Is the Kansas City region losing its competitive edge in housing affordability?

The Kansas City region has long touted affordability as a major draw to businesses and people looking for a place to establish themselves, relative to peer metro regions. Rents across the U.S. and the region climbed at unprecedented rates between 2021 and 2022. But as that growth cooled among peer metros, Kansas City’s rates continued to climb through the first half of 2023. It is a concerning trend for renters¹ and for the region’s broader economic competitiveness.

All ten benchmark metros experienced accelerated rent growth compared to the norms of the pre-pandemic period. Between the last quarter of 2017 and last quarter of 2020, average annual rent growth was 2.7% across peer metros. From the end of 2020 to the second quarter of 2022, annual rent increases were 4.75 times that amount at 12.6%. Kansas City’s average annual increase was below average but still at a historically unprecedented level of 9.6%, or four times a pre-pandemic rate of 2.4%.

In the past year, Kansas City’s rents continued to increase while those in most peer metros fell. As a result, Kansas City’s rent increases were the third highest among the benchmark metros in the last year.

The net result over the entire post-pandemic period (Q4 2020 to Q2 2023) is that Kansas City’s cost advantage is shrinking. Post-pandemic annual rent increases for the region are very close to the average for benchmark metros. If the recent trends continue, it will put the Kansas City region at risk of losing its competitive edge in housing affordability.

Footnotes:

¹ Low-income renters, who were already experiencing a shortage of affordable housing in the region, are especially impacted by increasing rents across the region.