Comprehensive Housing Market Analysis for Kansas City, Missouri-Kansas

The analysis presented in this report was completed prior to the COVID-19 outbreak

in the United States and therefore the forecast estimates do not take into account

the economic and housing market impacts of the actions taken to limit contagion

of the virus. At this time, the duration and depth of the economic disruption are

unclear, as are the extent and effectiveness of countermeasures. HUD will continue

to monitor market conditions in the HMA and provide an updated report/addendum

in the future.

COMPREHENSIVE HOUSING MARKET ANALYSIS

Kansas City,

Missouri-Kansas

U.S. Department of Housing and Urban Development,

Office of Policy Development and Research

As of January 1, 2020

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Executive Summary 2

Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020

Executive Summary

Housing Market Area Description

The Kansas City Housing Market Area (HMA), coterminous

with the Kansas City, MO-KS Metropolitan Statistical Area

(MSA), encompasses 14 counties along the border between

Missouri and Kansas. For this analysis, the HMA is divided into

two submarkets: (1) the Missouri submarket, which consists

of Bates, Caldwell, Cass, Clay, Clinton, Jackson, Lafayette,

Platte, and Ray Counties; and (2) the Kansas submarket,

which consists of Johnson, Linn, Miami, Leavenworth, and

Wyandotte Counties. The city of Kansas City is known for

its style of jazz. In 2018, the United Nations Educational,

Scientific, and Cultural Organization designated Kansas City

as a ¡°City of Music,¡± the only such city in the United States.

Tools and Resources

Find interim updates for this metropolitan area, and select geographies nationally,

at PD&R¡¯s Market-at-a-Glance tool.

Additional data for the HMA can be found in this report¡¯s supplemental tables.

For information on HUD-supported activity in this area, see the Community Assessment Reporting Tool.

Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas

U.S. Department of Housing and Urban Development, Office of Policy Development and Research

Executive Summary 3

Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020

Market Qualifiers

Economy

Sales Market

Rental Market

Since 2011, nonfarm payroll jobs have increased

by an average of 16,200, or 1.6 percent, annually.

The unemployment rate had dropped from a peak

of 8.7 percent in 2009 and 2010 to 3.2 percent in

2019. During 2019, job gains occurred in 8 of the

11 employment sectors, with the education and

health services sector having the largest increase,

up by 7,000 jobs, or 4.5 percent. During the 3-year

forecast period, nonfarm payrolls are expected to

increase an average of 0.9 percent annually.

The home sales market in the Kansas City HMA is

slightly tight, with an estimated vacancy rate of

1.3 percent, down from 2.7 percent in 2010. The

number of home sales in the Kansas City HMA

declined nearly 5 percent during 2019 from an

all-time high in 2018, as a lack of inventory for sale

constrained the market (Metrostudy, A Hanley Wood

Company). During December 2019, there were

2.0 months of inventory on the market, down

from 2.4 months in December 2018 (Kansas City

Association of Realtors?). During the 3-year

forecast period, demand is estimated for 17,875

new homes. The 1,480 homes under construction

will satisfy a portion of the demand during the

first year.

The overall rental market is currently balanced with

an estimated 6.4-percent vacancy rate, down from

11.7 percent in 2010, when conditions were soft.

Similar conditions exist in both submarkets where

the overall vacancy rates have declined significantly

since 2010. The apartment market in the HMA is

slightly tight, with a vacancy rate of 4.5 percent during

2019, down from 4.9 percent in 2018 (Reis, Inc.). The

apartment market improved significantly in the first

half of the decade from soft conditions in 2010. By

2015, the apartment market conditions became tight.

Increased rental production since then has helped to

meet the increased demand and alleviate the tight

conditions that existed in 2015. During the 3-year

forecast period, demand is estimated for 13,425 new

rental units. The 10,100 units under construction will

satisfy a significant portion of the demand.

Increasing: During 2019, nonfarm

payrolls increased by 15,100, or

1.4 percent, which was the ninth

consecutive year of growth.

Slightly Tight: The average new

and existing home sales price

increased by 3 percent during 2019.

TABLE OF CONTENTS

Economic Conditions 4

Population and Households 10

Home Sales Market 14

Rental Market 23

Terminology Definitions and Notes 30

Balanced: The average rent for

an apartment increased 3 percent

during 2019, which is the lowest

annual rent growth since 2013.

3-Year Housing Demand Forecast

Total Demand

Under Construction

Kansas City

HMA Total

17,875

1,480

Sales Units

Missouri

Kansas

10,350

800

7,525

680

Kansas City

HMA Total

13,425

10,100

Rental Units

Missouri

Kansas

8,375

5,500

5,050

4,600

Notes: Total demand represents the estimated production necessary to achieve a balanced market at the end of the forecast period. Units under construction

as of January 1, 2020. The forecast period is from the current date (January 1, 2020), to January 1, 2023.

Source: Estimates by the analyst

Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas

U.S. Department of Housing and Urban Development, Office of Policy Development and Research

Economic Conditions 4

Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020

Economic Conditions

Table 1. 12-Month Average Nonfarm Payroll Jobs (1,000s)

in the Kansas City HMA, by Sector

12 Months

Ending

December

2018

Largest Sector: Professional and Business Services

Economic conditions remain strong as nonfarm payrolls have

increased in the Kansas City HMA for 9 consecutive years.

Primary Local Economic Factors

The city of Kansas City originated as a river port on the Missouri River and later

became a major rail hub. Today, the HMA, which is near the geographic center

of the continental United States, continues to serve as a hub for shipping and

distribution for a large area of the country. As a transportation hub, one of the

most recent developments in the HMA is Logistics Park Kansas City, a 1,700acre planned development with a capacity of 17 million square feet of industrial

space. The HMA is home to the Kansas City Southern railway, which ranks at

816 on the Fortune 1,000 list. The city of Kansas City also has a large federal

government presence, which includes one of the five Internal Revenue Service

(IRS) processing centers. With the IRS having a large presence in the city of

Kansas City, the HMA is also home to H&R Block, Inc.

Absolute

Change

Percentage

Change

Total Nonfarm Payroll Jobs

1,096.5

1,111.6

15.1

1.4

Goods-Producing Sectors

126.5

128.7

2.2

1.7

Mining, Logging, & Construction

49.6

51.6

2.0

4.0

Manufacturing

76.9

77.2

0.3

0.4

Service-Providing Sectors

970.0

982.9

12.9

1.3

Wholesale & Retail Trade

162.7

160.8

-1.9

-1.2

Transportation & Utilities

53.9

53.9

0.0

0.0

Information

17.0

15.8

-1.2

-7.1

Financial Activities

80.0

78.3

-1.7

-2.1

Professional & Business Services

194.3

198.0

3.7

1.9

Education & Health Services

155.5

162.5

7.0

4.5

Leisure & Hospitality

110.0

111.1

1.1

1.0

Other Services

42.7

42.7

0.0

0.0

Government

154.0

159.7

5.7

3.7

Notes: Based on 12-month averages through December 2018 and December 2019. Numbers may not

add to totals due to rounding. Data are in thousands.

Source: U.S. Bureau of Labor Statistics

Figure 1. Sector Growth in the Kansas City HMA, 2001 to Current

Current Conditions¡ªNonfarm Payrolls

During 2019, nonfarm payrolls totaled more than 1.1 million, an increase

of 15,100 jobs, or 1.4 percent from 2018 when nonfarm payrolls increased

by 11,800, or 1.1 percent (Table 1). Nonfarm payrolls expanded in 8 of the 11

employment sectors, with job growth being led by the education and health

services sector, which increased by 7,000 jobs, or 4.5 percent, to 162,500 jobs.

Contributing to job growth in this sector was the opening of several new microhospitals and expansions of existing hospitals throughout the HMA, including

the $100 million expansion at The University of Kansas Hospital Indian Creek

Campus and a $100 million expansion of the Olathe Medical Center in Olathe,

Kansas. From 2001 to current, the education and health services sector has

been the fastest growing sector in the HMA, increasing by an average of 3,300

jobs, or 2.6 percent, annually (Figure 1).

12 Months

Ending

December

2019

?

?

?

?

?

?

?

?

?

?

?

?

?

?

-80

-60

-40

-20

0

20 40

Change in Jobs (%)

60

Total Nonfarm Payroll Jobs

Goods-Producing Sectors

Mining, Logging, & Construction

Manufacturing

Service-Providing Sectors

Wholesale & Retail Trade

Transportation & Utilities

Information

Financial Activities

Professional & Business Services

Education & Health Services

Leisure & Hospitality

Other Services

Government

80

Note: The current date is January 1, 2020.

Source: U.S. Bureau of Labor Statistics

Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas

U.S. Department of Housing and Urban Development, Office of Policy Development and Research

Economic Conditions 5

Kansas City, Missouri-Kansas Comprehensive Housing Market Analysis as of January 1, 2020

The government sector added the second greatest number of jobs, increasing

by 5,700, or 3.7 percent, during 2019. Job growth accelerated in this sector due

to increased employment in the federal government subsector, which increased

by 1,400 jobs, or 5 percent, during 2019. Increased hiring of temporary

census workers and the relocation of U.S. Department of Agriculture (USDA)

employees from Washington, D.C., to a downtown Kansas City, Missouri location

contributed to growth. More than 500 jobs in the USDA Economic Research

Service and National Institute of Food and Agriculture moved to the HMA. The

local government subsector increased by 4,300, or 3.9 percent, during 2019,

which was mostly the result of hiring new schoolteachers, especially in the

Kansas submarket, where local government hiring remained flat from 2014

through 2017. The federal government is the largest employer in the HMA, with

more than 20,800 employees at various agencies and an additional 7,500 at

Fort Leavenworth. Table 2 shows the list of the 10 largest employers in the

Kansas City HMA.

Table 2. Major Employers in the Kansas City HMA

Number of

Employees

Name of Employer

Nonfarm Payroll Sector

Federal Government

Government

20,846

Cerner Corporation

Professional & Business Services

14,178

The University of Kansas Health System

Education & Health Services

10,229

HCA Midwest Health

Education & Health Services

9,963

Saint Luke¡¯s Health System

Education & Health Services

9,029

Fort Leavenworth

Government

8,937

Children¡¯s Mercy Hospital

Education & Health Services

8,614

Ford Motor Company

Manufacturing

6,640

Hallmark Cards, Inc.

Wholesale & Retail Trade

6,085

Sprint Corporation

Information

6,000

Notes: Excludes local school districts. Employment figures for Fort Leavenworth include federal government

employees and private contractors who work on base and military personal, who are not counted in

nonfarm payroll data.

Source:

The largest employment sector in the Kansas City HMA is the professional and

business services sector with 198,000 jobs, accounting for nearly 18 percent

of all nonfarm payroll jobs (Figure 2). The sector was the third largest growth

sector in 2019, gaining 3,700 jobs, or 1.9 percent. This sector has been the

second fastest growing sector in the HMA from 2001 to current, increasing by

an average of 3,200 jobs, or 2.0 percent, annually. Since 2011, job creation in

this sector has increased by an average of 5,100 jobs, or 3.0 percent, annually,

the fastest pace among all sectors since 2011. Contributing to the large

increase of jobs in this sector are several expansions at Cerner Corporation¡ª

a healthcare information technology company. Work is still ongoing at the

Cerner Corporation Innovations Campus as construction is wrapping up on

the third and fourth phases of this project. Since this project started in 2016,

the company has added more than 4,000 full-time employees with continued

growth expected over the next several years.

Figure 2. Share of Nonfarm Payroll Jobs in the Kansas City HMA, by Sector

Mining, Logging, & Construction 5%

Government 14%

Manufacturing 7%

Other Services 4%

Trade 14%

Leisure &

Hospitality 10%

Total

1,111.6

Transportation &

Utilities 5%

Information 1%

Education &

Health Services 15%

Financial Activities 7%

Professional & Business Services 18%

Notes: Total nonfarm payroll is in thousands. Percentages may not add to 100 percent due to rounding.

Based on 12-month averages through December 2019.

Source: U.S. Bureau of Labor Statistics

Comprehensive Housing Market Analysis Kansas City, Missouri-Kansas

U.S. Department of Housing and Urban Development, Office of Policy Development and Research

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