Government & Politics

Johnson County home prices are spiking. Can young families still afford to live there?

Home prices in parts of Johnson County continue to skyrocket, raising fears that those communities could become unaffordable for the young families that have long been the backbone of the county.

The home price surge could also hit many current homeowners, whose property taxes in some cases could rise by several hundred dollars. Notices of Johnson County’s 2018 residential appraisals will go out to about 200,000 property owners on Feb. 26, and county officials are warning that the rise in appraisal values could be startling.

The median Johnson County residential sale price has jumped from $195,000 in January 2014 to $269,000 this year, an increase of nearly 38 percent. In the hottest markets like central Prairie Village and parts of Fairway, prices are up more than 10 percent in just the past year.

Prairie Village Homes Association leaders were surprised when a modest ranch house sold about a year ago for $325,000, compared with $150,000 for comparable properties a few years ago.

Real estate agents say the market is supercharged because the housing supply is especially tight. Fewer than 1,300 homes are currently listed for sale. A more normal market would have about 6,000 homes on inventory, balancing sellers with potential buyers. Demand is especially fierce for anything under $350,000.

For young people looking to buy their first home, it’s a challenge.

Ryan Ringel and his wife, Lyndsi, both 27, are expecting their first child and hoping to move from a small Overland Park rental to their own home.

They moved here in July from a very pricey housing market in Washington state, but were still surprised at how tough the Johnson County market is.

Ringel said they want to find something under $200,000, but most of what they’ve seen so far requires a lot of updating or improvements, which adds to the cost.

“We were not prepared for the competitiveness,” he said, noting that investors often pay cash up front for $200,000 homes, making it hard for first-time buyers to beat those offers.

Friday evening, they put in an offer on a Merriam house that had just gone up for sale for $175,000. But it had eight other offers, even above the asking price, and went under contract Saturday to another buyer.

They’ve broadened their search to include Mission, Lenexa and Olathe, still hoping to find something in Johnson County.

“It’s a place I’d like to stay,” Ringel said.

Veteran Johnson County real estate agent Sherri Hines also has a young client with a good job who is trying to buy a nice house with a yard for her dog.

“She’s pretty much priced out of Johnson County,” Hines said, noting that anything under $200,000 is likely to be small or a fixer-upper — and still sell in the blink of an eye.

It’s a concern for some civic and government leaders who want Johnson County to be a welcoming, diverse community.

Overland Park City Council member Logan Heley, 25, rents an apartment and is watching the housing trends.

“Absolutely we need to make sure Overland Park not only has a high quality of life for people of all ages and backgrounds but also is affordable for all incomes,” he said. “I want to live in a community with diverse backgrounds, mixed incomes and multi-generations.”

He pointed out that millennials often earn less than baby boomers did at this stage in their working lives, especially in black and Latino populations.

“My ward in northern Overland Park has as many starter homes as anywhere in Johnson County,” he said. “But they are generally older and may need updates that are hard to finance on young income, especially if you’ve been renting a less-affordable apartment and are saddled with student debt.”

Property tax impact

Property appraisals — an estimated value of what your home is worth — are pegged to what comparable houses have sold for in a particular neighborhood.

The appraisals due out later this month, county officials say, will show 15 percent jumps in parts of northeast Johnson County and 10 percent or higher increases in parts of Overland Park and Merriam. Big jumps will also be seen elsewhere throughout the county.

  

Those new appraisals will affect 2018 tax bills that go out late in the year.

The rise in appraisals “is probably the largest increase we have seen in many, many years,” said Johnson County Appraiser Paul Welcome, who has held the position since 1991. “It’s because there’s very limited housing stock in this area.”

Appraised values are a worry for some longtime residents and those on fixed incomes.

A homeowner’s residential property tax bill derives from a home’s assessed value, which is 11.5 percent of the appraised value. The property tax is calculated by multiplying the assessed value by the total mill levy — including state, county, school district and city — then dividing by 1,000.

The impact of appraisal changes varies greatly depending on the tax rates in various geographic locations within the county.

For 2017 tax bills, one 1950s two-bedroom ranch home near the Prairie Village shops saw a 20 percent increase in its appraised value, from $176,000 to $212,000. Its annual property taxes went up $479, to $3,231.

In Olathe a three-bedroom split-level home built in 1991, valued just somewhat higher at $184,000 in 2016, saw its appraisal go up 7 percent to $197,000 in 2017. Its annual taxes rose $262, to $2,882.

After reappraisal notices go out at the end of the month, homeowners can appeal by March 28 if they think the valuation is too high.

The increased values don’t automatically mean a revenue windfall for cities and the county. Elected leaders can provide some tax relief by lowering their mill levies.

Overland Park reduced its mill levy slightly in 2017, as did Prairie Village.

Johnson County Budget Director Scott Neufeld said the county also reduced its total mill levy in 2017, including libraries and parks, from 26.607 to 26.351.

Johnson County Commission Chair Ed Eilert said the commissioners are well aware of the coming appraisal increases, and the need to address the tax impact on residents, by giving strong consideration to another levy reduction this year.

“It’s going to be on everybody’s radar screen,” he said. “This is an issue we will be dealing with.”

Prairie Village Councilwoman Jori Nelson said she has had several residents contact her with concerns.

“Many of our Prairie Village residents are elderly and on a fixed income and it is challenging for them. A lot of our residents have lived in Prairie Village, raised their families in Prairie Village, and have no intention of selling their home anytime soon so they must budget accordingly,” she said.

Still affordable areas?

Many real estate agents believe Johnson County is still a big draw for young professionals and families attracted to strong neighborhoods and good schools.

“I think Johnson County still offers a lot of affordable housing,” said Christian Zarif, who was the 2016 president of the Kansas City Regional Association of Realtors. “There’s availability, but it’s harder because of the market conditions and competition.”

She said Prairie Village and Fairway are among the most challenging. More choices exist in Roeland Park, Overland Park, Merriam, older parts of Shawnee and Olathe.

“You just have to look in the right areas and be patient,” she said, pointing to a recent SmartAsset study that named Olathe and Overland Park among the most affordable cities nationally for millennial homebuyers. According to SmartAsset, someone with an annual income of about $50,000 could afford a home of about $200,000.

Hines said home sale prices have gradually increased since about 2013, but the northern Johnson County market has exploded in the past year or two.

  

“A house under $200,000 will have multiple offers within the first day,” she said, citing the example of a $185,000 Overland Park house that went on the market recently and had 40 showings within hours. “It was a revolving door in this tiny little house all day long.”

Zarif said it’s stressful for first-time homebuyers to make a decision that quickly, but in many instances, homes go on the market on a Friday and are already under contract by Sunday.

She doesn’t see that changing anytime soon, even as interest rates rise. She said prices have been rising throughout the metro area, including in areas like Brookside and parts of the Northland, but it’s a bit more frenzied in Johnson County.

The demand for homes isn’t uniform across all price ranges. The biggest desire, and thus the biggest impact, said county appraiser Welcome, is for homes considered more affordable, under $350,000.

Prairie Village is particularly hot because of its well-maintained Cape Cod homes, the mature tree canopy and the proximity to good schools, Welcome said.

Prices have also risen in Fairway, but it’s not deterring young families from buying, said Ed Peterson, former Fairway mayor and former Johnson County commissioner. He said he got a real estate mailer in January that noted homes in his neighborhood are selling for above $400,000, compared to about $300,000 as the area emerged from recession three or four years ago.

Still, he’s watched nearly a dozen homes go on the market nearby and “I think all of those homes were purchased by families with young children.”

Gina Burke, 34, an Overland Park City Council member, believes her city is still affordable for young families, and she’s not terribly worried about increasing home prices.

“I think having the increased value of homes makes it a great investment,” she said.

That’s what Quentin Hoover, 28, and his 24-year-old girlfriend were thinking.

It took several months of searching, but they were able to find a home they could afford in Overland Park in December.

They had enjoyed living in a loft rental in Kansas City’s Crossroads, but wanted a home.

They looked in Prairie Village but felt it was too expensive. Hoover says they found a home they liked not far from his job at Cargill on Metcalf Avenue. They viewed it on the same day it went on the market, and made their offer that night.

“For us, it was having something you can really invest in, as opposed to paying rent,” he said. “It’s a neighborhood that provides a lot of character…..It’s something we’ll have for the future.”

Staff writer Kelsey Ryan contributed to this report.

Lynn Horsley: 816-226-2058, @LynnHorsley

  Comments