Kansas City, MO Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Fri, Jun 25 2021

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. Thus, 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 2021 Overview

  • Median Home Value: $196,318

  • Median List Price: $394,933

  • 1-Year Appreciation Rate: +17.8%

  • Forecasted 1-Year Appreciation Rate: +14.2%

  • Months Of Supply: 0.8% (-57.9% year over year)

  • Total Inventory: 3,011 (-53.6% year over year)

  • Median Days On Market: 21 (-54.3% year over year)

  • Closed Sales: 3,974 (+17.1% year over year)

  • Pending Sales: 4,737 (+5.2% year over year)

  • Median Rent: $1,192

  • Rental Vacancy Rate: 12.2% (+2.2% year over year)

  • Price-To-Rent Ratio: 13.72

  • Delinquency Rate: 4.4% (+0.8% year over year)

  • Unemployment Rate: 4.1% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 495,327 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $54,194 (latest estimate by the U.S. Census Bureau)

[ Thinking about investing in real estate? Learn how to get started by registering to attend a FREE online real estate class from expert real estate investors. ]

Kansas City housing market

Kansas City Real Estate Investing 2021

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 17.8% over the last year, 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 heading into this year. Therefore, investors may 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 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 historical 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 3.02% halfway through 2021. To put things into perspective, interest rates are near historic lows, and more people are expressing an interest in buying.

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. With half the year remaining, Kansas City only has about 0.8 months of supply. Traditionally, a healthy market has about six months of inventory, which leaves real estate in Kansas City well short. 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.

[ Ready to take the next step in your real estate education? Learn how to get started in real estate investing by attending our FREE online real estate class. ]

Foreclosure Statistics In Kansas City 2021

According to Attom Data Solutions’ Q1 2021 U.S. Foreclosure Market Report, 33,699 U.S. properties entered into the foreclosure process in the first quarter of this year. According to the latest research, nationwide foreclosures are up 9.0% from the last quarter of 2020 but down 78.0% from this time last year.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

Foreclosures are expected to start rising everywhere, and the Kansas City real estate market is no exception. That said, real estate in Kansas City has two things working in its favor: relatively low home prices and a better-than-average unemployment rate. While it’s still too soon to tell just how many foreclosure filings will occur over the course of 2021, homeowners in Kansas City appear more capable of dealing with the crisis than many of their counterparts. Moreover, the unique combination of lower unemployment and lower home values suggests fewer homeowners will succumb to the foreclosure process. Nonetheless, it’s safe to assume foreclosures will increase, and well-positioned investors may be able to lend a helping hand.

Median Home Prices In Kansas City 2021

Capping off what has been a considerably generous upward trend in prices, real estate in Kansas City has appreciated as much as 17.8% in the last year. At that rate, the Kansas City real estate market outpaced the national average. As a result, the median home value in the Kansas City real estate market now sits at $196,318. For some perspective, real estate in Kansas City has appreciated each year since 2012. In that time, home prices have increased (on average) upwards of 96.3%. The median home value in the United States, on the other hand, increased 76.1% over the same period of time. The reason for the higher rate of appreciation may be attributed to Kansas City’s employment rate. With a better-than-average unemployment rate, more people have made the move to homeownership over the last decade.

Higher rates of employment, combined with the city’s low inventory level, have driven prices up almost exponentially. Competition has enabled homeowners to increase prices accordingly, which begs the question: Is it a good time to buy a house in Kansas City? The answer will depend on the timing of the purchase. Those looking to buy sooner rather than later will find today to be a great time to buy a house in Kansas City. If for nothing else, interest rates are near historic lows, and the inventory crunch is likely to drive prices higher for the foreseeable future. Experts expect homes to appreciate an additional 14.2% in the coming year, and there’s nothing to suggest they are wrong. As long as inventory levels remain as low as they currently are, prices will rise.

Still, today’s rate of appreciation is unsustainable. Prospective buyers are already being priced out of the market. Once new builds are brought to the market, real estate in Kansas City will correct itself. The shift is likely years away, but those afforded the time may find better prices in three to four years.

Kansas City Real Estate Market Trends

“The City of Fountains” has experienced a lot in the wake of the pandemic, which has many residents asking one simple question: Is Kansas City a good place to invest in real estate? The answer is a resounding yes, as long as investors heed prominent market indicators. At the very least, it’s possible to invest in any market (up or down), and today’s real estate entrepreneurs need to take the path of least resistance. Fortunately for the Kansas City real estate investing community, the path of least resistance involves rehabbing and long-term rental properties.

With relatively low home values and an expected increase in foreclosures, real estate investors in Kansas City may be able to find deals with attractive profit margins; the same can’t be said about many cities across the country. Still, there’s no denying the latest increase in prices. Prices have increased so dramatically that attractive rehab deals are getting harder to find. Of course, it’s possible to rehab, but real estate market trends suggest building a rental property portfolio is a more viable exit strategy. With borrowing costs lower than they have ever been and the demand for rental properties increasing with every prospective buyer who can’t find a house, landlords are positioned well. Moreover, today’s unique circumstances may simultaneously allow landlords to increase cash flow from rental properties and avoid costly vacancies.

Kansas City Real Estate Market: 2020 Summary

  • 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%)

Kansas City Real Estate Investing 2020

Investing in the Kansas City real estate market in 2020 was shaped largely by the fallout of the pandemic. In particular, new fundamental indicators emerged following the pandemic, which favored long-term investment strategies. The switch to long-term strategies represents a departure from recent history, as most investors were partial to rehabbing strategies. However, the Fed’s decision to drop mortgage rates as low as 2.66%, and keep them low, made it cheaper than ever to borrow institutional money. Lower borrowing costs simultaneously helped prospective landlords offset higher acquisition costs and increase monthly cash flow. In short, the government’s steps to spur buying activity greatly benefited investors who were looking to add to an existing rental property portfolio.

In addition to lower borrowing costs, local landlords were helped by the city’s lack of available inventory. If for nothing else, many of those who wanted to by 2020 were relegated to the renter pool; there wasn’t enough supply to meet demand. As a result, landlords found vacancies less of a threat and were actually able to use the added competition to increase rental prices.

Another investment strategy that took hold during the pandemic was tax lien investing. The increase in foreclosure filings enabled investors to practice this particular strategy on a larger scale. With more foreclosures, investors were able to capitalize on the influx of homeowners falling behind on payments.

Last but certainly not least, many investors turned to real estate investment trusts (REITs) in 2020. In March, the stock market suffered one of its largest losses ever, and the real estate sector experienced one of the biggest setbacks of any industry. With lockdowns initiated, many rents went unpaid, and REITs lost a large portion of their income in a matter of weeks. That said, the downturn made the valuations of some of the best REITs more attractive. Those who bought low are looking for the vaccine rollout to open the economy and return profits to their invested REITs.

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. As a result, the construction level 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 desired. The first quarter’s one-year job growth rate 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 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. In addition, 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. In addition, of the eight area counties surveyed by the association, six increased their permit counts from the previous year.

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

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. As a result, 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:

Is a lack of funds keeping you from investing in real estate? Don’t let it!

One of the obstacles many new investors face is finding funding for their real estate deals. Our new online real estate class, hosted by expert investor Than Merrill, is designed to help you get started learning about the many financing options available for investors, as well as today's most profitable real estate investing strategies.

Register for our FREE 1-Day Real Estate Webinar and get started learning how to invest in today's real estate market!

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either expressed or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.