After several years of eroding prices and slow sales, 2013 promises to be the year that selling a home in the Kansas City area becomes a winning proposition as opposed to a source of worry, real estate industry professionals agree.
Prices have stabilized and are forecast to improve slightly. The time it takes to sell a home has shortened significantly. And interest rates for mortgages remain historically low, helping both people buying homes and owners who want to stay put and refinance.
“I think the housing market is going to continue to do well and get better,” said Jim Nutter Jr. of James B. Nutter & Co., one of the area’s biggest home mortgage businesses.
“I believe the economy is doing better than the statistics say, and we’re ready for an upward expansion, which is really good. I’m pretty optimistic.”
Ryan Floy of Shawnee and his wife, Abby, are very pleased with the new year when it comes to selling their home. The young couple are expecting their second child and wanted a bigger place. They put their current house on the market in December and sold it in mid-January for close to their $238,000 asking price.
“We couldn’t be happier with the market,” Ryan Floy said. “We found a place that’s perfect for us, and put our house on the market and sold it in less than 45 days and got what we wanted for it.”
The latest report from the Kansas City Regional Association of Realtors supports the observations of experts. The average sales price of an existing home in December was $158,418, up 15 percent from a year ago, and the average sales price of a new home was $347,486, up 16 percent from December 2011.
Boding well for sellers going into 2013 is the significantly smaller supply of homes listed for sale in the metropolitan area. There were 9,719 existing homes listed in December, down 16 percent from the previous year, and 1,077 new homes, down 13 percent. Compare that to five years ago when there were 12,563 existing homes and 3,208 new homes on the market.
According to the Realtors association, the Kansas City market ended the year with a six-month supply of new homes, given the current sales rate, and a 4.8-month supply of existing homes. A six-month supply is considered a balanced market, meaning in the case of existing homes, the advantage is now firmly with sellers.
“It’s become a seller’s market instead of the buyer’s market of the past five years, and that will stabilize prices,” said Brenda Oliver, the new president of the Realtors association. “Everyone in the real estate community is very encouraged.”
Though not as optimistic as the local Realtors group when it comes to charting a rise in sales prices, Fiserv Case-Shiller, a national organization, is projecting that median housing prices should begin increasing in the Kansas City area the second half of this year and increase 3.9 percent through the second quarter of 2014.
Arthur Parks, an agent with Reece & Nichols, said confidence began returning to the local housing market early last year, and the momentum is carrying into 2013. The average number of days that homes are on the market dropped from 103 in December 2011 to 82 last month, a 20.4 percent decrease.
People also were selling their homes in Kansas City for closer to their listed prices compared with a year ago. Parks calculated sellers on average wound up receiving 86 percent of their initial asking price last month versus 74.4 percent in December 2011.
“We’ve all felt an increase in buyer’s confidence, consumer confidence, this past year,” Parks said.
“The main thing is the list price to sales price. They were far apart in 2008 through 2010, and they’re coming together now. Some sellers are getting 96 to 97 percent of their list price.”
Amy Manske of Prairie Village sold her three-bedroom house last March in 13 days and got her full listing price of $176,500.
“I had a great experience,” she said. “I staged it by removing some wallpaper and listening to my real estate agent’s recommendations, and it worked out perfectly.
“It sold so fast, I was pleasantly surprised.”
Manske’s experience selling her house quickly and at the price she wanted is typical for northeast Johnson County, according to Judy Klemm, a real estate agent with ReMax. She added that starter homes appear to be particularly attractive on the Kansas side of the area, while more expensive homes in the $250,000-to-$500,000 range are selling well in Missouri.
“I think it’s a great time to sell your house, and it’s an even better time to buy, because the interest rates are so good,” Klemm said.
“Location is still driving sales though. The first-time buyer market in Missouri is not as strong as the first-time buyer in Kansas. Selling prices are expected to go up.”
Mike Frazier, chief financial officer at Reece & Nichols, said the seller’s market is also being helped by the entry of younger adults seeking to buy homes.
“Gen X and Gen Y buyers are coming into the market in full force, which also allows sellers to move up,” he said. “First-time home buyers are gobbling up the lower-priced homes.”
Despite the popularity of renting, Frazier said studies show young adults in their 20s and 30s still believe owning a home is part of the American Dream.
Renting, however, remains an attractive financial option for people who have divorced, recently relocated or just want to shed their large homes after their children have left the nest. Apartments have lower utility bills, and residents are spared the cost of maintenance and lawn care.
“The economics make sense once you get past raising a family and the need for a large house and yard,” said Steve Coon, a principal at Land Development Strategies, whose apartment developments include Mission Farms in Overland Park and a new project going up in the city at 51st and Main streets.
“There are a certain number of people who prefer that lifestyle and find the prices competitive,” Coon said.
If you are thinking about selling your home, January is a good time to put it on the market, said David Cooper, president of Better Homes and Gardens Real Estate, formerly Prudential.
“Everything I’m hearing and what we’re feeling and seeing is that last year was a good year, and it’s predicted this year is going to be better,” Cooper said.
And you don’t have to be selling a home to reap financial benefits in the current marketplace.
Refinancing at interest rates that are expected to remain historically low, below 3 percent for a 15-year mortgage and 4 percent for 30-year mortgage, is a big incentive to save money and shave years off your mortgage, according to Nutter.
The key factor to consider is the cost of refinancing, generally about $1,200 to $1,500, and the amount of savings over time when it comes to paying off your house.
“We’re seeing a lot of people with 30-year loans going to 15,” Nutter said. “If you’re middle-aged and you can refinance to a 15-year and sometimes get your payment a little less and cut 12 or 15 years of interest, it’s a great deal.”