The analysis presented in this report was completed prior to the COVID-19 outbreak in the United States and therefore the forecast estimates do not take into account the economic and housing market impacts of the actions taken to limit contagion of the virus. At this time, the duration and depth of the economic disruption are unclear, as are the extent and effectiveness of countermeasures. HUD will continue to monitor market conditions in the HMA and provide an updated report/addendum in the future. COMPREHENSIVE HOUSING MARKET ANALYSIS Kansas City, Missouri-Kansas U.S. Department of Housing and Urban Development, Office of Policy Development and Research As of January 1, 2020 Share on: Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020 Executive Summary 2 Executive Summary Housing Market Area Description The Kansas City Housing Market Area (HMA), coterminous with the Kansas City, MO-KS Metropolitan Statistical Area (MSA), encompasses 14 counties along the border between Missouri and Kansas. For this analysis, the HMA is divided into two submarkets: (1) the Missouri submarket, which consists of Bates, Caldwell, Cass, Clay, Clinton, Jackson, Lafayette, Platte, and Ray Counties; and (2) the Kansas submarket, which consists of Johnson, Linn, Miami, Leavenworth, and Wyandotte Counties. The city of Kansas City is known for its style of jazz. In 2018, the United Nations Educational, Scientific, and Cultural Organization designated Kansas City Tools and Resources as a “City of Music,” the only such city in the United States. Find interim updates for this metropolitan area, and select geographies nationally, at PD&R’s Market-at-a-Glance tool. Additional data for the HMA can be found in this report’s supplemental tables. For information on HUD-supported activity in this area, see the Community Assessment Reporting Tool. Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas U.S. Department of Housing and Urban Development, Office of Policy Development and Research Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020 Executive Summary 3 Market Qualifiers Economy Sales Market Rental Market Increasing: During 2019, nonfarm Slightly Tight: The average new Balanced: The average rent for payrolls increased by 15,100, or and existing home sales price an apartment increased 3 percent 1.4 percent, which was the ninth increased by 3 percent during 2019. during 2019, which is the lowest consecutive year of growth. annual rent growth since 2013. Since 2011, nonfarm payroll jobs have increased The home sales market in the Kansas City HMA is The overall rental market is currently balanced with by an average of 16,200, or 1.6 percent, annually. slightly tight, with an estimated vacancy rate of an estimated 6.4-percent vacancy rate, down from The unemployment rate had dropped from a peak 1.3 percent, down from 2.7 percent in 2010. The 11.7 percent in 2010, when conditions were soft. of 8.7 percent in 2009 and 2010 to 3.2 percent in number of home sales in the Kansas City HMA Similar conditions exist in both submarkets where 2019. During 2019, job gains occurred in 8 of the declined nearly 5 percent during 2019 from an the overall vacancy rates have declined significantly 11 employment sectors, with the education and all-time high in 2018, as a lack of inventory for sale since 2010. The apartment market in the HMA is health services sector having the largest increase, constrained the market (Metrostudy, A Hanley Wood slightly tight, with a vacancy rate of 4.5 percent during up by 7,000 jobs, or 4.5 percent. During the 3-year Company). During December 2019, there were 2019, down from 4.9 percent in 2018 (Reis, Inc.). The forecast period, nonfarm payrolls are expected to 2.0 months of inventory on the market, down apartment market improved significantly in the first increase an average of 0.9 percent annually. from 2.4 months in December 2018 (Kansas City half of the decade from soft conditions in 2010. By Association of Realtors®). During the 3-year 2015, the apartment market conditions became tight. forecast period, demand is estimated for 17,875 Increased rental production since then has helped to new homes. The 1,480 homes under construction meet the increased demand and alleviate the tight will satisfy a portion of the demand during the conditions that existed in 2015. During the 3-year first year. forecast period, demand is estimated for 13,425 new rental units. The 10,100 units under construction will satisfy a significant portion of the demand. TABLE OF CONTENTS 3-Year Housing Demand Forecast Economic Conditions 4 Sales Units Rental Units Kansas City Kansas City Population and Households 10 HMA Total Missouri Kansas HMA Total Missouri Kansas Home Sales Market 14 Total Demand 17,875 10,350 7,525 13,425 8,375 5,050 Rental Market 23 Under Construction 1,480 800 680 10,100 5,500 4,600 Notes: Total demand represents the estimated production necessary to achieve a balanced market at the end of the forecast period. Units under construction Terminology Definitions and Notes 30 as of January 1, 2020. The forecast period is from the current date (January 1, 2020), to January 1, 2023. Source: Estimates by the analyst Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas U.S. Department of Housing and Urban Development, Office of Policy Development and Research Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020 Economic Conditions 4 Table 1. 12-Month Average Nonfarm Payroll Jobs (1,000s) Economic Conditions in the Kansas City HMA, by Sector 12 Months 12 Months Largest Sector: Professional and Business Services Ending Ending Absolute Percentage December December Change Change 2018 2019 Economic conditions remain strong as nonfarm payrolls have Total Nonfarm Payroll Jobs 1,096.5 1,111.6 15.1 1.4 increased in the Kansas City HMA for 9 consecutive years. Goods-Producing Sectors 126.5 128.7 2.2 1.7 Mining, Logging, & Construction 49.6 51.6 2.0 4.0 Manufacturing 76.9 77.2 0.3 0.4 Primary Local Economic Factors Service-Providing Sectors 970.0 982.9 12.9 1.3 The city of Kansas City originated as a river port on the Missouri River and later Wholesale & Retail Trade 162.7 160.8 -1.9 -1.2 became a major rail hub. Today, the HMA, which is near the geographic center Transportation & Utilities 53.9 53.9 0.0 0.0 of the continental United States, continues to serve as a hub for shipping and Information 17.0 15.8 -1.2 -7.1 distribution for a large area of the country. As a transportation hub, one of the Financial Activities 80.0 78.3 -1.7 -2.1 Professional & Business Services 194.3 198.0 3.7 1.9 most recent developments in the HMA is Logistics Park Kansas City, a 1,700- Education & Health Services 155.5 162.5 7.0 4.5 acre planned development with a capacity of 17 million square feet of industrial Leisure & Hospitality 110.0 111.1 1.1 1.0 space. The HMA is home to the Kansas City Southern railway, which ranks at Other Services 42.7 42.7 0.0 0.0 816 on the Fortune 1,000 list. The city of Kansas City also has a large federal Government 154.0 159.7 5.7 3.7 Notes: Based on 12-month averages through December 2018 and December 2019. Numbers may not government presence, which includes one of the five Internal Revenue Service add to totals due to rounding. Data are in thousands. (IRS) processing centers. With the IRS having a large presence in the city of Source: U.S. Bureau of Labor Statistics Kansas City, the HMA is also home to H&R Block, Inc. Figure 1. Sector Growth in the Kansas City HMA, 2001 to Current Total Nonfarm Payroll Jobs Current Conditions—Nonfarm Payrolls Goods-Producing Sectors During 2019, nonfarm payrolls totaled more than 1.1 million, an increase Mining, Logging, & Construction of 15,100 jobs, or 1.4 percent from 2018 when nonfarm payrolls increased Manufacturing Service-Providing Sectors by 11,800, or 1.1 percent (Table 1). Nonfarm payrolls expanded in 8 of the 11 Wholesale & Retail Trade Transportation & Utilities employment sectors, with job growth being led by the education and health Information services sector, which increased by 7,000 jobs, or 4.5 percent, to 162,500 jobs. Financial Activities Professional & Business Services Contributing to job growth in this sector was the opening of several new micro- Education & Health Services hospitals and expansions of existing hospitals throughout the HMA, including Leisure & Hospitality Other Services the $100 million expansion at The University of Kansas Hospital Indian Creek Government Campus and a $100 million expansion of the Olathe Medical Center in Olathe, -80 -60 -40 -20 0 20 40 60 80 Kansas. From 2001 to current, the education and health services sector has Change in Jobs (%) been the fastest growing sector in the HMA, increasing by an average of 3,300 Note: The current date is January 1, 2020. jobs, or 2.6 percent, annually (Figure 1). Source: U.S. Bureau of Labor Statistics Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas U.S. Department of Housing and Urban Development, Office of Policy Development and Research Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020 Economic Conditions 5 The government sector added the second greatest number of jobs, increasing The largest employment sector in the Kansas City HMA is the professional and by 5,700, or 3.7 percent, during 2019.