Kansas City has nation’s fastest moving real estate market, but some relief in sight
Homes are selling faster in the Kansas City area than in nearly any other American market.
National real estate listing site Zillow says houses in Kansas City, Columbus and Cincinnati are typically selling within three days of listing — half the national average of six days.
It’s just the latest sign of an ultra-hot real estate market that has made it difficult to purchase homes and easier than ever to sell them. Zillow calculated the Kansas City metro area’s typical home value at $244,048 in May, a nearly 16% increase over May 2020. That’s the largest year-over-year price appreciation for Kansas City tracked in Zillow’s data, which dates back to 1996.
Through the pandemic, Zillow has tracked a migration of home owners from expensive coastal cities to Midwestern cities, where a dollar goes much further when buying a home. Its data shows that people moving to Kansas City came from Zip codes where average home values were $75,000 higher. Those buyers on average landed homes here that were 315 square feet larger than in more expensive cities.
“In a lot of cases, historically more affordable areas have been seeing the fastest growth and the Midwest stands out in that. So Kansas City, Cincinnati and Columbus are at the top of the charts,” said Zillow economist Treh Manhertz.
Even as the market continues to speed up, experts see some signs of relief on the horizon. Inventory, which has been strained for months, is finally easing up, according to Zillow’s analysis. May’s inventory of available homes here was up nearly 12% over April, though it’s still down nearly 25% since last year.
Nationally, home inventory increased for the first time since July 2020.
“Despite extremely strong demand for homes in this red-hot market, a steady increase in new listings appears to have finally started turning the tides, bringing a long-anticipated turn toward more choices for buyers,” Treh Manhertz said.
While builders are rushing to add more new homes to market and vaccines have improved consumer confidence, the inventory crunch is unlikely to be resolved any time soon.
“I think it will be a while yet,” Manhertz said.
While buyers may start to see more choices and reduced competition, it’s unclear if or when prices may start to level off. Zillow’s economists forecast U.S. home values to increase by nearly 15% by May of next year.
The real estate market has been humming for years now in Kansas City, where demand for homes far outstrips available inventory. That was the case before the coronavirus: In 2019, Kansas City home prices were rising faster than most U.S. cities, even boom towns like Denver, Nashville and Austin.
That only accelerated last year as the pandemic pushed many to reconsider what they want and need out of their homes. In Kansas City’s sellers’ market, buyers must be prepared to make quick decisions, compete with multiple offers and, in many cases, pay above list price to snag a home.
Data from the Kansas City Area Regional Association of Realtors show home prices surging as homes fly off the market. Across the region, the average sales price in May was $297,082 — up 24% over May 2019. That region stretches beyond just the metro area to include places such as Lawrence and St. Joseph.
And with warmer temperatures, rising sale prices and the reopening of the economy, the association doesn’t expect to see a substantial change in local inventories any time soon.
Association president Tony Conant said he has not seen inventory improve the way Zillow’s data suggests.
“I wish I was. That sounds awesome,” he said. “I wish that the market was moving that way a little quicker.”
The association’s data, which includes all activity tracked through the region’s Multiple Listing Service, shows inventory is still down by about half in Jackson, Clay and Johnson counties over 2020. In Wyandotte County, inventory was down about 45%
But he expects that the local real estate market is headed for a correction. It’s just unclear when.
“Looking at real estate historically, it’s peaks and valleys. I would say we’re on our way to one of those peaks,” Conant said. But “this is probably the market that we’ll see for the next three to five years.”
With limited supply, local agents are looking to home builders to boost inventory. But the association’s May report noted that increasing material and labor costs, along with supply chain challenges, have caused higher prices, which are then passed on to buyers.
Even in an ultra-competitive market, historically low mortgage rates make this a desirable time for many buyers. And even with skyrocketing prices, it can still make financial sense for those who plan to stay put for the next several years.
“It’s not a bad time to buy right now,” Conant said, “but buyers need to have a different tool box now than they did three to five years ago.”
This story was originally published June 17, 2021 at 6:56 AM.
