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Compared with much of the nation, KC’s housing decline is hardly a blip
By CHRIS LESTERThe Kansas City Star
Just ask somebody with a home for sale in Miami or Las Vegas.
In Kansas City, though, it offers another signal that we’re muddling through this housing slump with bruises but few open wounds.
That’s the takeaway from the March housing numbers, which offer an early glimpse of how the spring sales season is shaping up.
Things are still pretty tough nationwide.
The nationwide average existing home price in March was $200,700, down 7.7 percent from a year earlier, according to the National Association of Realtors. Sales volume was running at a 4.93 million unit annual rate, down 19.3 percent from a year earlier.
The narrower Standard & Poor’s/Case-Shiller index, which tracks 20 metros nationwide — but notably excludes Kansas City — tumbled 12.7 percent over the past year.
Ouch.
With that as the nationwide backdrop, I’m taking comfort that things look a little better closer to home.
The average existing home sales price in the Kansas City area during March was $144,910, down 3 percent from a year earlier, according to the Kansas City Regional Association of Realtors. Existing home sales in March totaled 1,924, down 13 percent from a year earlier.
While modestly reassuring, the local numbers still came as a disappointment. You see, I had taken heart in the sudden sale of several nearby homes that had been lingering on the market.
Real estate is an intensely localized market, one that can change tremendously over a few blocks, let alone across the country. Even so, the recent flowering of nearby “pending” and “sold” signs sparked hope that we’ve marked the bottom.
Not quite yet, I suspect.
An acquaintance in the real estate business ran down some sales comps and histories on the properties in question in my neighborhood. And the resulting message is that while homes are starting to move, most only do so at a somewhat discounted price.
Here’s how things went for a few representative sales near my house in recent weeks.
As a group, the homes were most recently on the market for between five weeks and 10 months. The discount from their final asking price to sales price ranged from 1.8 percent to 5.6 percent.
Those figures, though, can be misleading. If you rewind the clock to account for price changes since those homes first hit the market, the final sales price was discounted between 8.6 percent and 18.2 percent from the original list price.
Frankly, those figures strike me as fairly realistic for my neighborhood.
As an incurable open house junkie, I watched with slack-jawed wonder in recent years as asking and sales prices soared during the housing boom. I watched with growing incredulity as Zillow.com nearly doubled its “guesstimate” of the value of my house since we bought it in 1999, then marked it back down nearly 17 percent from the peak. Zillow’s estimate for my home tweaked lower in recent days after the nearby homes sold.
These are the needed, if discomforting, adjustments that must be made to get the market priced at a level where the backlog of unsold housing inventory gets cleared. It’s no fun. But it must happen.
In the meantime, my family can take comfort in the fact that we like our house, we’re still way ahead of what we paid for the place nine years ago, and we haven’t sucked any equity out to buy TVs and such. We can also spend some time helping a relative scout for a deal in the neighborhood.
One of the more interesting bits of housing data I’ve seen lately comes from a nationwide study suggesting the broader Kansas City housing market is fairly valued, and may in fact be slightly undervalued.
Global Insight and National City Corp. jointly analyzed 330 metropolitan areas across the country at the end of 2007, covering 78 percent of the nation’s housing units. Notably, their methodology goes beyond pricing to include interest rates, local household income and population trends, and historic premiums or discounts for each market.
The study found 23 markets to be “overvalued,” including Miami, which it estimated to be 43.1 percent over its estimate of fair value. An additional 60 markets were deemed to be “moderately overvalued,” including Las Vegas, which it deemed to be 17.9 percent over fair value.
The vast middle of 221 “fairly valued” markets included Kansas City, which was estimated to be 6.8 percent below the statistically estimated fair value. And finally, 26 markets were labeled “undervalued,” most notably Dallas, which was estimated to be 30 percent below fair value.
Bottom line: Boom times are gone, folks. Now we’re groping for stability. And we’ll find it — eventually.