How Missouri's 2024 Wage Hike Affects Real Estate Investors

Photo by Jason Leung on Unsplash

Written by David Dodge

With Missouri voters approving Proposition A, the state is now on a path to gradually raise the minimum wage to $15 an hour by 2026. The measure includes guaranteed paid sick leave, aiming to boost income for many workers and provide more support to families. But what does this mean for the real estate market in Missouri, especially for investors?

If you’re a real estate investor, property owner, or landlord in Missouri, here’s a breakdown of what to expect and some strategies for adjusting to the changes.

 What’s Changing with Missouri’s Minimum Wage?

Missouri voters have approved Proposition A, which introduces a gradual increase in the state’s minimum wage, aiming for a $15 hourly rate by 2026. This initiative also includes a provision for paid sick leave, which advocates say will support lower-income families by offering both financial security and workplace flexibility.

Here’s a breakdown of the planned wage increases:

• 2024: Minimum wage remains at $12.30 an hour.
• 2025: Wage rises to $13.75 an hour on January 1.
• 2026: Reaches $15 an hour, with annual inflation adjustments thereafter to keep pace with the cost of living.

This measure not only improves wages but also mandates paid sick leave for Missouri workers, a provision that was highlighted by supporters as a way to benefit individuals and families at lower income levels​ 

Photo from : https://www.kansascity.com/news/

How Could This Affect the Real Estate Market?

With wages going up, here are a few things to consider:

1. More Financially Stable Tenants
   As wages rise, tenants should have a bit more breathing room in their budgets, which could mean more stable rent payments and fewer issues with late payments. For landlords, this stability can mean fewer tenant turnovers and a more reliable rental income.

2. Higher Demand for Quality Rentals
   When people have a little extra income, they often start looking for better living conditions. Affordable rentals that offer good value for the price could see a boost in demand. This could be an ideal time to invest in affordable housing or upgrade properties with small improvements to make them stand out.

3. Rethink Rent Adjustments
   With tenants’ income increasing, some landlords might consider slight rent adjustments over time. Aligning rent increases with wage growth can keep units affordable while optimizing returns. A small increase that matches the cost of living can make a big difference in the long run.

4. More Tenants Looking to Buy
   Some renters might start looking at homeownership as wages rise, especially if mortgage rates are favorable. This could create more competition for starter homes, so real estate investors might see a different dynamic between rental demand and entry-level home sales.

5. Impact on Real Estate Staff Costs
   The new law includes paid sick leave and wage increases that will affect staff, such as property managers and maintenance workers. While it might raise operating costs, it could also mean better employee retention and a happier team overall.

What Can Real Estate Investors Do Now?

To make the most of these changes, here are some tips:

• Focus on High-Demand Areas
  Look for neighborhoods where minimum wage earners tend to live or want to move to. Affordable areas with good schools and amenities are likely to see an increase in demand, which could make them smart places to invest in.

• Consider Small Upgrades
  If you own rental properties, think about making minor upgrades to attract quality tenants. Modern appliances, security features, or energy-efficient updates can add value without breaking the bank, and they appeal to renters who now have a bit more choice in their housing.

• Keep Up with Local Resources

  With these economic shifts, having access to the right resources is crucial for real estate professionals. Here are some valuable websites and tools to stay informed on market changes:

  • Missouri Department of Labor and Industrial Relations – Provides updates on minimum wage adjustments, labor regulations, and wage calculators. Staying updated on wage trends can help agents and investors understand their clients' financial situations.

  • Real Estate Skool – Real Estate Skool offers courses that cover crucial real estate investment topics, from wholesaling to flipping, making it ideal for investors looking to capitalize on changes in demand due to rising wages.

  • Discount Property Investor – This platform offers resources and tips on investing in Missouri’s real estate market. As rental demand potentially increases, their insights can help investors identify lucrative rental property opportunities.

Bottom Line

Missouri’s minimum wage increase is a big deal for workers, but it’s also a game-changer for real estate investors. Higher wages can create a more financially secure tenant pool, increase demand in certain areas, and make small property upgrades more worthwhile. On the flip side, rising costs in staffing and potential shifts in tenant homeownership aspirations are factors to watch.

By adjusting your strategies to fit this evolving landscape, you can set yourself up for success while contributing to Missouri’s housing market. For more insights and updates, check out resources like KansasCity.com to stay informed on the latest in Missouri real estate and policy changes.

Links:

https://thebeaconnews.org • https://ballotpedia.org • https://discountpropertyinvestor.com • http://reiskool.com/ • https://labor.mo.gov • https://www.kansascity.com