Kansas City private, public sectors teaming up to meet housing demand

Commercial, historic spaces becoming residential
2022 housing market
Posted at 6:42 AM, Feb 01, 2022

KANSAS CITY, Mo. — Housing shortages continue to affect Missouri and Kansas.

While the number of homes listed continues to decrease, prices continue to go up.

According to an end-of-the-year report conducted by Missouri Realtors, the number of homes put up for sale kept going down significantly each month after August 2021. Homes sold in December saw an average price jump of over 30% compared to homes sold in December of 2019.

"This is a situation where builders didn’t build for a number of years at a level that they needed to build to keep up with the level of demand," said John Sebree, CEO of Missouri Realtors.

The housing crisis is also being felt across the country.

The National Association of Realtors reports the country is short of about 5.5 million homes and it's causing a ripple effect on the economy.

With more people working from home, they are less likely to put up their homes for sale. And low supply and high demand continue to cause an increase in prices.

Unless those prices level out, Missouri Realtors predicts the trend will continue into 2022.

“There is no silver bullet, the private, in the public sector have to work together to come up with solutions," Sebree said.

He pointed out that some of those solutions are already being used in Kansas City.

Missouri is one of several states that offer tax credits, which are tax incentives given to developers by the government, to reuse and remodel historic properties.

Applications for the 2022 fiscal year closed Dec. 31, 2021, and there are already applications in line that exceed the $90 million state-wide cap for the year.

“Instead of going to the suburbs and building something from the ground up, it's neat to see something right in the heart of the community in an urban area come back to life," said Banks Floodman with Sunflower Development Group LLC.

Sunflower Development Group is based in Kansas City and has benefited from historic tax credits throughout the years.

They redeveloped The Grand building after it was left half vacant in 2016 and turned into a residential building with more than 200 units. The Argyle Building in the heart of the Power and Light District is another example. The building was built in 1906 and was repurposed by Sunflower and is now home to more than 200 units. The Blenheim school was also redeveloped by Sunflower after it was put up for sale by Kansas City Public Schools in 2009. The building currently has more than 50 affordable senior units inside.

"There is definitely a market for this type of housing," Sebree said. "It will then free up the other real estate that someone is looking for."

Sebree added that repurposing vacant and historic buildings also helps to lower construction costs and uses up less resources.

No historic tax credits were used to build Sunflower's latest project, Converge KC. However, they were able to turn available retail space into residential space after it was completed last year.

More than half of their units are already leased, with Phase 2 in the works that would add nearly 100 additional units to the building.

"With Covid and all the things associated with that, we are seeing migration from office to residential," Floodman said.

MarksNelson, a certified public accounting firm in Kansas City, explained how historic tax credits work and how they can also add economic growth within the community.

“Typically, structures like an old school that were never on the tax roll to begin with will now be on the tax roll and will be taxable," said Tim Anderson, Tax Manager at MarksNelson. "A lot of times, a vacant building that has been remodeled or rehabbed will increase the taxable base and increase the property value, which then will increase the local state and tax revenue."

Depending on the structure, property taxes can also increase with these changes as Kansas City continues to attract developers.

"Kansas City is unique in that they have a lot of old historic structures and a lot of those have fallen out of favor," Anderson said. "Developers are taking those bases and adapting them into an alternative use, which is bringing economic activity into the area."

If you still have your sights set on buying a home, Missouri Realtors said to be patient and talk to your real estate agent about your wants and needs.

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