I don’t get this article in the Star today in which Christina Boveri, downtown realtor, and Kevin Collison, writer to the Star, make the assertion that we are going to be facing a shortage of downtown housing this time next year. The article states:
“This time next year, it might be very hard to buy or rent a place to live downtown.”
Say what? Now, I am admittedly no expert on rentals, but from what I see of the condo resale market I can understand why no developers are throwing their hat into the dark and dusty ring. In downtown Kansas City from the River Market to the Crossroads (zip codes 64105, 64106, 64108), we currently have over 12 months of condo inventory on the market. Anything over 6 months is considered a buyers market. This is a slow sales rate (a.k.a absorption rate – or the rate at which homes are selling in a given sample area). Not to mention this recent article published in the Kansas City Business Journal (via CNBC) which ranks Kansas City as the 10th emptiest U.S. city.
Part of the problem, other than the overall national real estate slump and economic downturn, is that it is hard to get a loan on a condo. Very few of them are FHA approved, and Fannie Mae and Freddie Mac have very strict requirements on condo loans, and therefore, so do all lenders. If you are curious about this topic and the specific requirements, this article in Habitat (a trade journal for condo board members and property managers) does a fantastic job explaining this issue in detail.
On a positive note, I do agree that the Kauffman Center for the Performing Arts will create more interest and demand in our downtown market. I may be putting my foot in my mouth, but I predict that the 2012 downtown condo sales will be better than 2011 condo sales. In addition, based on this article in HousingWire, there seem to be some lawmakers putting pressure on HUD to revise this strict FHA approval process. Perhaps this mix of factors will be a winning combination for downtown housing.
Find out here if your condo building is FHA approved
Photo: Gillham Row condo interior