Kansas City homes are selling for more than ever before; is there any end in sight?
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‘Priced out’
Skyrocketing home prices across Kansas City have been good for sellers, but not necessarily for buyers. And none are having a harder time than low-income and first-time buyers.
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Kansas City homes continue to fly off the market.
New listings here typically stay on the market for three days, according to real estate listing site Zillow. That’s the shortest time among major American cities.
Zillow calculated the Kansas City area’s average home value at $250,881 in July — an 18% increase year over year. Though values are moving fast, Kansas City’s market remains relatively more affordable than other cities. Across the country, the company estimates, the average price of a home is $298,933, according to the Zillow Home Value Index, a seasonally adjusted figure that looks at the middle price tier of homes.
As in other parts of the country, prices are being driven up in Kansas City by low inventory: The 4,352 homes on the market in July represented a 28% drop over July 2020’s inventory of 6,061 homes.
“If inventory continues on that pace, then prices are just going to continue to go up,” said Mike Frazier, president and CEO of ReeceNichols, which employs more than 2,000 real estate agents across the region.
Home values are appreciating nearly universally, though experts say prices are rising fastest on the most affordable homes. Still, those homes are frequently much lower priced in the first place.
With homes in places like Overland Park and Olathe commanding top dollar, Frazier said buyers are increasingly looking to less competitive markets, particularly when buying their first home. That might mean Wyandotte County or the east side of Kansas City, where home values and incomes have long lagged behind the rest of the metro.
“Those areas are becoming areas where both investors and first-time homebuyers are going into and buying homes,” he said. “I think that’s a great way to get into the first-time home buying market. And those houses are appreciating as well because of that.”
Wyandotte County remains the most affordable in the five-county metro area. In July, the Kansas City Regional Association of Realtors calculated the average sales price there at $210,061 — up 11% from last year. That’s less than half the average sales price of $426,642 in the ultra-competitive suburbs of Johnson County.
The market has made places like Bonner Springs and Piper more competitive in recent months, said Charles Gilbert, a broker at Sellstate Heartland Realty. Entertainment and shopping options around Village West have made that part of western Wyandotte County more popular.
On the opposite end of town, buyers are increasingly looking at downtown Kansas City, Kansas. Prices are rising there, but at a slower pace than surrounding areas, Gilbert said.
“People who are desperate for housing have opened up their scope of where they wouldn’t normally be willing to live,” he said. “Those are the ones that are getting a lot more attention because flippers can get them cheaper, and then it’s at a lower and more affordable cost for buyers.”
Though the market remains competitive, Frazier thinks it’s still a good time to buy.
Record-low interest rates have been a major driver of demand for housing purchases, but it’s unclear how long those will stick around. The average rate for a 30-year fixed mortgage is under 3%, less than half of where that figure was 20 years ago.
Though the housing market crash leading up to the Great Recession showed housing values can fall, they’ve only increased in recent years. Some think a correction is imminent, but widespread lack of inventory is likely to keep values moving up.
“I don’t think you should sit on the sidelines,” Frazier said. “That’s how you build wealth. You buy a $200,000 house and sell it for $250,000.”
But buyers should come prepared to face an unprecedented market.
“Number one, I would tell them be patient,” said Gladstone Realtor Jason Sharpsteen.
“It could take some time for you to get into a home, and you might have to write multiple offers before you have something accepted.”
He said he sees first-time buyers spending a lot more money than in previous years.
When he started in real estate in 2004, many first-time buyers spent $150,000 or less. Now, he sees many spend $250,000 to $300,000.
“Just because they’ve saved money and they haven’t bought a home and they waited and bought a more expensive home than would be traditionally a first home,” he said. “That’s good for them, but not all first-time homebuyers have the ability to do that.”
Although U.S. home values broke records again in July, analysts at Zillow say there are signs of a rebalancing on the horizon. In July, national home inventories increased for the third consecutive month and home value appreciation slowed.
“I think that if we’re not at the top of this market, we’re close to it,” said Sharpsteen.
