Situated in a virtual sweet spot for business mobility, straddling the state line between Kansas and Missouri, the Metropolitan Kansas City has become a safe haven for real estate investments. The region as a whole has just started to tap into an enormous amount of unused land for new development, including mixed-use facilities, new commercial development, in addition to new multi-family and single-family units.
There are many reasons that can be attributed to the abundance of new construction. When the economy turned sour in 2007-2009, Kansas City was one of a few major metro areas that was able to weather the storm. While property values and business revenues in most sectors did see a decline, the magnitude of the adjustment was not as extreme.
Today, the Kansas City Metro is seen as a trendy, hip, town with strong growth in a number of segments, especially, in real estate. Property values have climbed on average for the metro at 2% annually, with some areas, such as Johnson County, Kansas and Platte County Missouri, experiencing 8% growth when compared to 12 months prior. Inventory has held steady, at an average of around 5%, which has helped values climb. This proves that investors and homeowners are confident that the Metropolitan Kansas City region is a safe region when it comes to evaluating the overall health of real estate industry.
A number of new building sites including Prairie Fire and Mission Farms in Johnson County have placed a major bet on high-class “rent by choice” apartment complexes. These A class assets have for the moment helped to absorb a segment of the population that cannot find ample housing due to the inventory shortage and the lack of savings that the young generation has amassed thus far.
It remains to be seen how the overall absorption of these units will affect multi-family assets in lower classes. Many experts believe that the B- to D class assets are safe due to the low rents offered by the investors that own these types of properties. The average rent is so low that even if a low absorption rate in the A-Class new builds is seen, the great difference in offered rents should offset any negative effects for lower class asset holders.
Overall, we see Kansas City as an exceedingly strong real estate market in terms of growth in the number of units available, and the appreciative values of existing dwellings for both single-family and multi-family dwellings for the foreseeable future.
As the local economy improves, look for investors to make acquisitions in established areas that are seeing a robust revival due to new commercial activity such as Merriam, Prairie Village, Gardner-Edgerton in suburban Johnson County, Kansas. Areas of Kansas City, Missouri such as Waldo, Westport, Midtown and Brookside have become hotbeds of activity for investment properties.
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