Ingrams August 2023

DESTINATION MISSOURI REASONS TO CHOOSE

DESPITE THE RECENT RUN-UP IN HOUSING VALUES, MISSOURI CONTINUES TO SHINE COMPARED TO THE REST OF THE U.S. IN THIS ONE IMPORTANT REGARD. Real-Estate Values

At the midpoint of 2023, home own ership in the United States had taken on Dickensian dimensions: The best of times and the worst of times at the same time. For anyone selling, opportunities re mained to secure near peak-level pricing seen during the pandemic era, a nearly unprecedented surge in home valuations that was tempered—for a while—as inter est rates rose throughout 2022 and early into this year before resuming their up ward trajectory. For anyone buying, some tough choic es: Wait to see if interest rates will fall, or bite the bullet now before prices rise, gambling on the ability to refinance at a lower rate when the Fed eventually puts the brakes on its monetary policy. That was the national dynamic. For buyers in Missouri, the choices were considerably less dire because the nearly unmatched value in home prices makes a compelling case for buying here. This is why: Across the nation, aver age home values shook out at $416,300. Of course, the market with the most homes and some of the most expensive— California—skewed that figure up quite a bit; the median price of a home there is now north of $813,000. But consider the Missouri Difference: St. Louis, the largest metropolitan popula tion center in the state, saw average values of $252,000 in the first half of this year. Kansas City, the city with the biggest pop ulation, recorded an average of $294,000. And the third-biggest market in the state, Springfield, split the difference between the two at $269,900. Thus, Missouri’s statewide figure, $267,100, represents better than a one third discount over the national average. And far more than that compared to other metropolitan areas around the nation. None of that is purely the concern of the home buyer. Those statistics have con siderable value for business owners and

NO COMPARISON | In California or other coastal markets, don't even think of looking at a home like this for less than seven figures, and often, well into that bracket. In Missouri, you can.

executives in the state. Because Missouri ranks so low in housing costs compared to most other states, employees here can work for less yet still acquire a bigger, bet ter home than they can in many markets and still have more disposable income left over each month. The business implica tions for that are profound. That’s on the residential side of the market. Some of the same dynamics are in play on the commercial side, as shown through market profiles compiled by Newmark Zimmer and Commercial Café. In the office market, which has been ravaged by the impact of the work-from home dynamic well into the post-pan demic era, asking rents for Class A space in the St. Louis market was $22.82 per square foot in the first half of 2023; in Kansas City, there were slightly more af fordable at $22.12. The national rate: $38.36 percent, is more than 72 percent higher than Mis souri’s two biggest markets. Vacancy rates, curiously, don’t seem to be weighing heavily on the national

asking price any more than they do re gionally. While the nation as a whole re corded a 17.0 percent office vacancy rate early this year, Kansas City stood at 16.3 percent, and St. Louis was at 15.2. The office market has been a chal lenge for more than three years now, but that doesn’t mean an absence of explosive activity. The big markets in Missouri are enjoying a run that goes back more than a decade with industrial space—unprece dented construction volume, and unprec edented demand. Kansas City, in particular, has been rid ing that wave. Compare the national aver ages of $7.29/sf asking rates and a 4.3 per cent vacancy rate to the $5.30/sf rent ask in Kansas City and the 3.8 vacancy rate there. St. Louis, with the added industrial asset of Mississippi River shipping in its industrial quiver, had a 4.8 percent vacancy rate and an asking-rent average of $5.94. The low costs of doing business, in terms of payroll and space expenses, boldly declare that Missouri is open for business. The low costs of housing? Icing on the cake.

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DestinationMissouri.com

Missouri's Business Media

2023