Kansas City vs. San Francisco: A housing market matchup

Mortgage Banking

With teams from two cities in Bank of the West’s footprint going up against one another in the World Series, I couldn’t help staging my own fantasy matchup pitting my beloved San Francisco Giants’ housing market against Kansas City’s.

worldseries_splitMy “World Series of Housing” is a best-of-seven series to see whose housing market is the World Champion. We’ll play the first two games in Kansas City.

Game 1 is homes for sale. Let’s see who has inventory for buyers. San Francisco, at twice the size of the Royals’ hometown, should win easily. I checked realtor.com Friday, and San Francisco had 1,464 homes listed for sale. That’s not bad, and may be enough to beat Kansas City (which gets last at bats as the home team). Using the same site on the same day, Kansas City comes on strong with 4,996 homes listed!

And the Royals take a 1-0 lead in the series.

Game 2 is homeownership rates. You might expect a wealthy city like San Francisco to have the edge. I checked U.S. Census data for the second quarter, and San Francisco’s homeownership rate was a subpar 54.1%. In the West the current average ownership rate is 59.1%, and the national average is 64.7%. So it appears San Francisco is hitting below average. But can the Royals top it? Kansas City’s homeownership rate in the second quarter was 64.3%. It’s below the Midwest average (highest region in the nation) of 69.6%, but a good 10 percentage points above the City by the Bay’s rate.

Kansas City goes up 2-0.

Down two games, the Giants return home to AT&T Park. Now, let’s see what happens in a city where a buyer needs a salary of $145,898 to afford the median-priced home. It is clearly a power hitter’s town.

Game 3 is a rental affordability matchup. What percent of tenants in occupied rental units are paying 35% or more of their household income on rent? The lower percentage team will win as the more affordable city for renters. San Francisco scores a not-so-affordable 37.3%, meaning 37 out over every 100 renters are spending more than 35% of their income on rent. A number lower than that will be a win for Kansas City. The U.S. Census 2008-2012 American Community Survey shows that in Kansas City, tenants paying 35% or more of income toward rent comes in at 45.5%. San Francisco gets a surprise Game 3 win as the more affordable city for renters.

Game 4 is highest-priced home. The Royals’ palace at $4.45 million would certainly be a hit in most Midwest cities. But in Baghdad by the Bay? Once again, the Giants bring the big bats: $18 million! Go Giants!

We have ourselves a series now tied at 2-2.

Game 5 and 6 are a double-header: residential building permits. Game 5 is multi-family building permits. Through August, Kansas City has issued 2,320 multi-family building permits compared to 2,980 in San Francisco’s market, according to housing statistics compiled by the National Association of Home Builders. Of course, the Bay Area is larger than Kansas City so to level the playing field, let’s consider the percentage change compared to the same period a year ago. Kansas City: +15%. San Francisco: -32%. I’d say game 5 is a no-hitter win for the Royals.

Traveling back to the Show Me State, the Giants have their work cut out for them, down 3-2 in the series.

Game 6 is single-family building permits. Surprisingly, from NAHB.org, we find there have been 2,780 single-family permits issued in Kansas City compared to just 2,480 in the San Francisco market in the first eight months of this year. But our game is about year-over-year growth. San Francisco’s permits are up a slim 2%. Are two percentage points enough to win? Kansas City’s single-family permits are down 2%. San Francisco ties the series at 3 games each.

Game 7! Let’s wrap up the series by looking at one of the most widely watched pieces of housing data: How fast home prices have moved over the past year. In the second quarter of this year, seasonally adjusted home prices in San Francisco rose a solid 2% compared to the first quarter, according to the Federal Housing Finance Agency. In Kansas City, prices sprinted ahead 3.2%! Advantage KC. Alas, one quarter does not a baseball game make. We’re looking at the year-over-year change in prices. Compared to a year ago, prices in San Francisco ran up 11.2% — one of the fastest rates in the country. In the past year, Kansas City home prices moved up at a 5.7% clip. Fast, but not a world-champion pace.

So, there you have it. San Francisco takes the series.


In the Market: Precautions to protect yourself

Posted by Nneka Madus
Mortgage Market Analyst

This weekly feature is a real estate information roundup from a millennial’s point of view. When a young professional moves from Indianapolis (median home price $125K) to San Francisco (median price $1 million), you can expect an adventure. Nneka Madus, a marketing analyst in Bank of the West’s Mortgage Division, did just that and has plenty to share in her quest to own a home in San Francisco.

Man in jeans with tool belt carries a ladder walking on an empty room's hardwood floor.Moving into a home from an apartment (or bedroom) can be super exciting, but it may also be a major adjustment. Aside from the decorations to pick up from Pottery Barn, there’s so much more that goes into making a home a home. Who can tell me when you should check your furnace and HVAC filters?

If you are like me, you haven’t the faintest idea. Thanks to this Houzz article from contributor Christine Tusher, I now know I may want to check the filters as soon as I move into a new home and before I run to the store to buy decorations. Christine’s maintenance guide may help new home owners avoid home hassles down the road.

It’s your money, so you may want to take precautions to protect yourself. The Consumer Financial Protection Bureau (good people, look them up) has been clamping down on some deceptive mortgage operators. As a first-time home buyer, it could be easy to fall for the tricks dubious lenders pull, but with a heads up and a little education, you may be able to avoid some traps. Lew Sichelman from the Los Angeles Times exposes some common tricks consumers may want to know about.

OK, full disclosure here: The mortgage process may not be the easiest thing to go through, particularly closing on a mortgage. You would think that this is a happy, glorious time, but can you believe that people actually walk away at closing? Apparently it happens. Casey Bond, a personal finance writer and contributor to Huffington Post gives some tips to help make the closing process smoother and avoid what the NYTimes piece called “the real estate version of road rage.”

Losing your job can be tough enough. So how do people deal if they are days or weeks away from closing on their dream home? Chris Birk explains in his Credit.com blog why losing a job may not automatically mean the end of a home purchase or loan approval, and why he recommends that borrowers let their lender know if they lose their job.