When will the topsy-turvy local real estate market calm down?
The Kansas City housing market is intense, with soaring prices and limited availability challenging the city’s reputation for affordability. Nationwide, record-low interest rates and rising demand are met with a depleted inventory. The result is dramatic price jumps and homes selling in days.
According to the Kansas City Regional Association of Realtors, the median price in May 2021 for an existing home in the KC area was $255,000, about a nineteen percent increase from the same time last year. The number of available properties has dropped by fifty-three percent compared with 2020.
How did we get here? And if you’re thinking about entering the market, what should you know? We asked some of the city’s most knowledgeable real estate agents.
Covid didn’t start the crisis, but it did worsen it. “It’s always been a seller’s market,” says Sarah Montgomery, lead buyer specialist at Dani Beyer Real Estate. “However, it’s definitely intensified.” As people spent more time at home during the pandemic, they’ve recognized the need for more space and a comfortable home, says Sharon Barry, associate broker at Reece Nichols. And since the Federal Reserve cut interest rates to near-zero in the first days of the pandemic, there’s been a stronger incentive for prospective owners to enter now.
It’s not ending soon, but it’s probably not a bubble. Despite the worrisome rise in prices, national experts don’t expect a crash. As prices continue to soar due to low inventory, demand should slow. But this won’t happen overnight. “I don’t foresee the buyer’s side changing much over the next two years,” says Trent Gallagher, a realtor at Compass Realty Group.
Don’t expect a huge increase in inventory. Steep lumber prices shouldn’t slow down construction, Montgomery says, but it’s one of the reasons new housing is so expensive. The median new house price in the KC metro has jumped nearly twenty-one percent from last year to $439,425. In 2021, the metro has already issued nearly twice as many new building permits as last year, but it takes time to build.
More existing homes might enter the market when the federal moratorium expires July 31 and foreclosures spike. But Gallagher doesn’t expect it to have a strong impact. “With buyer demand so high, they’d all be picked up, and we’d still be back where we are right now,” Gallagher says.
It might be best to stay in the market. It sounds risky, but the future could be riskier. Interest rates won’t stay low forever. “I perceive the market’s going to continue to appreciate, and it’s a great time to buy,” Gallagher says.
There are limited ways for buyers to have leverage. Cash buyers typically move to the front of the list, Barry says, but that isn’t a realistic option for many people. She believes having good credit and placing a large down payment can help. Some people are rolling the dice by waiving inspections, but Montgomery recommends against it “unless they have a solid pre-inspector report from a reputable inspector,” she says.
Montgomery thinks the best advantage is finding the perfect agent. “Don’t hesitate to shop for agents and make sure you have a good fit,” she says. It can be a stressful process, but having someone friendly and knowledgeable can help you push through it.