"Toto, I’ve a feeling we’re not in Kansas any more."
But, Toto, maybe you should be. And that would probably apply to anyone else who is not looking for a heart, a brain or courage but a nice home in one of the most stable housing markets in the United States.
Back in March, two news items caught my eye. First, a report by the Federal Housing Finance Agency that noted a seven-state region, which included Kansas, had the highest home-price appreciation from December 2011 to January 2012.
On the heels of that report came a LendingTree survey called, "America’s Healthiest Housing Markets," which listed Kansas at No. 9, right behind Utah, Virginia and Colorado.
Kansas, a long, rectangular-shaped state in the heart of the Midwest, boasts ample agriculture production and even good oil and gas (a lot of small, stripper wells have been pumping continuously since the price of oil passed $60 a barrel), but, in terms of population core and gross domestic product (GDP), all that’s somewhat misleading because the state has been undergoing a general urbanization.
One-third of the state’s economy is located in the Kansas City metro area, said Art Hall, director of the Center for Applied Economics at the University of Kansas. "If you include Lawrence (home to the University of Kansas), you get up to more like 40 percent of the economy."
The densest of the those Kansas City metro counties is Johnson County, home to Overland Park, a city with a population of 173,000 in 2010, up from 149,000 in 2000. The county population reached 544,000 in 2010, up from 451,000 in 2000. Other growing cities include Shawnee, Mission and Lenexa.
The state’s largest city, Wichita, with a city population of 382,000, is located in the south-central part of the state. Hall also said that a growing population corridor has developed along Interstate 35 from Wichita through McPherson and Salinas to Manhattan.
So, while the state population growth is generally flat, because of internal migration the urban areas are still expanding, which helped those markets considerably during the Great Recession. The state’s economy was extremely stable because of high agricultural prices, and, as Hall points out, as with other Midwest states, there is "high labor participation; everyone is employed unless a manufacturing operation goes down."
Indeed, unemployment was about 3 percentage points below the national average. "We move in lockstep with the national economy, but we tend to be better," said Hall.
Finally, when it comes to housing, the Kansas metros didn’t experience the huge housing price bubble, so the Great Recession bust was moderate.
Traditionally, the Wichita area, for example, shows a 2.5 to 3 percent increase per year in house price appreciation, said Bud Cortner, president of Wichita Area Association of Realtors Inc. and a principal with Keller Williams Realty Signature Partners LLC. "When you are on that type of schedule, you don’t have the kind of bust that areas experiencing 20 percent to 30 percent appreciation experienced. We have taken an 8 percent to 10 percent hit."
Wichita is a manufacturing city with a strong aviation sector, which means the city’s housing market moves differently than Johnson County. During the peak year of 2007, home sales reached 13,000 units; now the market sees about 7,000 homes moving, which Cortner calls "the new norm."
Back in February 2009, the average sale price in the Wichita area was $109,000; the average price rose to $120,000 in 2010, back down to $109,000 in 2011 and this year touched $104,000.
There is some good news in this market, according to the South Central Kansas MLS Inc., which reported existing-home sales climbed 16.7 percent between January and February of this year, and 22.8 percent between February 2011 and February 2012.
Meanwhile, in February, the number of units sold hit 924, a nice increase over the 773 homes sold a year earlier, Cortner said. The SCK MLS reported months of inventory for existing homes decreased to 7.6 months.
Nevertheless, Cortner cautioned, new construction (which used to be 20-25 percent of the total market) has slipped down to 6 percent, and the formerly high-priced market around Flint Hills National Golf Club has seen sales drop substantially.
This all differs dramatically from the Kansas City metro area, where new construction sales were up 45 percent in February over the year before. "We are still well below new construction sales from the peak in 2006 by about three-fourths, but it is getting better," said Steve Banks, president of the Kansas City Regional Association of Realtors (KCRA) and Heartland Multiple Listing Service, and principal in RE/MAX Heritage in Blue Springs, Mo.
Banks sees good things ahead for the area.
"Regionally, we are in the ninth consecutive month of increased sales (as compared to the same month of the prior year)," he said. "That hasn’t happened since 2003."
In March 2012, the existing-home sale price hit $143,354, a 3 percent rise over March 2011, KCRA reported. Much of that was carried by a handful of counties — Clay/Ray, Jackson and Johnson — all of which experienced an increase in average sales price for existing homes from the same month in the prior year.
The average new-home price in March 2012 was $316,036, up 3 percent from a year earlier, according to KCRA.
Also on the right track is existing-home supply, which in March was 7.1 months, a much better number than the 8.9 months in March 2011.
In Johnson County, through the first three months of the year, closed sales jumped 25 percent over 2011, said Banks. "Year to date (through March) average sale price hit $235,599 in Johnson County, up 2 percent over the prior year."
Banks attributes the better numbers in the housing market to pent-up demand. Plus, he sees more building ahead. "We’re seeing basements going in, cement being poured and framing crews back at work," he said. "Just a year and a half ago, there was no activity; new construction had stalled."
Johnson County is a very prosperous area with a well-diversified economy, said Hall. "The county has been doing well for three decades. It’s our Dallas. Again, the reason it’s so stable is because of internal migration. No one is building in the rural areas and we are getting excess population moving into the metro areas."
Dorothy, after arriving back from Oz, and growing up, would move away from the family farm to Overland Park where she would become a successful headhunter and killer entrepreneur.
