Inherent Attractiveness of Place: Home Value
The affordability of housing in the Kansas City region is often cited as one of the key characteristics that make it an attractive place to live. But the concept of “inherent attractiveness of place” has more to do with the quality of living here than the price of a home.
When recent newspaper accounts suggest that it takes housing prices five times higher on the coasts before coastal residents begin to consider moving here, this says something about the relative inherent attractiveness of the Kansas City region.
This is not to say the region’s cost advantages aren’t important — they clearly are, and the benefits of the Kansas City area’s housing affordability are captured in the Metro Outlook’s section on Economic Competitiveness. But here we are talking about housing price as a measure of valuation. Generally, homes with higher prices are more valuable than homes with lower prices. Moreover, home prices include not just the value of the housing itself, but market’s valuation of a community — comparable houses usually cost more in more “desirable” neighborhoods. (see Percent Change in Real Housing Values map)
Median Home Value, 2000
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The relative median value of homes in the Kansas City region and its peer metros can be viewed as the national real estate market’s estimate of the relative inherent attractiveness of living in each of these regions. By this measure, Kansas City's inherent attractiveness lags behind most of its peers.
Land constraints in Denver and Salt Lake City may explain part of this differential. But a significant portion of the difference in valuation is due to relatively higher demand to live in those areas — a demand demonstrated by their faster population growth rates.
Land constraints don’t appear to contribute to Minneapolis-St. Paul’s performance, where urbanized land area grew faster than any other peer (see Efficient Use of Resources). But homes in the Twin Cities are still valued significantly higher than in Kansas City and those values are growing significantly faster.
National Market Values vs. Self Rating
Self-Rating of Overall Neighborhood Quality, Latest Year
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surveys a few metropolitan areas each year it is conducted. Shown here are the latest survey
results for each metro. Salt Lake City and Minneapolis were last surveyed in 1998; Kansas City,
Portland and Dallas in 2002; Denver, Indianapolis and St. Louis in 2004.
While the national housing market may place a relatively low value on living in regions like Kansas City and St. Louis, those that live here rate the quality of their neighborhoods relatively high. Asked about schools, crime, noise and odors, a higher proportion of residents in Kansas City and St. Louis gave their neighborhoods a perfect 10 (on a scale of 1 to 10) than any of their peers.
The nearly perfect inverse relationship between national market valuation and self-rating is, on the surface, puzzling. But it more than likely means that metropolitan areas without strong urban centers tend to focus more on the micro-scale — neighborhood attractiveness and amenities — and that a larger proportion of residents live in developing suburbs.
It could also mean that the self-rating is implicitly based more on residents' perception of value for the money, which translates into more space per housing unit, than on neighborhood characteristics alone.
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