On Wednesday, the Lee’s Summit Economic Development Council (LSEDC) hosted part one of its Developer’s Showcase event, featuring a panel of housing industry experts who discussed the current housing market, as well as the outlook for the next few years. Panelists included Tim Paulson of Emery Sapp & Sons, Zalman Kohen of Summit Homes, Ian Mussman of Drake Development and Brenner Holland of Hunt Midwest. The event was moderated by LSEDC co-chair, Todd Haynes of RBC Wealth Management.
On the short-term outlook, one surprising impact of the COVID pandemic has been the demand for housing. Holland said that typically in the Kansas City area, there is a five month supply of newly-constructed homes on the market. Currently, Holland said, the supply on the market is more like 1.8 months.
“I’ve been doing this 17 years, it’s by far the lowest I’ve ever seen,” said Holland.
Meanwhile, Kohen added, the COVID pandemic has contributed to what is being dubbed “The Great Reshuffle” where people are re-evaluating their home ownership priorities.
“It really created an opportunity for people to re-think their choice and their housing choice. People have been purchasing for a variety of needs, Zoom rooms and home offices. Obviously, having a space for kids to do home schooling while the parents are working from home as well. So, such a variety of reasons that really created such a strong demand,” said Kohen.
The demand is so great, that Paulson said his company is busy preparing lots for new construction at a speed that far exceeds their usual pace.
“It’s putting a stress on the system. There’s a lot of construction companies busy, so we’re grateful for that,” said Paulson.
It’s not just the single-family market that has been impacted. Mussman said his company has seen a shift in the rental market from home owners looking to go maintenance-free.
“We’ve seen an interesting trend where a lot of our applicants are actually the baby boomer generation that has paid off their homes, have low debt, and has seen asset values both in the stock market and their home price go up and now they’re looking at, if they sell their home, they can afford this premium luxury apartment unit,” said Mussman. “We’ve seen a great demand from those 55+ for this class-A, highly amenitized product.”
All panelists agreed that the current trend will level out eventually, leading to new opportunities and challenges, including increased construction costs and an increased demand for attainable housing. Kohen said for Summit Homes, the term attainable means a person with a median income can afford their homes.
“A lot of times when people talk about affordable housing, there’s a negative connotation with that word that ‘affordable’ means ‘less than,’” said Kohen. “For us, this is a good opportunity to showcase that we can achieve that attainability in collaboration with the city.”
Currently, Kohen said the average sales price on a new construction home in Lee’s Summit ranges from $375,000 to $390,000. To meet the attainable housing, as defined by his company, Summit Homes plans to break ground soon on a new community that will range from $250,000-$275,000. But in order for the community to offer that product, Kohen said, there needs to be a great deal of coordination.
“The builders and developers cannot do this alone,” said Kohen. “It really takes all of us coming together, really recognizing the vision of being a municipality and being a city that provides housing options that really are relevant to the consumer today and for the consumer of tomorrow.”