The Kansas City housing market is on a fast track this spring with sellers in the driver’s seat, so real estate agents are telling buyers they better move fast or the houses they want will be gone.
Although plenty of buyers are looking, buoyed by low interest rates and solid consumer confidence, the supply of existing homes for resale is low. At the current sales rate, there was just a 4.8-month supply in March, down from the 7.1-month supply in March 2012.
The market for new homes, however, is more balanced, with a 6.3-month supply at the current sales pace compared to 8 months in 2012.
Well-priced homes are going fast, often with competing offers.
“It’s taking potential buyers longer to find a home, and when they do find it there are multiple offers,” said Kathy Minden, president of the Kansas City Regional Association of Realtors. “It’s clearly a seller’s market.”
When the supply exceeds six months, the market begins to favor buyers, and when its less than five, the market tends to favor sellers, according to real estate agents.
Van Robbins, a 34-year-old engineer at HNTB, found out just how fast the market was moving when a couple of homes he was looking at in Lee’s Summit last month were snatched from his grasp by competing buyers.
“I looked at a house online, but it was sold before we could make an appointment to see it,” Robbins said. “I then looked at two homes on a Saturday morning, and we were going to come back that afternoon, and both were sold.”
He then turned to Liberty.
“I found two houses there, and we looked at them on a Saturday,” he said. “The house I bought, we put our offer down, and when we were making the offer, another buyer was there. Our offer was cleaner.”
The numbers reflect how challenging the hunt is this spring.
There were 10,593 existing homes listed in the area in March, down 2 percent from a year ago and almost 19 percent lower compared to March 2012. As a result of that shortage, sales were actually down 9 percent in March over last year, the most recent month statistics are available, according to the Realtors association.
“Home sales are slightly lower, and I think a lot of the reason is the inventory is down,” Minden said.
The supply of new homes was 26 percent higher in March than a year ago, with 1,339 on the market. New-home sales were down just 1 percent in March compared to a year ago.
The Home Builders Association of Greater Kansas City reported there were 863 single-family building permits issued during the first quarter of the year, up 4 percent from the same period last year.The Parade of Homes
, which features 377 homes, ends Sunday.
The experience in the Kansas City area is being repeated nationally, with sales of existing homes down for much the same reason, a shortage of inventory, according to the National Association of Realtors. Sales were off 7.5 percent in March nationwide compared to a year ago, and in the Midwest they were down 10.3 percent.
The shortage has driven up prices, although the Kansas City housing market has not seen the same price increases buyers are facing in other places in the country.
Nationwide, existing-home prices were up 7.9 percent in March, according to the national association. Locally, real estate agents reported the average sales price for an existing home was $159,576 in March, up 5.5 percent, and new-home sales prices were up 1 percent to $340,736.
And in further good news for local home buyers, asurvey by nerdwallet.com
, a San Francisco-based consumer finance website, ranked Kansas City as the seventh-most affordable market among U.S. metropolitan areas larger than 1 million people. The survey list was based on a home-price-to-income formula using sales prices and the median income.
Other regional metropolitan areas did well, too. St. Louis ranked fourth among areas over 1 million. Wichita ranked ninth in the medium-size category, and Topeka ranked sixth among small metropolitan areas with fewer than 300,000 people.
Cindy Yang, a senior analyst for nerdwallet.com, said a big thing in Kansas City’s affordability favor is its diverse economy.
“It means there’s a lower income disparity compared to the rest of the country,” she said, “which means home prices don’t get pushed up by the concentration of income in certain individual industries.
“In San Francisco, there’s a lot of tech individuals who are able to bid high for homes, but people who are not in tech are not able to afford those house prices.”
Ellen Bradbury, a real estate agent at Reece Nichols, said that the year started off slow because of poor weather but that when April came around, the market took off. She focuses on homes in the central metropolitan core straddling State Line Road and southern Johnson County.
“The biggest concern we have now is the lack of inventory. It’s really scarce,” she said. “As a result, homes come on the market, and they go fast with multiple offers. It creates an anxiety-ridden atmosphere.
“There aren’t any homes. That’s why my sales have dropped.”
Arthur Parks of Reece Nichols said the supply of homes in the swath of city neighborhoods south of the Missouri River that includes the Country Club Plaza, Brookside, Armour Hills and Waldo was down 8.5 percent in March compared to last year, with 537 residences listed. Sales were off 5.7 percent in that area because of the lower inventory, but prices were up 5.6 percent on average.
“The good stuff that’s priced right is gone and gone quickly,” he said.
It took 87 days on the market before homes were sold in those neighborhoods, a 20.2 percent drop from the previous year. Although that sounds lengthy, Parks said that time period includes the 30 to 45 days it takes to close on a transaction.
Although interest rates have crept up slightly from their historic lows of a year ago, real estate agents say they still are a big factor behind people wanting to buy.
“When you can get a 30-year mortgage at 41/2 percent, how can you say it’s high?” Minden asked. “If the house is priced right and in good shape, it will sell, no matter if it’s a first-time home buyer, a move-up or a luxury property.
“Two weeks ago I wrote three different offers for three buyers, and all three had competition.”
Despite the demand, prices have not jumped substantially. But real estate agents are noticing that sellers are getting what they’re asking for or very close. The era of low-ball offers, common during the recent recession, is definitely over.
“I do see that buyers have a sense they have to make offers closer to list,” said Brenda Oliver of Heritage Realty in Odessa, Mo., immediate past president of the regional Realtors association.
Miranda Sloan, an engineer at Burns McDonnell, and her husband, Josh, were looking for a home in southern Johnson County in the Gardner area but finally wound up buying a place in Wellsville, Kan., after a two-month search. They paid close to the listing price for their five-bedroom home.
Sloan, who’s expecting her second child, said it was a war out there.
“Every time we saw something it was a battle to see it first,” she said, “and once we found something we liked, we knew we had to put an offer in right away.”
After checking 20 homes, they jumped on the Wellsville opportunity.
“We were notified the day it was listed, looked at it that night and put an offer in the next day,” she said.