Lack of Mortgage Activity Brings Down Kansas City Housing Market
Here’s how bad the Kansas City housing market is getting:
Doug and Cathy Cade are offering a new car or a trip to Hawaii for anyone who buys their five-bedroom Shawnee house for the asking price. And they haven’t had a taker.
“We have a lot of interest, as you can imagine,” Cathy Cade said last week of her home and the incentive to buyers offered. “But it’s kind of a down market.”
That’s for sure. The Kansas City Star, with the help of the Kansas City Regional Association of Realtors, broke down Missouri housing prices by ZIP codes (see attached picture for an example) and found just how far “down” the area market has been. Consider:
• Last year, the average resale price of existing homes declined in almost half — 44 percent — of almost 100 ZIP codes tracked by The Star in the six-county area.
• Housing appreciation didn’t even keep up with inflation in more than two-thirds of all ZIP codes last year. By contrast, prices rose faster than inflation in more than three-quarters of ZIP codes in 2005.• Only 10 percent of all ZIP codes experienced a double-digit jump in average resale price last year after 40 percent of ZIP codes achieved that in 2005.
The housing price misery rippled across the city and suburbs last year. As a result, Missouri mortgage demand was not exactly at its peak.
Sales in Kansas City’s Country Club Plaza-Loose Park area plunged 17 percent. Platte County’s Tiffany Springs area was down 9 percent. The Southland’s Hickman Mills section was off 7 percent. Even Johnson County’s 66208, encompassing Mission Hills and part of Prairie Village, declined 2 percent.
“The market has been going up and up and up, and what goes up must come down,” said Sue Walton, a Re/Max real estate agent. “But I think we had a more moderate correction compared to other cities.”
Indeed, metropolitan Kansas City’s downturn was hardly unique. Much of the country suffered declines, as well. The National Association of Realtors just reported that housing prices fell in more than half of the nation’s 40 largest metropolitan areas during the last quarter of last year.
The median price of existing homes decreased 4.2 percent in the Midwest between the end of 2005 and the end of 2006. That was the largest drop of any region. The Kansas City area was down 2.2 percent. Columbus, Ohio, was off 6.2 percent. Indianapolis fell 4 percent. The St. Louis housing market, though, was up 0.5 percent.
Real estate experts blamed the Midwest’s slump on job losses or sluggish growth, too much supply of new homes, and high foreclosure rates.
“It’s not the housing bubble popping, it’s weak local economies,” said Walter Molony with the national association.
Nevertheless, this decade has mostly been a boom time for housing appreciation across metropolitan Kansas City. In some places, prices have risen at double or triple the inflation rate since 2000. Consequently, mortgage loan borrowers have had trouble with affordability.
Even in 2006, a bright spot continued to be downtown.
The average resale price of homes and condominiums between the Missouri River and 31st Street soared 23 percent last year. A condo in the 1819 Lofts on Baltimore Avenue, for instance, was bought when the building opened two years ago for $188,500, then sold at the end of last year for $260,750 — a 38 percent profit.
For much of the rest of the area, however, plenty of sellers have gone through what the Cades are finding: The easy days of real estate speculating appear over.
The Cades are investors and bought the 3,600-square-foot home out of foreclosure. They intended to flip it quickly after some cosmetic repairs. They tried an advertising blitz capped by a local auction. But the bids were too low. That’s when they added the special incentives for a full-price, $359,500 offer — a new 2007 Nissan Versa sedan or Toyota Yaris hatchback, or a five-night trip to Hawaii.
“We felt like we had to do something to attract attention,” Cathy Cade said.
Click here to read the rest of this Kansas City Star article.