Housing exec sees slight downturn
The good news: The eight-county, Kansas City metropolitan area is riding an unprecedented wave of single-family residential growth. The bad news: Next year, that wave is expected to crest, although only slightly.
So, there were pros and cons to the message Tim Underwood, executive vice president and chief executive officer of the Home Builders Association of Greater Kansas City, delivered during a seminar last week. Underwood addressed issues concerning residential construction during the Home Builders Association 2006 Forecasting Seminar at the Sheraton hotel in Overland Park.
New home construction in the metropolitan area will continue at a steady pace for the next few years, Underwood told the crowd of hundreds. But, expect 2006 numbers to be less robust than 2005.
"We should have a strong building climate for the next five years," he said. However, changing demographics, rising interest and mortgage rates, as well as an increase in costs for construction materials, "is going to make (building in 2006) a bit more difficult."
"We're predicting that we'll probably be down," he said. "But, that mirrors the national market."
Statistics support Underwood's claim that home building in the Kansas City metro reached record levels in recent years.
According to LandMarketing Inc., a research firm that analyzes the Kansas City housing market, the area saw 36,864 home starts in the last three years. Of that total, 3,129 remain unoccupied.
Underwood said the wave began in 2001, with builders and homebuyers seeking to capitalize on low mortgage rates.
"A lot of people made the decision to buy because of low rates and because of that they were able to purchase," he said. "That created the market."
The surge continued and, as result, all-time highs were set in residential permits issued for 2003 and 2004. Last year, the market scaled back, and permits decreased by 7 percent.
Underwood said the 2005 decrease and the 2006 prediction aren't cause for panic. Communities throughout the metro are continuing to see development of new subdivisions, he said.
"The metro area is growing," Underwood said, "and we've got to provide housing for the people that are moving here."