KC Home-Building: Behind the Numbers

Home building through the first nine months of the year reached its highest point since the real-estate crash of 2007, according to new statistics from the Home Builders Association of Greater Kansas City. Through September, builders secured 6,294 permits in the eight core counties tracked by the association, compared with 6,217 in 2007, at the onset of the decline.

The grain of salt one must take with that news is the shift in types of residences being built, as construction has moved sharply away from single-family residences to multi-family structures. In 2007, the region saw 6,385 single-family homes erected. So far this year, the figure is 3,126, and the annual slowdown that marks permitting processes from November through January won’t alter that difference significantly this year.

Home construction, particularly with single-family homes, is a key economic driver, triggering purchases of major appliances, lawn and landscaping service and equipment, furnishings, carpets, window treatments and other related expenses. All of those are critical components of consumer spending, which accounts for more than two-thirds of economic activity in the U.S. Apartment construction, according to Moody’s Analytics, generates two additional jobs for each unit built–just half the rate of job creation attributed to single-family residential construction.

In the Kansas City area, September yielded a slight bump in permits issued over August, with 377 single-family permits issued. Multi-family construction, however, saw 897 units permitted, the association said.

“With tight credit and strict mortgage-lending obstacles faced by first-time homebuyers, new home sales may have difficulty maintaining their upward track,” said Sara Corless, the association’s vice president. “However, changes reported as recently as this week by federal regulators may assist those same first time buyers going forward in 2015.” She also cited the positive contribution from continuing low interest rates.

While Kansas City led the list of area cities most active in permitting, at 557, the Johnson County suburbs continue to drive the construction resurgence. Cities there account for nearly 39 percent of permits issued in the region this year, led in September by Olathe with 412, Overland Park with 309and Lenexa at 161.

Single-family permits, the association said, have been almost equally divided across the state line, with Kansas accounting for 1,584 and Missouri with 1,542; that dynamic flips for multi-family activity, where Missouri cities issued 1,660 permits to 1,508 in Kansas.