With average sale prices at $400,000 will JoCo get serious about affordable housing?
Limited inventory and skyrocketing demand have pushed up home prices across the Kansas City metro area.
But Johnson County is approaching a new milestone: In August, the average sales price of new and existing homes reached nearly $400,000, according to the Kansas City Regional Association of Realtors.
While the booming market is good news for sellers, it does underscore longstanding concerns that Johnson County homes are becoming increasingly out of reach for many working- and middle-class families.
“No matter how well our careers go, I don’t think we’ll ever be able to afford a house over $300,000,” said Olathe teacher Amy Hastings. “I think a $400,000 house is out of the question for us.”
She and her husband, who works in sales, didn’t know what to expect when they started house hunting in the middle of the pandemic.
They hoped to find a home with at least two bedrooms and two bathrooms in Mission or Roeland Park. But looking at homes priced up to $240,000, they realized that was unlikely.
They eventually found a home in Roeland Park with two bedrooms and one bathroom. The kitchen and bathroom had outdated laminate flooring and cabinetry and it needed new paint and fixtures.
“Being first time home buyers we were maybe a little idealistic,” said Hastings, who closed on her home in May. “It’s definitely a good house for us to start out in. But it needed some TLC.”
Johnson County’s average sales price of $395,577 was up 12% over the previous year. That’s more than double the average $192,346 in Wyandotte County and well above Jackson County’s average sale price of $238,926 in August.
The Kansas City Regional Association of Realtors reported an average sale price of $266,093 for all homes sold in August across the wider Kansas City region, which stretches as far as Lawrence and St. Joseph.
But even as prices climb, Johnson County is still home to a wide range of price points. In the 66221 zip code in south Overland Park, the average sales price this year topped $630,000. But out in Gardner, the average sales price in August was closer to $257,000.
Across the county, 13 of the county’s 30 zip codes had average sales prices above $400,000 year to date, according to the Realtors association.
The real estate market was tight before the coronavirus pandemic, with Kansas City area home prices rising faster than most U.S. cities, even boom towns like Denver, Nashville and Austin. That momentum has only increased. Prices are soaring as buyers compete over a limited pool of inventory.
“It’s just insane. There’s about five buyers out there for every home,” said Mike Gallagher, a real estate agent with Keller Williams. “It’s all supply and demand.”
Pandemic doesn’t slow sales
Across Johnson County, inventory remains tight on just about anything priced under half a million dollars, Gallagher said.
While more than 1,100 new homes have been built in Johnson County so far this year, construction hasn’t kept up with rising demand. Many homeowners are staying in their homes longer. At the same time, builders in some communities like Prairie Village are tearing down existing homes to build newer, bigger ones.
Homes in good condition that are priced right sell within a matter of days. And buyers should be ready to pay up. In Johnson County, Gallagher said most starter homes are priced between $250,000 and $300,000. He searched listings last week and saw only 13 priced below $200,000 across the entire county.
“A first-time home for some of these kids is $350,000 or $375,000. They can afford that,” he said. “In Johnson County, the middle class is probably considered upper class in a lot of other places.”
Still, record low interest rates are helping buyers get more for their money.
There are few bargains to be had in Johnson County nowadays. But if buyers want a less competitive option, he suggests they look into what he calls “grandma’s house.” There’s still a reliable stock of homes with solid bones, but outdated carpet, wallpaper and fixtures.
“That’s the house you might want to go after. Because you might not be fighting multiple offers. Because everybody wants move-in ready,” Gallagher said.
He said he recently sold a four-bedroom, one-bath home near Antioch Park for under $200,000. The home was outdated and the young couple who bought it planned to refurbish it and convert one of the bedrooms into a second bathroom.
“They’ll make it their own,” he said. “They could spend $30,000 on this house and probably turn around and sell it for $280,000 if they add another bathroom.”
Johnson County’s housing gap
A growing number of people are struggling to afford rent or a mortgage in Johnson County — or find a place to live at all.
“My husband is a teacher and I work in human services. We certainly wouldn’t be able to buy a house in the county,” said Kristy Baughman, who bought her house in 2012 in Overland Park. “We were lucky enough to buy when we did. If we tried to get into the county right now, we wouldn’t be able to.”
Baughman, director of education and planning at United Community Services of Johnson County, or UCS, said many workers are finding it increasingly difficult to live where they work. That’s particularly true for workers like retail sales clerks, office administrators and bank tellers.
Wages have not kept up with the cost of living in Kansas’ largest and richest county. And the availability of cheaper housing options continues to shrink.
“In the county, we’ve got around 138,000 jobs that fall into three categories: food service, retail and office administration. And they have a top median salary of about $35,000. Those people aren’t going to find places to live in the county. It’s just not possible,” Baughman said. “It’s an issue of housing availability, an issue of wages and an issue of opportunity. Those things come together in this perfect storm for the county.”
From 2014 to 2019, the median monthly housing cost for a homeowner with a mortgage rose nearly 13%, according to data from UCS. Costs rose nearly 18% for homeowners without a mortgage. And in the same five-year period, the monthly cost of rent rose 19.5%.
The median home list and sales prices in Johnson County are rising faster than national rates, according to real estate listing site Zillow. While prices are rising across the metro, Zillow predicts that the rate of price growth may slow this fall.
For the first time since 2004, community leaders have undergone a comprehensive, countywide housing study, which is supported by all of Johnson County’s municipalities and conducted by UCS. While the final product won’t be completed until the end of the year, early data show the number of households burdened by the cost of living has been jumping.
Attitudes among local residents continue to rank among the county’s most enduring obstacles to creating more affordable housing.
NIMBY, short for “not in my backyard,” battles take over many city meetings when denser housing projects are proposed. Many residents often push back against apartment developments — albeit many proposed in Johnson County are at a luxury price point — arguing that they could bring crime or change the character of their neighborhoods.
“This is one of our biggest hurdles,” Baughman said. “We have to move away from thinking about people as ‘them’ and really think about our community as ‘us.’ It’s not my backyard. It’s all our yard. It’s important to think about who we want in our community and who needs a space to live here.”
In Prairie Village, residents are serious about creating more affordable housing, said Mayor Eric Mikkelson.
“There is generally more openness now throughout Johnson County to addressing this issue,” he said. “It’s gotten more momentum and traction as an issue we should be paying attention to.”
He said residents would likely not support a massive apartment development that would stand out in the community. But he said there’s some interest in securing developments of 15 to 20 units that would fit into the character of Prairie Village’s tree-lined neighborhoods.
Housing prices present competing interests for city leaders: They can be viewed as a financial boon because of the potential for increased property tax revenue — particularly welcome during the current recession.
But Mikkelson said prices make communities like his increasingly unattainable for many middle and working class families.
“Prairie Village is stronger as a city if our police, our teachers, our restaurant workers can live amongst us. And it’s better for business, too, because they have a broader pool of employees,” he said. “I think from a city planning standpoint, we don’t want to make Prairie Village a place where those families cannot ever afford to live or buy.”
Prairie Village still has 1,000 homes assessed below $250,000, he said. But that inventory is rapidly shrinking as existing home values rise and as builders tear down homes to replace them with expensive new builds.
The city has sought to rein in the number of tear downs. And it’s trying to address housing affordability as part of a long-term planning process currently underway.
Prairie Village is also contemplating zoning changes that would make it easier to develop accessory dwelling units. Creating apartments in basements or above garages would help property owners offset the cost of ownership while also creating more starter home options in town, the mayor said.
“Each city has its own unique version of this,” he said. “But we’re seeing a reduced proportion of that attainable workforce, starter home.”
Residents burdened by rising costs
In some parts of Johnson County, nearly one in four households are burdened by the cost of housing. The number rises to 40% for renters. That means households spend more than 30% of their income on housing.
Recent data show Edgerton has the highest population of residents struggling to pay for housing, at 23.4%. Shawnee followed with 20.7%. Nearly 19% of De Soto’s population was cost-burdened.
First-year teacher Abby Kirk said she saw firsthand how limited the housing market was this summer. Kirk recently landed a job in Topeka, while her boyfriend works in Overland Park. The couple needed to find a place somewhere in between, with an apartment they could afford that had rent less than $1,000.
“Our options were very limited. We had to expand our options and open our minds a little bit more, and be willing to drive more,” said Kirk, who eventually found an apartment in De Soto — a city that’s seen strong competition for its stock of $350,000-range homes, a bargain relative to many parts of Johnson County.
But it’s not just early-career or low-to-moderate-income workers who are struggling, said UCS Executive Director Julie Brewer. With limited inventory, she said there’s a log jam of people searching for everything from apartments to starter homes to places to downsize and retire. And homes under $250,000 are difficult to come by.
Even seniors who have paid off their homes are seeing the cost of home ownership rising, she said.
“If you’re on a fixed income and costs over the last five years have grown by 18%, your wages wouldn’t have grown,” Brewer said. “So at what point in time, just by maintaining what you have, do you have costs making it unmanageable?”
Johnson County, Brewer said, needs to address its housing gap, or the “missing middle” — essentially housing that falls somewhere between large, single-family homes and luxury apartment complexes.
That could require cities to make policy changes, she said. Overland Park, for example, has been exploring changes to its city code that could make it easier for developers to build duplexes, triplexes and cottage communities of cheaper homes. Cities might also need to rethink the high costs required for developers to build low-density housing projects, she said.
Along with the countywide housing study, leaders are forming a task force to tackle the lack of housing options. And as a result of the efforts, Brewer wants to provide each city with an action plan to make such changes and make it more attractive for developers to propose affordable housing projects.
In some communities, the priority is preserving the existing stock of housing. But in others, like Edgerton, miles of wide open space creates opportunities for new housing development. More than 4,000 people travel to Edgerton’s Logistics Park for work each day.
“There may be swaths of land that owners are willing to sell, that could be turned into housing for the thousands of workers at the Logistics Park,” Brewer said.
But the problem isn’t just about policy.
Brewer said people should think about people like teachers, health care workers, food service workers and emergency service responders who have been hailed as essential workers during the pandemic.
“We’ve put up yard signs thanking them for being heroes,” Brewer said. “Why wouldn’t I want them for my neighbor?”
‘They’re selling so fast’
Garick Lair bought his Merriam home in January, just before the pandemic.
“I thought the market at that time was really stable,” he said. “After buying my house, I wish I would have waited a few months.”
That’s because current buyers are benefiting from months of declining interest rates. A regulatory auditor at a local bank, the 27-year-old said his neighborhood near Werner Park seems to be comprised of two disparate groups: young families and people over the age of 65.
“It seems like a lot of these houses people bought and moved in the ’50s or ’60s and they’ve lived in the house that whole time,” he said.
Garick recently looked up his home on Zillow, which estimates it’s already appreciated $42,000 in value since he bought it earlier this year.
“That shocked me completely,” he said.
Still, he said home ownership in Johnson County remains within reach for younger people.
“It’s going to take some research and effort,” he said.
Homes generally sell at or above list price and the most desirable properties can sell within hours. The fast-paced market has changed the needs for home staging services.
Before the pandemic, Blue Nest Staging & Interiors would generally work with those selling homes listed at $300,000 or above. But not so much these days.
“They’re selling so fast that the need for staging in that price range has decreased,” said co-owner Amy Anderson. “The market is definitely hot.”
Blue Nest is now working primarily with sellers of homes priced at $400,000 or above. At that price range, buyers are more particular about furnishings and fixtures, she said. And even at that price point, the market is moving quickly, she said.
“We’re busier than we’ve ever been,” Anderson said.
This story was originally published October 5, 2020 at 5:00 AM.
