The Kansas City housing market, situated on the border of Kansas and Missouri, has gained a reputation for its affordability, strong cash flow, and exceptional investment opportunities. Furthermore, the city caters to first-time homebuyers, thanks to its relatively low median home value. The demand for entry-level homes in Kansas City has seen a significant increase, with an influx of FHA buyers in recent history.
The impact of the Coronavirus has led the government to reduce interest rates, making it irresistible for new buyers to enter the market. Additionally, the local unemployment rate, which has been slightly higher than the national average, is poised to be a catalyst for further market growth. Although COVID-19 was unwelcome, it has created an opportunity for buyers, sellers, and investors in the Kansas City real estate market.
Kansas City Real Estate Market 2022 Overview
- Median Home Value: $230,647
- Median List Price: $419,667 (+9.2% YoY)
- 1-Year Appreciation Rate: +15.5%
- Median Home Value (1-Year Forecast): +7.6%
- Months of Supply: 1.3 (+8.3% YoY)
- Total Inventory: 4,733 (+1.5% YoY)
- Median Days on Market: 16 (-11.1% YoY)
- Closed Sales: 4,331 (-9.8% YoY)
- Pending Sales: 4,078 (-3.7% YoY)
- Median Rent: $1,203 (+8.6% YoY)
- Price-To-Rent Ratio: 15.97
- Unemployment Rate: 2.6%
- Population: 508,394
- Median Household Income: $56,179
- Total Active Foreclosures: 86
Image: Kansas City housing market
Kansas City Real Estate Market Trends 2022
"The City of Fountains" has experienced significant changes due to the pandemic, leading many residents to wonder whether it is a good place to invest in real estate. Based on prominent market trends, the answer is a resounding yes. Let's explore the key trends likely to shape the Kansas City real estate market in the near future:
Supply Trends
The latest trends indicate a total of 4,733 listings in the Kansas City housing market. On average, homes stay on the market for about 16 days, and the city has approximately 1.3 months of inventory. Listings have increased slightly compared to the previous year, which is expected to continue due to rising interest rates and fewer buyers in the market. As the economy normalizes, the supply of homes for sale in Kansas City will stabilize.
Home Price Trends
Kansas City has witnessed a steady increase in home prices over the past decade, with a historic surge during the pandemic. Low interest rates, pent-up demand, and limited inventory have created fierce competition, resulting in a 15.5% increase in the median home price. Although prices will continue to rise, the rate of appreciation is expected to slow down to 7.6% over the next year.
Interest Rate Trends
To combat high inflation rates, the Federal Reserve has raised interest rates. The average commitment rate on a 30-year fixed-rate mortgage has increased to 4.99%, up 2.22 points from the previous year. As rates continue to rise, the affordability of the Kansas City housing market may be affected in 2022.
Investor Trends
The high cost of homes has made flipping properties less viable for investors. Consequently, the Kansas City real estate investing community has shifted its focus to long-term rental properties. While acquisition costs remain high, attractive borrowing rates and increased rental demand make rental properties a favorable option. This trend not only reduces vacancies but also enhances cash flow for investors.
Image: Kansas City housing market trends
Foreclosure Statistics in Kansas City 2022
Foreclosures declined throughout most of 2021 due to government interventions and moratoriums. However, foreclosure filings began to increase as assistance programs expired. In the first six months of 2022, there were a total of 164,581 U.S. properties with foreclosure filings. Although the Kansas City real estate market saw a decline in foreclosures, it is anticipated that more filings will occur as distressed homeowners are asked to catch up on their payments. Investors interested in foreclosed properties should consider attending local auctions, as the majority of foreclosures in the city are expected to be sold through this channel.
Image: Kansas City foreclosures
Kansas City Median Home Prices in 2022
Real estate in Kansas City has experienced an appreciation rate of 15.5% in the past year, slightly trailing the national average. The median home value in the Kansas City real estate market currently stands at $230,647. Over the past decade, home prices in Kansas City have increased by an average of 126.1%, outpacing the national median home value growth of 112.0%. The city's higher rate of appreciation can be attributed to its better-than-average employment rate and the resulting increase in homeownership.
Given the low inventory levels and healthy demand, now is a opportune time to buy a house in Kansas City. Buyers who take advantage of the current relatively low interest rates may benefit from a projected 7.6% appreciation in home prices over the next year. However, it is essential to note that the current rate of appreciation is unsustainable, and homebuyers may find themselves priced out of the market in the future. As the market adjusts and new housing developments become available, prices are expected to stabilize.
Should You Invest in the Kansas City Housing Market?
The Kansas City real estate investing community is currently benefiting from several favorable indicators. The affordability of homes in Kansas City makes it an attractive market for both investors and traditional buyers. The market has experienced a significant increase in FHA buyers, many of whom are first-time buyers or unable to make a large down payment.
The Coronavirus pandemic has shifted the most viable exit strategy for investors from rehabbing to long-term rental properties. With a decade of appreciation behind it, home prices in Kansas City have reached historic levels, making flipping properties less profitable. However, with attractive borrowing rates and increasing rental demand, investors can capitalize on the rental market.
Moreover, the supply and demand dynamics in Kansas City's housing market favor rental property investors. With only 1.3 months of supply and strong demand, rental properties offer stable cash flow and reduced vacancy rates.
Kansas City offers numerous reasons to invest in its real estate market, including low unemployment rates, fast growth, a high quality of life, low cost of living, and attractive renters' markets. The city's low unemployment rate, in particular, has been instrumental in driving the housing sector.
In summary, the Kansas City real estate market presents ample opportunities for investors. Affordability, demand, employment rates, and rental market dynamics make it an appealing market for both short-term and long-term investment strategies.
Image: Real estate in Kansas City
Final Thoughts
The Kansas City housing market has experienced a decade of growth, with appreciation rates expected to continue in the near future. Despite the challenges posed by the pandemic, the disruption has created opportunities for buyers, sellers, and investors alike.
If you are considering investing in the Kansas City real estate market, now is an opportune time. Take advantage of the current opportunities and explore the potential offered by this thriving market. Share your thoughts on real estate in Kansas City in the comments below.
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Sources
- Zillow
- Freddie Mac
- U.S. News
- Apartment List
- Redfin
- Bureau of Labor Statistics
- U.S. Census Bureau
- RealtyTrac
- ATTOM Data Solutions
