If you opened an envelope from Johnson County recently and it said your property is worth significantly more than it was last year, you’re not alone.
Some 98% of residential properties in the county, including apartments, increased in appraised value this year, despite higher interest rates that appear to have cooled the number of sales, according to the annual reappraisal report presented Thursday to the Johnson County Commission.
Last year, about 91% of Johnson County residents saw their valuations go up.
The primary reason appears to be a lack of new construction, said County Appraiser Beau Boisvert, during Thursday’s report.
‘It’s still going to be a seller’s market’
New construction has remained at the same low levels since about 2016, Boisvert said, and that has created a shortage that has kept home prices high.
“We just can’t seem to get the housing community to add in these spec homes that are built ahead of time and give us a balance of supply and demand that would help cut down inflation of the market,” he said. “Until that happens, it’s still going to be a seller’s market.”
The reluctance to build homes on the speculation that buyers will turn up later has kept the number available to sell stubbornly low at a time when new jobs are bringing new residents to the county who need affordable housing.
Since the Great Recession more than a decade ago, builders have been shy of putting up spec homes, causing the inventory of available homes to drop.
Only about a three-month inventory is typically available now, where at least a five- or six-month inventory would be necessary, according to Boisvert.
Average price for new homes up 11%
Recent interest rate increases have brought the overall number of real estate sales back down to pre-pandemic levels, he said.
Residential building permits – including single and multi-plex – also have dropped to 1,554 in 2022 from 2,337 the previous year.
But the average selling price for new and existing single-family homes has continued to rise in 2022, according to Boisvert’s report.
The average selling price for a new home was $678,000 and the average resale price was $473,000.
That’s up from $610,000 and $426,000 respectively in 2021.
Highest valuation jumps clustered in some pockets
A map of overall changes in valuation showed the highest increases in the center of the county, with pockets of especially high increases there and in the northeast.
Appraised values (not including new construction) went up from 16% to as much as 25% in some neighborhoods bounded by Kansas Highway 7 and Interstates 35 and 435.
Another area with similar increases was along the state line, north of Interstate 435.
The next highest increase, 13% to nearly 16%, was in the central part of the county.
Some areas in the southeast that experienced big increases in the past had lower ones this year, with increases under 8%.
Number of affordable homes on the market decreased
Boisvert’s office also provided a chart with the number of homes in each city broken down by price range.
The chart presents a picture of how ever-increasing home sales prices have depleted the number of homes considered in the affordable range.
By the appraiser’s office count, there were only 931 homes in the county valued at less than $150,000. That was a decrease from last year’s count of 1,623.
Moreover the number of homes in the next category, from $150,000 to $300,000 has also dropped, while the number of homes valued from $800,000 to $1.1 million has increased.
Some commissioners found the data on affordable housing troubling.
Commissioner Becky Fast noted that most new construction is in the luxury range or is for multi-family.
“That is to me where the real challenge is to this county,” she said.
Fast said her district in northeast Johnson County had only 20 homes valued at below $150,000.
“If you’re a teacher, you can’t afford a house for more than $150,000,” she said.
Commissioner Michael Ashcraft also noted the lack of lower-priced housing.
“If we were going to give tax incentives to have government help in certain areas supporting efforts to build more affordable housing it might be worth the debate,” he said.
Other notes from this year’s presentation
Commercial property – Appears to be coming out of the pandemic, although there are still challenges in office and some retail, Boisvert said.
- The retail market still has some uncertainty due to changes in shopping patterns. Over 350,000 square feet of retail space were added this year.
- Office space is still a “big gray cloud,” as businesses try to figure out whether employees will work from home, come into an office building or some combination of the two, he said.
- Some 241,800 square feet of office space was added this year, but much of it was for projects that were already on the books as the pandemic began.
- Boisvert noted he knew of at least three office complexes that may be converted into hotels.
Industrial – The market is “very strong” and is anticipated to remain strong for the next few years, he said, because of the continued need for warehouse facilities.
- About 5.6 million square feet of industrial space has been added in the past year.
Apartments – No slowdown in sight, Boisvert said.
- There have been over 1,000 units completed in each of 2021 and 2022, and 5,226 are under construction now.
- Another 9,376 are reported to be working their way through city approvals.
Hotels – The pandemic was crushing for hotels, but they are starting to slowly come back, Boisvert said.
- Weekend activities like soccer camps have improved occupancy, he said, although weekday business travel has not bounced back.
- No new hotel rooms have been built in either of the past two years.
