Home Builders Association of Greater Kansas City (KCHBA)

The Voice of the Kansas City Housing Industry

Business View Magazine profiles the Home Builders Association of Greater Kansas City (KCHBA) for our focus on the U.S. Residential Construction Industry

For more than 80 years, the Home Builders Association of Greater Kansas City (KCHBA) has been supporting the home-building industry and the home buyers who keep the industry strong. Comprising approximately 500 member companies, the KCHBA represents an industry that contributes more than $1.5 billion to the Kansas City economy and supports more than 20,000 jobs in the Greater Kansas City metropolitan area.

If you’re not familiar with the Kansas City area, what you find may surprise you – a vibrant city with flourishing suburban communities, and a thriving economy that serves as the world headquarters for top brands such as Garmin, AMC, American Century, Hallmark and H&R Block. Many outsiders are confused by the fact that there is a Kansas City, Kan., and a Kansas City, Mo. Simply put, we are one big metropolitan area that happens to have a state border down the middle. Each side has its bragging rights, but we are often considered one big community.

The demand for housing in Kansas City is high and doesn’t seem to be slowing. The residential construction market is unique in that it is the only top 50 market in the country that doesn’t have a top 50 nationally ranked home builder. This distinction means that our builders are part of the very communities they serve.

KCHBA Members regularly visit the Missouri and Kansas state capitals to meet with legislators and discuss issues of importance to the industry.

To promote new home construction, KCHBA hosts year-round opportunities for consumers to experience the home building industry, including the Fall Parade of Homes, Spring Parade of Homes and the Artisan Home Tour. The KCHBA’s Parade of Homes is the second largest in the country, averaging 500+ homes on display annually between the Spring and Fall events. Prices generally range from $200,000 to more than $1 million and homes are located throughout the KC metropolitan area. The Artisan Home Tour showcases Kansas City’s finest custom home builders and the unique and impeccable qualities of their one-of-a-kind homes and featured products. This tour takes place every other year.

In addition to our consumer-facing events, advocacy on behalf of the industry to promote and support the residential construction continues to be its mission. The KCHBA greatly values its relationships with local jurisdictions as we share the common goals of promoting new economic growth, homeownership, affordable housing, and strong communities.

With that being said, about 25 percent of the cost of a new home is due to federal, state, and local regulation. The KCHBA’s government affairs efforts play a leading role in setting the KCHBA’s policy positions at both the state and local levels to ensure that the priorities of our members are represented when key decisions that impact our industry are being made. In a typical year, these actions save $10,500 on each new home built. Without this advocacy, those added costs would ultimately be paid by consumers in the form of higher home prices.

As an example, KCHBA secured an “essential” designation for the industry in local jurisdictions across Kansas and Missouri to ensure that our members could continue to provide housing, which contributed to a 13 percent increase in single-family permits in 2020 compared to 2019.

The three “Ls” are the industry’s biggest challenges: land, labor, and lumber. As the cost of development continues to rise, its impact becomes more pronounced on the growth of our communities. Infrastructure, design and development, and planning, zoning and subdivision regulations can all be barriers to the success of a project. Regulations are certainly necessary to ensure that safe, sturdy homes can be brought to market, but our goal is to work with local leaders to ensure a balanced approach between economic and environmental systems so that costs do not exceed the benefit.

Labor is another challenge. A skilled workforce that is capable of meeting the housing demand is vital to home builders. Despite competitive pay, the home-building industry continues to experience labor shortages, which impacts housing affordability. The KCHBA’s Workforce Development Committee has been diligently promoting jobs in the skilled trades in several ways.

A home featured on Kansas City’s 2020 Fall Parade of Homes, built by KCHBA member Befort Construction

The KC Manufacturing and Design Expo (KC MADE) is a contest among high school students (grades 9-12) in construction and manufacturing programs to promote careers in the residential construction industry. The KC MADE competition focuses not only on promoting skilled trade development and opportunities in the home-building industry, but also the importance of soft skills and connecting education to industry stakeholders. Participants have the freedom to enter everything from a tiny house to a dining room table. KCHBA also provides student tours of homes on the spring and fall Parade of Homes. This programming includes educational content discussing all that goes into building a home, from foundation to finish.

KCHomeWork.com provides information on what types of jobs are available in the home-building industry, pay ranges for those jobs, resources for finding those opportunities and more. The website also presents an overview of the KCHBA and the organization’s role in alleviating the labor shortage within the housing industry.

The third “L” is lumber. Between mid-April and mid-September 2020, lumber prices soared more than 170 percent. This unprecedented lumber price spike added nearly $16,000 to the price of a typical new single-family home.

The escalating lumber prices are due to a host of issues. But chief among them is the fact that there is simply not enough domestic production. Many mills decreased production in response to stay-at-home orders and social distancing measures enacted by state and local governments at the onset of the coronavirus pandemic. Further, mill operators projected that housing would be adversely affected by the crisis and anticipated a large drop in demand. But housing weathered the storm much better than was predicted fueled by low interest rates, and demand for lumber has accelerated.

KCHBA contributed to a dialogue between key members of Congress, the Trump administration, and the National Association of Home Builders (NAHB) to address the spike in lumber prices in which the U.S. Secretary of Commerce Wilbur Ross repeatedly acknowledged the critical role home building plays in the U.S. economy.

Altogether, the result of rising costs for land, labor and lumber mean higher home prices for consumers. Many cities, including many within the Kansas City metro, are making housing affordability a priority. There is no single “silver bullet” solution, however, to the challenge of making housing more affordable. The effort requires comprehensive strategies and a variety of tools that can be used – alone or in combination – to reduce costs, boost supply, and empower aspiring home buyers. In order to design those strategies and tools, an understanding of the underlying costs of new construction (and where they come from) is critical to the success of this important effort.

Neither the public nor the private sector can meet the challenge alone. Together, we must seek, implement and devise innovative solutions that enable more families to achieve homeownership or have access to suitable rental housing.

As the voice of the housing industry in Kansas City, the KCHBA is actively participating in important  ongoing discussions occurring in various municipalities around Kansas City. The home building industry was an economic bright spot over the course of 2020. With the right leadership and partnerships in place, it can remain so this year and well into the future.

AT A GLANCE

Home Builders Association of Greater Kansas City (KCHBA)

What: The voice of the housing industry in the Greater Kansas City metropolitan area

Where: Kansas City, MO

Website: www.kchba.org