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

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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 no other city has seen a larger increase in FHA buyers in recent history. Subsequently, the latest developments onset by the Coronavirus may offer potential buyers even more chances to secure a discount. Local experts and industry pundits are fairly confident home values will drop modesty over the next six months, only to return to today’s values within a year. As a result, the Kansas City real estate market appears poised to benefit just about everyone in one way or another: buyers, sellers and—especially—real estate investors.

Kansas City Real Estate Market 2020 Overview

  • Median Home Value: $162,487

  • 1-Year Appreciation Rate: 4.3%

  • Median Home Value (1-Year Forecast): -0.8%

  • Average Days On Market (Zillow): 73

  • Median Rent Price: $1,025

  • Price-To-Rent Ratio: 13.21

  • Unemployment Rate: 3.4% (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 2,344 (4.2%%)

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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 4.3% in one year’s time (February 2019 to March 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 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% up front) in the second quarter halfway through 2019. 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 real estate should become even more affordable for the next six months or so. In lieu of the global pandemic, housing activity is likely to fall, which will probably lead to a drop in prices. As of now, the drop is expected to be temporary, and shouldn’t last too long. However, there is no telling how long the Coronavirus will impact home values in Kansas City. All we can do is assume prices will dip for the foreseeable future. The drop isn’t expected to be big, as there still appears to be demand. Competition over the homes that are still on the market will do their best to maintain appreciation momentum, but the “shelter in place” orders will certainly detract slightly from recent gains.

As a result, the Kansas City real estate investing community may find itself with a temporary break in appreciation. With prices expected to drop slightly, the next few months could represent a great time to buy. When all of the dust settles, the expected drop in home values could represent a great opportunity to buy in a market with plenty of demand.

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 455 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 March, “the number of properties that received a foreclosure filing in Kansas City, MO was 57% lower than the previous month and 13% lower than the same time last year,” according to RealtyTrac.

With foreclosure filings inching down, a great deal of the city’s distressed homes has transitioned from defaulted properties to bank-owned homes. In fact, the number of bank-owned homes in the Kansas City housing market has increased as much as 300.0% year-over-year. After the increase, bank-owned homes now represent 49.3% of Kansas City’s distressed inventory. The remaining 50.7% of the city’s distressed homes are auction inventory.

At the moment bank-owned homes represent a great opportunity for Kansas City real estate investors. Due to holding costs, these financial institutions would rather sell the homes in their possession rather than hold onto them, even if that means selling them for a discount. Therefore, it’s reasonable to assume Kansas City real estate investors who know where to look for bank-owned homes may find themselves with some good looking deals.

Outside of bank-owned homes, local investors should also consider visiting local auctions. 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:

  • 64125: 1 in every 834 homes is currently distressed

  • 64128: 1 in every 842 homes is currently distressed

  • 64123: 1 in every 1,415 homes is currently distressed

  • 64137: 1 in every 1,181 homes is currently distressed

  • 64132: 1 in every 1,772 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 4.3% in the last year (February 2019 to March 2020). At that rate, the Kansas City real estate market outpaced the national average, albeit slightly. As a result, the median home value in the Kansas City real estate market now sits at an attractive $162,487, compared to the national average which is now somewhere around $248,857.

It is worth noting, however, that the city’s appreciation rate is expected to temper, and it has already started doing so. In the last few months, homes have started showing signs of slower appreciation rates than towards the end of 2019. However, the introduction of the Coronavirus and “shelter in place” orders are expected to drop appreciation rates even further. For the first time in about eight years, in fact, prices are expected to decline—albeit modestly. While original projections had the city’s appreciation rate continue upwards as recently as last month, the impact of the Coronavirus has tempered expectations. Instead of continuing its upward trend, the median home value in Kansas City is expected to dip 0.8% over the next six months.

Fortunately, the decline isn’t expected to last too long. Within one year’s time, home values are expected to return to today’s levels, which may actually give buyers a nice window to purchase.

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. While appreciation rates are expected to temper soon, there appears to be plenty of pent up demand to maintain momentum. The demand from new buyers should remain intact and help the city weather the current storm.

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:

*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.
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