Despite the COVID-19 pandemic, which has eliminated untold numbers of jobs and shuttered businesses across the Kansas City metro, property values in Johnson County continue their upward march, according to the most recent revaluation report presented by county Appraiser Beau Boisvert.
Although there are signs of struggle in some areas — most notably the hotel and commercial office markets — home values and apartment construction in the county remained on their upward trajectory throughout the economic turmoil of the past year, Boisvert said.
The annual report, presented last week to county commissioners, signals the property valuations upon which future property taxes will be based and is a key factor in setting the county budget.
Some key takeaways from Boisvert’s report:
- The average selling price of single-family homes in Johnson County was $394,000 last year, up from $362,000 in 2019. If the trend continues, the county is on track to crack $400,000 next year, Boisvert said.
- The median sale price is a little under $327,000.
- The average selling price for a new home was $558,000, though appraised values are set lower.
- The biggest increases in valuation are closest to the county’s northern and southern borders.
- Apartment building is still hot. There are 8,651 units proposed and 3,461 under construction currently.
- Commercial property has seen some negative effects of the pandemic. New construction is down from last year but value has grown by 2.08%, which is significantly more than growth last year.
- Hotels took a big hit from the decrease in travel during the pandemic. That market is likely beginning a contraction, Boisvert said.
Competition, low inventory driving higher values
Around 70% of Johnson County residents will see an increase in their home’s appraised value this year, while 17. 5% will see their values go down, Boisvert reported.
Reappraisal growth for this year averages 4.46% higher, which is still less than the over 6% growth in 2017 and 2018.
Even though the expectations during the pandemic might be for less sales activity, that has not been the case in the county, Boisvert said.
Much has to do with the low inventory of homes for sale, which can result in tougher competition.
Boisvert said the county has less than a one-month inventory of homes available, which he described as “very, very low.”
That’s a trend in cities across the country. Experts have suggested a confluence of factors for the lack of homes on offer, but it may come down in large part to sellers’ skittishness at putting homes on the market in a pandemic.
Johnson County hot spots
The growth in home values is not evenly distributed around Johnson County.
The appraiser’s map of growth hot spots shows the biggest jump at the county’s edges, with an average in home value spikes greater than 10% in:
- De Soto
- Southern Overland Park and in unincorporated areas nearby
- Eastern Shawnee
- Northern Prairie Village.
Those cities are followed by Shawnee, Gardner, Edgerton, Spring Hill and northern Leawood with growth of between 7 and 10%.
Cities with the least amount of growth were central Overland Park, and a pocket of central Leawood, with less than 3% value growth.
Residential building permits were also on the upswing, with 1,867 issued last year compared with 1,621 the year before.
Boisvert said the appeal of Johnson County’s amenities and service is a “huge factor,” in the continued strong real estate market.
“This county is unique compared to the immediate area. There’s a lot of demand to move into the county for a lot of reasons,” he said.
Apartment-building boom continues
“This one doesn’t seem to ever want to go down,” Boisvert said of the apartment building trend.
Some 1,579 units were completed in 2020, pushing the number of recently completed apartment units above 9,000 in what has been an ongoing apartment building boom.
Add to that more than 3,400 under construction and over 8,600 proposed.
Apartment builders are “still riding that wave,” Boisvert said. “There’s no sign in the future that this market is going to make a dive south.”
Boisvert placed apartment building near the peak in its cycle — a peak that has lasted since 2014.
Commercial and hotel property not as strong
Commercial valuations have seen some negative pandemic effects, Boisvert said. Still he considered 2.78% growth for new construction strong, although it was lower than the 3.78% growth in 2019.
Some of last’ year’s new construction was already in progress before the pandemic hit, however.
Nearly 90% of commercial property parcels will increase in appraised value this year, while almost 11% will decrease. The percentage of decreasing parcels is also larger than the previous year.
Meanwhile, construction of retail and office buildings dropped last year. Office construction was only about 60% of what it had been in 2019, which was a strong year, Boisvert said.
About 347,000 fewer square feet were built in 2020 for offices than in 2019, with the strongest performance in the higher-end office space, he said. But there are many other variables that could affect office building, including whether employees continue to work more often from home.
Hotels and the hospitality industry in general took some of the biggest hits from the pandemic.
Construction of hotel space was way down from 2019, which was the strongest year since 2012. In that year, 836 rooms were built, compared to 292 last year. He put the hotel market at the beginning of a downward phase.
Insights into abated property
The report also included a section on property abatements for Industrial Revenue Bonds and Economic Development Bonds, two vehicles often used to incentivize development. There are 120 active such bonds in the county now, Boisvert said.
The value of property exempted by these bonds was $1.1 million in 2020. Property that is no longer exempt was valued at $606 million.
The top five cities by the number of bonds issued were:
- Olathe with 43
- Edgerton with 26
- Shawnee with 18
- Lenexa with 17
- and Overland Park with seven.
The figures don’t include Tax Increment Financing districts, another form of public financing commonly used.