Hands On The Heartland
Checking The Pulse Of The Kansas City Real Estate Market
There hasn’t been much good news on the Kansas City home building front in 2009 and this is a continuation of what we saw in 2008. Builders simply aren’t speculating on any new home starts and build jobs are only slightly better. I spoke with a couple of builders last week who hadn’t pulled a single building permit in 2009. While not surprising given the real estate slow-down, hearing news like that is a grim reminder of the difficult times facing the real estate industry. In Johnson County Kansas, there are currently 792 new homes on the market. In the past year there were a total of 911 new home sales in Johnson County. At the rate of new homes sales the past 12 months, there’s 10.4 months of new home construction inventory in Johnson County KS.
Kansas City New Home Construction
When you include all of the home builders, sub-contractors, suppliers, project agents, decorators and others who have relied on new home construction, it adds up to a lot of people out there starving for business. The lack of new homes sales has also left many new home subdivisions hanging out there only partially complete. I’ve been trying to get a grasp on when I think the Kansas City real estate market will turn around but for every good indicator, there’s several more pieces of bad news. I do believe 2010 will be a better year but I’m not confident enough to be making any bold predictions for a rebound. I’ve lost a ton of potential listings to agents who’s outlook is overly rosy. I’m sticking to my guns and telling sellers not to count on a big second half of 2009 turn around. It’s certainly a buyer’s market out there now and there’s every reason to expect that to continue through the end of the year.
Really, for there to be serious talk of a rebound, the number of foreclosures we’re seeing needs to slow to a crawl. Keep in mind that once a bank takes back a property, that bank wants to move the REO asset as quickly as is practical. Every dollar that is tied up in a foreclosure property is money that a lender can’t be lender to consumers (and making a return on). So owning REO property is like handling a hot potato to banks. Unfortunately, rather than receding, foreclosures picked up some steam in the first half of 2009. The 1.5 million U.S. properties facing foreclosure (according to RealtyTrac) were 15% more than in the previous six month period (2nd half of 2008). Once the foreclosure rate slows, home builders should again be able to compete in the marketplace and new home starts should increase.
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