only about 16 percent of a household’s average expenditures, according to the Bureau of Labor Services. The cost index for miscellaneous goods and services runs 105.1 in this region.

Overall, then, costs for more than 70 percent of the biggest line-items in your budgets of those living in the Kansas City region are lower than they are for the nation as a whole.

Beyond the wage-earner’s perspective, there is another vantage point. Because of the affordability, businesses can still draw talented workers even at compensation levels below national averages. That’s because those same employees can enjoy a higher quality of life—with more disposable income each month.

Even more comprehensive figures from the U.S. Department of Labor underscore the region’s generally positive picture. Measuring both Missouri and Kansas sides of the metropolitan area, recent statistics yield averages that are not only below national figures, but below regional cost-of-living figures from other cities in the Midwest, as well.