The Kansas City real estate market is very hot and in many ways the envy of housing pundits on both coasts. Despite the COVID pandemic causing huge unemployment and impaired consumer confidence in real estate buying and selling, the Kansas City housing prices are soaring. Based on the FHFA all-transactions home price index, typical home values in the Kansas City MSA in the 4th quarter rose by 7.3 percent compared to the same quarter in 2019.
The residential housing market across the Greater Kansas City Region remained strong throughout 2020 according to year-end data from the Kansas City Regional Association of REALTORS® (KCRAR). Closed sales were up 6.3% for the year, indicating a good buyer demand. The average sale price increased by 10.4% to $272,623 in 2020.
The Kansas City real estate market was already competitive before the coronavirus, with Kansas City home prices rising faster than most U.S. cities. A lack of inventory across the metropolitan area is the biggest driver of the rising prices. But in Kansas City, there is only about one month of supply of available homes for sale — which is an indicator of Kansas City being a strong seller's real estate market.
The first half of 2021 continued a trend that began in 2020, in which high demand combined with limited inventory resulted in a spike in prices in the market. In the real estate market in and around Kansas City, Missouri, there is still significantly more demand than there is supply. The market will continue to be hot as long as the supply of available homes for sale remains low and mortgage rates remain near historic lows.
Kansas City Housing Market Trends 2021 (Most Recent – August)
Located on the Missouri River at the confluence with the Kansas River, the city is contiguous with Kansas City, Kansas. But most of Kansas city lies within Jackson County, Missouri. A large, prosperous, self-sufficient, and culturally rich city, it is no wonder why it has seen a continuous rise in its employment, directly impacting the local real estate.
Here are the Greater Kansas City housing market statistics for August 2021 as reported by the Kansas City Regional Association of Realtors (KCRAR).
- In the Greater Kansas City housing market, the average sales price is up +8.7% to $308,179.
- Home sales in the Kansas City area totaled 4359 units in August, up 2.3 percent from the same month in 2020.
- Pending sales were down 6.2% to 4,383 contracts.
- Homes that sold in August were on the market an average of 18 days and sold for 101.4 percent of their original asking prices.
- The number of active listings has dropped by 21.9% year-over-year, which makes the supply equal to 1.1 months.
- Months' supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. It is a good indicator of whether a particular real estate market is favoring buyers or sellers.
Kansas City Real Estate Market Forecast 2021-2022
Kansas City's housing market is one of the most affordable in the nation. It is one of the hottest real estate markets for affordable rental real estate investment. What are the Kansas City real estate market predictions for 2021 & 2022? Based on the FHFA all-transactions home price index, in Kansas City, MO-KS, house prices rose 16.9% over the past year and rose 4.0% over the last quarter. The cumulative change in the home price index since 2007 is 66.5%.
The Kansas City metro area currently ranks 56 in FHFA HPI® Top 100 Metro Area Rankings. The FHFA home price index measures the average change in home values within a market over time. The index for the Kansas City MSA covers all of the fifteen-county Kansas City metropolitan area, spanning both Kansas and Missouri.
Let us look at the price trends recorded by Zillow over the past few years. Since Sep 2011, the typical home value in Kansas City metro has appreciated by nearly 81% — Zillow Home Value Index. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in the Kansas City metro is currently $253,659. It indicates that 50 percent of all housing stock in the area is worth more than $253,659 and 50 percent is worth less (adjusting for seasonal fluctuations).
Kansas City is a sizzling hot seller’s real estate market, which means that there exists a limited supply of homes in Kansas City, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. In other words, based on the last month’s key housing market indicators, the demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace.
According to NeighborhoodScout's data, the cumulative appreciation rate over the ten years has been 64.97%, which ranks in the top 30% nationwide. This equates to an annual average Kansas City house appreciation rate of 5.13%. Kansas City real estate appreciation rates in the latest quarter were at 2.51%, which equates to an annual appreciation rate of 10.41%.
As of now Kansas City home prices have reached the highest level in years and upward pressure is expected to continue into the next year even if there is a marginal increase in homes for sale. The inventory can dwindle in 1.1 months if no new homes are listed. Low mortgage rates will bolster the home buying market and continue pushing up home price growth.
- Kansas City Metro home values have gone up 17% over the past year and Zillow predicts they will rise 11.2% in the next year.
- Kansas City home values have gone up 18.9% over the past year and will continue to rise at a similar pace.
- The typical value of homes in Jackson County is $198,942, up 18.8% over the past year.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until August 2022.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? While many have lost jobs, making them ineligible for a home mortgage, some sellers took their homes off the market. Active listings of homes in the Greater Kansas City area totaled 4300 at the end of August, representing a 1.1 months' supply, down 31.3% from last year.
In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Kansas City can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. Therefore, Kansas City real estate market remains strong and skewed to sellers, due to a persistent imbalance in supply and demand.
According to the U.S. Bureau of the Census, a total of 732 single-family permits were issued in the Kansas City metropolitan area in March 2021, up from 408 in March 2020, an increase of 79.4 percent. Year-to-date, 1686 single-family permits have been issued, up from 1120 over the same period in 2020.
For buyers in Kansas City Area: The market is red hot & very competitive at the moment so they should be prepared to look at a listing and make a serious offer above list price on the first day it hits the market. Interest rates have made many people consider buying during the pandemic. FreddieMac reported the average 30-year fixed mortgage rate was 2.84% in August 2021. The challenge for buyers will be getting qualified for a loan. If you’ve been laid off, it’s going to be harder to get approved.
For sellers in Kansas City Area: As there is less than a month of supply of properties for sale at a given time, this has created a market that greatly favors sellers. It’s a great time to sell a home. In conclusion, we can say that it is a strong seller's market seen by far and won't be any major dip in home values for the foreseeable future. The tight Kansas City real estate market here mirrors wider national housing trends.
Kansas City Real Estate Investment Overview
Is Kansas City a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Kansas City is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2021. Kansas City is the largest city in the U.S. state of Missouri, famous for its distinct barbeque cuisine and jazz heritage. Also nicknamed the City of Fountains, Kansas City is now emerging as a growing market for real estate investments.
When we refer to the Kansas City housing market, it comprises the Kansas City metropolitan area, which is a bi-state metropolitan area anchored by Kansas City, Missouri. Its 14 counties straddle the border between the U.S. states of Missouri (9 counties) and Kansas (5 counties). It is the second-largest metropolitan area centered in Missouri (after Greater St. Louis) and is the largest metropolitan area in Kansas, though Wichita is the largest metropolitan area centered in Kansas.
Kansas City, MO is a minimally walkable city in Jackson County with a population of approximately 460,377 people. In the past ten years, the annual real estate appreciation rate has amounted to 2.88% in Kansas City, according to NeighborhoodScout.com. Kansas City has a mixture of owner-occupied and renter-occupied housing units. Three and four-bedroom single-family detached homes are the most common housing units in Kansas City. Other types of housing that are prevalent in Kansas City include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.
If you are looking to make a profit, you don’t want to buy the most expensive property on the Kansas City real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Kansas City that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.
Top Reasons To Invest In Kansas City Real Estate
- Kansas City is the largest city in Missouri and is the sixth-largest in the Midwest.
- Kansas City has long been a favorite of real estate investors.
- Affordable Turnkey Properties.
- The largest city in the state of Missouri.
- The population is expected to grow to 2,200,000 by 2020.
- Median home price is up 18% year-over-year.
- 1-year appreciation forecast of 10-15%.
- 2020's Annual home appreciation rate in Kansas City MSA was 7.3% – FHFA House Price Index (HPI).
- #56 in the U.S. out of top 100 MSAs – FHFA.
- The cumulative change in the FHFA home price index since 2007 is 66.5%.
Disclaimer: Covid-19 may have had an impact that has not yet been reflected in our reports. When referencing the data on this page, please keep in mind that the data may not accurately depict the current market reality.
Overview of Kansas City & its Real Estate Market
Kansas City is a large, prosperous, self-sufficient, and culturally rich city located astride the Missouri River. In the metropolitan area, the population is estimated at 2.1 million. The median household income in Kansas City is 45,376 and the median home price is $146,300. Kansas City is the largest city in Missouri and is the sixth-largest in the Midwest. It hosts the Kansas City Chiefs as well as the Kansas City Royals. It's home to some of the Best Ribs in America.
The city has over 200 water fountains, making it only second to Rome, Italy, hence the nickname “City of Fountains.” It is also important to remember that only Paris, France has more Boulevards. In 2017, a WalletHub survey for real estate market growth in the United States listed the “Kansas City Real Estate Market” at number 18 out of 300 of the fastest-growing cities in the US.
Kansas City has started to do some major revitalization downtown. More than $6 million has been spent giving the downtown area a facelift and new makeover, including, apartments, offices, condominiums. These facelifts have also been done in both indoor and outdoor malls, restaurants, and places for concerts, plays, and other forms of entertainment. Kansas City real estate is very affordable; the home prices are near the national average. All these serve towards making Kansas City properties attractively appealing to investors and homebuyers who are looking for gains in cash flow.
Employment in Kansas City
The BLS reported that the unemployment rate for Kansas City fell 0.2 percentage points in March 2021 to 4.5%. For the same month, the metro unemployment rate was 0.3 percentage points higher than the Missouri rate. The unemployment rate in Kansas City peaked in April 2020 at 11.7% and is now 7.2 percentage points lower.
Keeping aside the impact of the recent pandemic, Kansas City has seen a continuous rise in employment prospects over the last 2 years, a trend that directly impacts the Kansas City real estate market. From 2017 to 2018, the city registered a remarkable 1.9% in terms of overall employment. This could be further broken down to 3.8% in professional and business services, 3% in terms of government-sponsored employment opportunities, and 1.9% in the trading, transport, and utility sectors. Recent job growth is positive. Kansas City jobs have increased by 1.4%. For the past 20 years, the big growth has been on the Kansas side to the southwest in suburbs like Overland Park, Lenexa, and Shawnee.
The Growth in Kansas City
The national average growth in cities is 4.45%. In Kansas City, in 2010, it was higher than 4.5%. It's growing at the national rate and is expected to grow even faster in the next few years. Between the years 2013-2015, the annual growth was 15,000 then raised to 20,000 between 2015-2016. Kansas City is home to some of the biggest companies, such as H&R Block, Sprint, Hallmark, and BNSF, to help to fuel the attraction of the Kansas City real estate market.
Kansas City is a great attraction for tourists, especially art-lovers. Housed by several museums and art destinations, the city is famous for its Jazz Museum as well as the Nelson-Atkins Museum of Art that boasts over 40,000 works of art, vintage antiques, and contemporary works. The influx of tourists into the city has a direct relationship with the growth of the city’s real estate market.
Great Place to Live Due To Rich Culture & Favorable Weather
The city is known for its distinct barbeque cuisine and uniquely crafted breweries, which makes it a preferred destination for foodies. It has more than 100 barbecue restaurants and is known in Missouri as the “world's barbecue capital. The ancient heritage of Jazz music makes it suitable for immigrants who are passionate about music. The city lies on the shores of Missouri & Kansas River with a landscape full of fountains. The overall ambiance and accommodating culture are sure to attract more and more residents into the city, which will prove to be a boon for investments in Kansas City Real Estate Market.
The weather in Kansas City is beautiful and usually clear and sunny. September, May, and June are the most pleasant months in Kansas City, while January and December are the least comfortable month. You can almost always count on the 4th of July to be a great day to BBQ and shoot off fireworks and watch your neighbors shoot theirs, creating a competition. The neighborhood fireworks shows have always been as big as the city's, only the last half the night.
During the shows, everyone in the neighborhood waters the top of their houses for a week straight to avoid catching fire. Where else in America can you find that? Even better, the people are friendly and the weather is inviting. There are nearby lakes for boating, fishing, swimming, and camping. The weather is almost always enjoyable. They get most of their rain in the spring of April and the summer month of June.
Cost of Living in Kansas City
Another great factor that is seen as a boon to the Kansas City real estate market is the cost of living. The cost of living in Kansas City is reasonable and affordable. With the cost of rent and the price you might pay for a house already discussed, there's the cost of day-to-day expenses to consider. A basic lunch around the business district is around $12 unless you go to a fast-food restaurant and order a combo meal, then you're looking at $7.
Milk is around $3.50 a gallon, a 2 lt. A bottle of Coca- Cola is $1.82. These prices are about the same as the national average at –1%. Housing is at 8% below. Kansas City is 15% below Oklahoma and 8% below Indiana. In fact, New York City is 129% above compared to Kansas City, while 14% below Miami, Fl, and 23% below Chicago.
Summary about the cost of living in Kansas City:
- Four-person family monthly costs: $3,105.72 without rent.
- A single person monthly costs: $896.33 without rent.
- Rent in Kansas City is, on average, 10.56% higher than in Kansas City, KS.
- The cost of living ranks 105th out of 465 cities in the world.
- Kansas City has a cost of living index of 67.00.
Rich and Stable Neighborhoods
The city is surrounded by neighborhoods like River Market District as well as the 18th & Vine District and the Country Club Plaza on its north, east & south sides respectively. These vicinities, in combination with the city’s vibrant real estate market, comprise all amenities residents and non-residents alike can take advantage of and put their investments in.
Some of the best neighborhoods in or around Kansas City, Missouri are Waldo, Raytown, The Downtown Loop, Northland, Westwood Hills, Patrician Woods, Chapel, Pendleton Heights, Crossroads, Turner, Westwood, Downtown Kansas City, Ward Parkway, Lake Quivira, Nashua, Shawnee Mission, and Briarcliff-Claymont.
Good Neighborhoods in Kansas City To Invest in Real Estate
- The Johnson County of Kansas City: It is high on the list of home buyers as an ideal place to raise a family. It has highly accredited school districts within the county, which include Shawnee Mission, Gardner Edgerton, Spring Hill, Blue Valley, Olathe, and De Soto. Most subdivisions see steady property valuation increases year after year.
- The Prairie Village, Kansas City: It is another good neighborhood with low crime rates, mature trees, plenty of quiet neighborhood parks, and accessible community pools.
- Leawood, Kansas City: It is a low crime rate area and it’s safer than 79 percent of U.S. cities. The residents have a median household income of $133,702, so they are quite well off. The region is home to the biggest Methodist church in the nation – the United Methodist Church of the Resurrection.
- Lenexa, Kansas City: This neighborhood has a median listing price of $394,000. Fifty-four percent report some school education, contrasted with the national average of 22 percent for all cities and towns.
Low median sales prices, which in return, drive a solid rent are another reason to look into the Kansas City real estate market. Add to that the weather, the many activities at your disposal, and the famous “Kansas City BBQ.” There isn't much left to desire when investing in the real estate market. Take a look around, make some calls, and talk to some of the people around Kansas City before you decide.
Good cash flow from Kansas City investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Kansas City real estate investment opportunity would be key to your success. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties.
The neighborhoods in Kansas City must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. As with any real estate purchase, act wisely. Evaluate the specifics of the Kansas City housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Kansas City.
Here are the top ten neighborhoods in Kansas City having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Southwest Blvd / W 31st St
- E 19th St / Main St
- E 39th St / Troost Ave
- E 18th St / Prospect Ave
- Missouri Ave / Forest Ave
- Troost Ave / E 55th St
- Genessee St / W 9th St
- W 46th Ter / J C Nichols Pky
- Truman Medical Center School for Nurse Anesthesia / E 25th St
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Kansas City.
Consult with one of the investment counselors who can help build you a custom portfolio of Kansas City turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Kansas City, MO
Not just limited to Kansas City or Missouri but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Kansas City turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
Is It The Right Time To Invest In Real Estate? – The timing to buy or invest in real estate is as good as it has ever been in recent history. Interest rates will likely stay low in 2021. On April 28, 2021, the Federal Reserve Open Markets Committee (FOMC) decided to leave monetary policy unchanged despite an economy that is acknowledged to be accelerating. That means near-zero interest rates and $120 billion in monthly bond purchases are here to stay a while longer as the economy convalesces from the Covid-19-induced recession.
Last year was a big one for the nation's housing market. This year, sales and price growth will continue to be propelled by still-strong housing demand. That growing demand is compounded by younger millennials, who s are in their prime buying years. About 4.8 million millennials are turning 30 in 2021. These first-time buyers are expected to enter the home-buying to build equity and take advantage of low relatively mortgage rates. The wave started in 2020, with 4.7 million Millennials turning 30, an age when many people consider buying a home.
Refinancing your mortgage can be a good financial move. This is especially useful if the new rate would be significantly lower. If you got your initial mortgage a decade ago, you may find that a new rate would be low enough to save you tens of thousands of dollars. Refinancing to the short-term can also save you thousands of dollars.
Not only the rates are at historic lows right now, but lenders charge lower rates on shorter terms. But your monthly payments will be higher. Also, do note that there are upfront costs associated with mortgage refinancing, such as appraisals, legal fees, and taxes, so you’ll want to be sure the savings outpace the refinance price tag in a reasonable amount of time.
According to the Federal Housing Finance Agency, more than 2 million lower-income households that could have saved money from refinancing to a lower rate did not – or were unable to – take advantage of the opportunity to refinance. In the newly announced initiative, homeowners with loans backed by Fannie Mae or Freddie Mac that have not missed a monthly payment in the last six months will qualify for more favorable refinance terms. Other restrictions also apply. To qualify, borrowers should have an income at or below 80% of the area median income. With this initiate, FHFA estimates that borrowers who take advantage of the new refinance option could save an average of between $100 and $250 a month.
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