RISMEDIA, Jan. 25, 2007-(MCT)-Single-family housing construction slowed 21% last year in the Kansas City area in response to a glut of unsold new homes, but there was a jump in multifamily projects.
The year-end numbers released Tuesday by the Home Builders Association of Greater Kansas City confirmed that the home-building rush of the first half of the decade cooled in 2006. There were 9,359 single-family units built last year, a decline from several consecutive years in which housing starts topped 10,000.
Builders put on the brakes partly because of the number of unsold new homes already on the market — 5,575 as of December, according to the Kansas City Regional Association of Realtors. Coupled with a slowdown in sales last month, the Realtors group estimated the area had a 10.9-month supply of new homes.
Tim Underwood, executive vice president of the Home Builders Association, said the decline in single-family new-home starts last year was a result of the market seeking a better balance.
"The past year has been a year of transition for the local housing market, with the primary focus of local home builders to reduce speculative new-home starts," Underwood said in a written statement.
"We're seeing positive signs that this is happening and expect new-home sales to outpace starts in early 2007."
Home builders had been warned a year ago to expect a slowdown in the market, but the 5 percent decline forecast then proved overly optimistic.
The Home Builders Association found encouragement in a surge last year in permits for apartments, up 122 percent, and condominium and town home units, up 102 percent.
When combined with the single-family housing starts, the overall residential construction pace in Kansas City area was down 6 percent last year, compared with a 14 percent decline nationwide through November, according to the association.
Kansas City led the area in new-home construction for the fifth straight year in 2006 with 2,033 units. It was followed by Olathe, 849; Lee's Summit, 616; Overland Park, 499; Kansas City, Kan./Wyandotte County, 473; unincorporated Platte County, 334; Belton, 329; Lenexa, 325; Independence, 300; and Raymore, 290.
Underwood used the year-end report to warn that Kansas City builders and governments had to do more to ensure that housing remained affordable. He pointed out that new-home construction was shifting to the Northland area of Kansas City and Cass County, and away from Johnson County.
Johnson County was the most expensive housing market, with the average price of a new home increasing 7 percent to $346,000, according to the Realtors group. The average new house in Cass County, which has been one of the fastest-growing counties in recent years, was $241,500.
"There is little doubt that Johnson County and other areas of the metro have lost market share due to a lack of housing choices for families and households headed by teachers, nurses, police officers, firefighters, retail sales workers and many other professionals," Underwood said.
Johnson County accounted for 27 percent of all single-family home permits last year, down from a peak of 44 percent in 1998. The share of housing permits in Jackson and Cass counties combined grew to 34 percent, from 29 percent in 1998, and the share of Northland starts grew to 26 percent, from 21 percent in 1998.
The increasing cost of new homes, coupled with other factors such as weak mass transit and urban sprawl, threatens Kansas City's reputation as being an affordable place to live, Underwood said.
He noted a recent report by The Brookings Institution and the Center for Housing Policy indicated long-distance commutes prompted because people had to live farther out to find affordable homes drove up costs for area residents.
A separate Housing Policy study put Kansas City in the middle of the pack for housing affordability, higher than St. Louis; Memphis, Tenn.; and Indianapolis.
Copyright © 2007, The Kansas City Star, Mo.
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