What makes the cost of housing in the area so much higher?

By Corene Brisendine

More people, less available land and higher taxes are keeping housing costs up in Manhattan.

Loren Pepperd, real estate agent and appraiser, said several factors inflate the cost of housing in Manhattan.

He said Manhattan is mostly built on rock.

Rock makes construction more expensive and more difficult than in areas like Pottawatomie County, where the soil is mostly sand and dirt. He said digging through rock for streets, laying utility lines and basements drives up the cost of construction.

The floodplain and various waterways also are contributing factors.

With three major waterways running around the city — Big Blue River, Wildcat Creek and the Kansas River — there are limits to where houses can be built.

Pepperd said building in the floodplain raises costs because it requires flood insurance in addition to standard homeowner’s insurance. That increases the overall cost to the homebuyer.

He said for every $100 a month a homebuyer must pay in principal, interest, tax and insurance translates into $10,000 less in real estate.

The National Flood Insurance Program reported that in Manhattan, the average cost of flood insurance is about $735 a year, which is about $61 a month.

Pepperd said another driving factor is the number of houses available on the market.

Manhattan was recently ranked one of the fastest growing communities in the nation.

He said Manhattan has a “best market” designation because the absorption rate is less than four months. He said that means a house for sale is purchased – on average – within four months.

As a result, the number of houses on the market remains low, and houses generally don’t stay on the market very long. Sellers are getting more for their houses than in places where properties tend to stay on the market for several months.

In addition to less space, Pepperd said taxes increase the cost of buying a house, and special assessments become a major factor. He said Manhattan has the highest special assessments in the area.

Pepperd explained that in addition to paying for the street, curb, gutter and utility lines, Manhattan residents also pay for parks and trails through special assessments. He said those taxes effectively add to the total cost of the house.

Terry Robinson, national director of the Flint Hills Area Builders Association, said the cost of building a house in Manhattan is also higher because of the building codes.

Robinson said Manhattan updates its codes every three years when the International Building Codes are updated.

“Manhattan has tried to pick and chooses those codes that keep the prices down,” he said “but Manhattan updates every three years.”

Compared to building outside the city limits where there are no codes, the cost of building a house in Manhattan is naturally more expensive.

Greg Webster, zoning administrator for Pottawatomie County, said he did not see a big price difference in Blue Township, which borders Manhattan. He said building permits have fair market values averaging $200,000 a residence.

Greg McHenry, Riley County appraiser, said he has seen a 3 percent increase in housing costs in 2013. Therefore, the cost of a new house has risen to about $206,000 in Manhattan.

He said those costs are mostly from increases in cost of building materials, but several factors also contributed.

According to Pepperd, $6,000 can make all the difference when looking at monthly payments.

Webster also said that in the case of construction in the county, people know they will not have some services that are available in town.

He said things like longer emergency response times and lack of city sewer or water may affect the cost of building a home, but he said the county has issued permits for homes that cost more than $750,000 in the county.

Pepperd said that because homebuyers are not paying the taxes for streets, utilities and parks, home owners can afford to buy more for less in the county.

Webster said demand also isn’t as great in the county, which is why the county does not require codes. He said it is not cost affective for the county to keep an inspector on staff to enforce a set of codes.

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