Kansas City, MO Real Estate Market Trends & Analysis [Updated 2020]

Jump To Another Year In The Kansas City Real Estate Market:

The Kansas City real estate market, situated precariously on the border of both Kansas and Missouri, has developed a reputation for affordable real estate, strong cash flow, and great investment opportunities. Perhaps even more importantly, however, is the city’s position to cater to first-time homebuyers. Thanks—in large part—to a relatively low median home value, real estate in Kansas City has seen a large increase in demand for entry-level homes. While that’s not necessarily unique to the “Gateway of the Southwest,” it is important to note that few cities (if any) have seen a larger increase in FHA buyers in recent history.

First-time buyers are inherently drawn to the Kansas City housing market, but demand may increase on the heels of several prominent indicators. The Coronavirus, in particular, has forced the government’s hand into reducing interest rates to a level that new buyers will find irresistible. On top of that, local unemployment appears to have been slightly more insulted than the national average, which should serve as a catalyst moving forward. While COVID-19 was undoubtedly unwelcome, it may have actually disrupted the Kansas City real estate market enough to create an opportunity for everyone: buyers, sellers, and investors.

Kansas City Real Estate Market 2020 Overview

  • Median Home Value: $173,432

  • 1-Year Appreciation Rate: +8.3%

  • Median Home Value (1-Year Forecast): +7.9%

  • Median Rent Price: $1,025

  • Price-To-Rent Ratio: 14.10

  • Unemployment Rate: 4.9% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 491,918 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $52,405 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 14.10%

  • Foreclosure Rate: 1 in every 8,004 (1.2%)

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2020 Kansas City Real Estate Investing

The Kansas City real estate investing community is currently the beneficiary of some rather favorable indicators. More specifically, market conditions may very well favor investors on both the buying and selling end of transactions. For starters, real estate in Kansas City remains incredibly affordable. While prices have risen nearly 8.3% in one year (August 2019 to September 2020), median home values are still well below the national average, which would suggest investors who can’t afford to operate in more expensive markets may be able to secure a deal in Kansas City.

The same affordability working in favor of Kansas City real estate investors has also helped traditional buyers. The local market recently saw the fifth-largest increase in FHA buyers across the country (many of whom are first-time buyers or can’t afford to put down 20.0% upfront). In fact, 17.6% of all sales were made to buyers with an FHA loan at the time. Therefore, investors may be able to simultaneously purchase relatively affordable homes in a market where an increasing number of people are looking for their first houses. The unique combination of affordability and demand should work heavily in favor of the entire Kansas City real estate investing community.

It is worth noting, however, that the introduction of the Coronavirus has shifted the city’s most viable exit strategy from rehabbing to long-term rental properties. First and foremost, nearly a decade’s worth of appreciation has increased home prices to historic levels. As a result, profit margins on flips are growing slimmer. That’s not to say rehabbing isn’t still a great idea in Kansas City, but rather that today’s indicators seem to favor rental properties.

In addition to historic rates of appreciation, it’s never been cheaper to borrow institutional money. The Fed announced it would keep rates low in an attempt to stimulate the housing market in the wake of the pandemic, and they haven’t let buyers down. According to Freddie Mac, the average monthly commitment rate on a 30-year fixed-rate mortgage was 2.89% as recently as September. To put things into perspective, interest rates have never been lower, and more people are expressing an interest to buy.

Low interest rates will simultaneously help investors justify today’s higher home prices and reduce their monthly mortgage obligations. In doing so, the prospects of renting a property to tenants become a lot more attractive. Lower monthly mortgage payments are easier to offset with rental cash flow, and investors may find it easier to pay down their mortgages with other people’s money.

Another factor contributing to the attractiveness of building a rental property portfolio in Kansas City is supply and demand. To be clear, there aren’t enough homes in Kansas City to keep up with demand, especially after the drop in interest rates. As a result, more people will be forced to continue renting, whether they can afford to buy or not. The demand for rental properties will not only help avoid vacancies, but it may even increase cash flow for investors.

The unique combination of indicators created in the wake of the pandemic has made rental properties in Kansas City more attractive than ever. Today, investors who can put money to work now may be happy they did, even just a few years from now.

2020 Foreclosure Statistics In Kansas City

According to data presented by RealtyTrac, a national leader in real estate foreclosure statistics, the Kansas City housing market is currently home to approximately 203 distressed properties that fit one of at least three descriptions: default, auction or bank-owned. It is worth noting, however, that the number of distressed homes in Kansas City has been on the decline. As recently as September, “the number of properties that received a foreclosure filing in Kansas City, MO was 48% lower than the previous month and 82% lower than the same time last year,” according to RealtyTrac.

With foreclosure filings inching down, a great deal of the city’s distressed homes are due to be sold at auction. With the majority of the city’s distressed inventory in auctions, investors may find the scales tipping in their favor by attending local auctions. At the very least heading to the source with the most distressed homes could increase your odds of finding a discounted property.

For a better idea of where to look for distressed homes, here’s a list of the neighborhoods in Kansas City with the highest distributions of foreclosures:

  • 64129: 1 in every 2,247 homes is currently distressed

  • 64113: 1 in every 5,066 homes is currently distressed

  • 64109: 1 in every 6,107 homes is currently distressed

  • 64134: 1 in every 9,866 homes is currently distressed

  • 64111: 1 in every 11,320 homes is currently distressed

Kansas City’s relatively high foreclosure rate suggests there may be more opportunities to secure deals below market price, which begs the question: Is Kansas City a good place to invest?

Every market is different, but there’s never a bad time to invest. Despite the state of a market or its respective economy, there’s an exit strategy tailored to optimize success. Even in today’s market, which has seen the Coronavirus impact the economy on a global scale, the Kansas City real estate market appears ready and able to support investors. Patient investors, in particular, may see an influx of foreclosure filings over the next 12 months, which would most likely increase their odds of landing a good deal with attractive margins.

2020 Median Home Prices In Kansas City

Capping off what has been a considerably generous upward trend in prices, real estate in Kansas City has appreciated as much as 8.3% in the last year. At that rate, the Kansas City real estate market outpaced the national average by nearly 2.5%. As a result, the median home value in the Kansas City real estate market now sits at an attractive $173,432, compared to the national average which is now somewhere around $259,906.

It is worth noting, however, that prices are expected to increase even more over the next 12 months. Thanks to the difference in supply and demand, the city’s lack of inventory will create competition that should increase prices by as much as 7.9% over the next year.

Kansas City Real Estate Market: 2016 Summary

  • Median Home Price: $163,300

  • 1-Year Appreciation Rate: 6.7%

  • 3-Year Appreciation Rate: 21.3%

  • Unemployment Rate: 4.4%

  • 1-Year Job Growth Rate: 1.4%

  • Population: 473,008

  • Median Household Income: $45,150

Kansas City Real Estate Investing 2016

Home prices and appreciation rates were on pace with the national average, home affordability was as dominant as ever, and an ever-improving economic landscape propped up the Kansas City housing market in 2016. The median home price was $163,300 during the first quarter, slightly behind the national average of $215,767. Although price growth slowed, home prices were actually up from the previous year.

Kansas City real estate market news in 2016 was all that different from today. The most attractive thing about the Kansas City real estate market in 2016 was how affordable the prices were. In the first quarter of 2016, Kansas City homeowners paid roughly 7.3% of their income to mortgage payments, while the rest of the nation paid almost double: 14.5%. With a historical average of 10.2%, which is vastly lower than the national average of 19.5%, the Kansas City housing market continued to show improvement.

At the time, affordability drove up demand, which—in turn—created a need for new homes. The level of construction in KC was 53.3% above the long-term average at the time, while the rate of single-family housing permits surpassed the national average, reaching 15.5% in the first quarter.

Kansas City’s economy was on the mend from the previous recession, as unemployment continued to improve and employment growth remained positive. Although the unemployment rate in Kansas City was 4.4%, which was lower than the national average, job growth left some to be desired. The one-year job growth rate in the first quarter was a disappointing 1.4%, compared to the national average of 2.0%. Fortunately, the job market continued to improve throughout 2016, which helped get the city to where it is today: the premier location for first-time homebuyers.

Kansas City Real Estate Market: 2014 Summary

  • Median Home Price: $164,300

  • 1-Year Appreciation Rate: 2.9%

  • 3-Year Appreciation Rate: 19.9%

  • Unemployment Rate: 6.3%

  • 1-Year Job Growth Rate: 0.2%

  • Population: 467,007

  • Median Income: $56,248

Kansas City Real Estate Investing 2014

The Missouri housing market, as a whole, was slow to recover following the Great Recession. However, 2011 marked what would be a great uptrend for the entire state, and Kansas City was no exception. As perhaps the biggest beneficiary of the Missouri recovery, Kansas City was in a great position to prosper as recently as 2012. By 2014, however, it was clear that real estate in Kansas City was on the right path.

According to Kansas City real estate news at the time, the local market really benefited from employment numbers. In 2014, Kansas City was on its third consecutive year of employment growth. Employment numbers were able to surpass their pre-recession levels faster than the national average.

In addition to rising home prices, the number of new home starts was encouraging in 2014. According to reports, homebuilding activity reached its highest level for October in seven years. The Home Builders Association of Greater Kansas City said “465 permits for single-family home construction were issued” in the record-setting month. That was the most permits the area had seen since 2007 before the recession took hold of the entire housing sector. Of the eight area counties surveyed by the association, six increased their permit counts from the previous year.

When all is said and done, 2014 was the year momentum really started to build in the Kansas City housing market.

Kansas City County Map:


Kansas City Real Estate Market Summary

The Kansas City real estate market has enjoyed a good run for the better part of a decade. Moving forward, appreciation rates are expected to run up for at least a year, which may spark near-term activity. The demand from new buyers should remain intact and help the city weather the current storm. More importantly, however, is the disruption onset by the Coronavirus. While the pandemic was unwelcome, it may have actually generated a great opportunity for everyone in the market.

Have you thought about investing in the Kansas City real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Kansas City in the comments below:

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