There is probably no hotter market right now than Kansas City, 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. The Kansas City real estate market is very hot and in many ways the envy of housing pundits on both coasts.
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, the Kansas City is now emerging as a growing market for real estate investments. High demand and low inventory are driving up both home prices and speed of home sales in the Kansas City Housing Market.
Home sales were up about 7 percent and prices were up about 6 percent throughout the region in the previous year. Data from the Kansas City Regional Association of Realtors shows the average home price reached $229,306 in November 2019, a 4.6% increase over the average in November 2018. At the same time, the average days homes remained on the market dropped 4.8% to 40 days.
The home prices are expected to flatten nationwide, increasing by just 0.8%, according to Realtor.com. Kansas City properties have a track record of being one of the best long term real estate investments in the U.S. The real estate appreciation rate in Kansas City in the latest quarter was around 2.7% which equates to an annual appreciation rate of roughly between 10% to 12%. This can trigger a massive interest in the Kansas City real estate investment.
Even small changes in the appreciation rate can change the long-term value of buying considerably. For sellers, a nice profit is on the horizon. Let’s learn more about the factors that make Kansas City a good place to invest if you’re considering real estate investment. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control.
Please note that there are many variables that can potentially impact the value of a home in Kansas City (or any other market) and some of these variables are impossible to predict in advance. In this article, our focus will be on the current state of the Kansas City real estate market and how it can affect the investors and home buyers.
Why Invest In Kansas City Real Estate?
Kansas City Real Estate Market Forecast 2020 – 2021
Kansas City Real Estate is one of the most affordable in the nation. It is one of the hottest real estate market for affordable rental real estate investment. What are the Kansas City real estate market predictions for 2020? Let us look at the price trends recorded by Zillow over the past few years. Since 2015, the median home prices in Kansas City have appreciated by roughly 43% from $112,000 to $160,180, according to Zillow’s index.
In the past year, the Kansas City real estate appreciated by 3.5%. The latest Kansas City real estate market forecast is that the home prices will continue to increase by 3.9% – in the next twelve months. The latest real estate data from Zillow shows that the current median home value in Kansas City is $160,180. Kansas City is currently a hot seller’s real estate market.
The demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. In other words, there are less homes for sale than there are buyers in the marketplace. Zillow reports that 12.0% of the listings in Kansas City had a price cut in Jan 2020.
Kansas City Housing Market Forecast Till 2021
Here is a short and crisp Kansas City housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Kansas City is 83% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Kansas City is 83% during this period. If this price forecast is correct, the Kansas City home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Kansas City Housing Market Forecast.
Kansas City Housing Market Trends
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. We shall now discuss some of the most recent housing trends in the Kansas City area from multiple sources and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region.
Kansas City 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. High demand and low inventory is leading to the rise in home prices in Kansas City. Currently, the inventory remains low and the prices will continue to rise for the next twelve months.
On average, homes in Kansas City, MO sell after 69 days on the market. The trend for median days on market in Kansas City, MO has gone down since last month, and slightly down since last year. In a healthy, balanced market, it would take about six months for the supply to dwindle to zero.
In terms of months of supply, the Kansas City market can tip to favor buyers if the supply increases to more than six months of inventory. However, looking at the current trends, we don’t see things stopping anytime soon. The inventory will decrease further and there may be an increase of 3 to 4 percent in home prices.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years.
Almost all the housing demand in the US in recent years has been filled by single family rental units. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
According to Neighborhoodscout.com, a real estate data provider, three and four bedroom single-family detached homes the most common housing units in Kansas City. Other types of housing that are prevalent in Kansas City include large apartment complexes, duplexes, row houses and homes converted to apartments. The median house price in Kansas City is $174,712,, which indicates that home prices in Kansas City are near the national average for all cities and towns in the United States.
Here is a snapshot that shows the median home values in the some of the popular neighborhoods in or around Kansas City.
Kansas City, MO Real Estate – Inventory And Sales Data
Kansas City has a mixture of owner-occupied and renter-occupied housing units. In the past month, 495 homes have been sold in Kansas City on Redfin.com, a national real estate brokerage. Additionally, there were also 177 condos, 50 townhouses, and 34 multi-family units for sale in Kansas City last month. The median listing price is around $220,000. The average sale price of a home in Kansas City was $180,000 last month, up 0.014% since last year. The average sale price per square foot in Kansas City is $103, down 0.96% since last year.
According their statistics, the Kansas City housing market is moderately competitive. Homes sell for about 3% below list price and go pending in around 42 days. A hot listing in the market can sell for around list price and go pending in around 14 days.
Trulia has 1,653 resale and new homes for sale in Kansas City, MO, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.
Currently, there are 910 homes for sale in Kansas City on Zillow, an online real estate database company. Additionally, there are 443 homes for rent. Under potential listings, there are about 27 Foreclosed and 189 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
- The median list price per square foot in Kansas City is $137, which is lower than the Kansas City Metro average of $147.
- The median price of current listings in Kansas City is $199,000.
- The median rent price in Kansas City is $1,025, which is lower than the Kansas City Metro median of $1,195.
There are currently 2702 homes for sale and 659 homes for rent in Kansas City on Realtor.com, a real estate listings website. According to their statistics, in February 2020, the Kansas City housing market was a seller's real estate market, which means that there were more real estate buyers in the market than there were sellers. When demand is higher than the supply, home prices increase, which benefits sellers. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in Kansas City have managed to hold good leverage in these negotiations in the past month. On an average, they could sell homes for 99.68% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
- In February 2020, the median list price of homes in Kansas City was $207,000, trending up 3.5% year-over-year.
- The median listing price per square foot was $117.
- The median rent price was $950.
- Single-family detached homes the most common housing units in Kansas City.
- The asking price of single family homes in Kansas City can start from $8,000 and can go up to $7.7M.
- South Plaza is the most expensive neighborhood in Kansas City, with the median price range of $399,500.
- Blue Hills is the most affordable neighborhood, with a median listing price of $49,500.
Kansas City Real Estate Foreclosure Trends 2020
As per the Kansas City foreclosure data by Zillow, the percent of delinquent mortgages in Kansas City is 1.0%, which is lower than the national value of 1.1%. There are currently 475 properties in Kansas City, MO that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,535. In February 2020, the number of properties that received a foreclosure filing in Kansas City, MO was 133% higher than the previous month and 143% higher than the same time last year.
|No. of Foreclosures in Kansas City||475 (RealtyTrac)|
|Homes for Sale in Kansas City||1535|
|Median List Price||$169,000 (2% rise vs Jan 2019)|
In Kansas City, the zip code with the highest foreclosure rate is 64120, where 1 in every 211 housing units is foreclosed. 64130 zip code has the lowest foreclosure rate, where 1 in every 536 housing units becomes delinquent.
Best 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 – United Methodist Church of the Resurrection.
- Lenexa, Kansas City: This neighborhood has the 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.
Is Kansas City a Good Place to Invest in Real Estate?
Now that you know where Kansas City is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. 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 good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020.
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.
Let’s take a look at the number of positive things going on in the Kansas City real estate market which can help investors who are keen to buy an investment property in this city.
1. Overview of Kansas City
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. The BLS reported that the unemployment rate for Kansas City rose 0.1 percentage points in December 2019 to 3.2%. For the same month, the metro unemployment rate was 0.1 percentage points lower than the Missouri rate. while the average home price is $86,000. Median rent is $993, with an estimated $667 monthly net cash flow. It's no wonder that the Kansas City real estate market is a great place to invest.
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 United States listed the “Kansas City Real Estate Market” at number 18 out of 300 of the fastest growing cities in the US.
2. Employment in Kansas City
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 utilities 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.
3. Constant Real Estate Friendly Renovation Projects
Kansas City has started to do some major revitalization downtown. More than $6 million has been spent giving the downtown area a face lift and new makeover, including, apartments, offices, condominiums. These facelifts have also been done both indoor and outdoor malls, restaurants and places for concerts, plays and other forms of entertainment.
4. Affordable Real Estate
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 home buyers who are looking for gains in cash flow.
5. Tourists & Art Destination
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 boast 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.
6. The Growth in Kansas City
The national average of growth in cities is 4.45%. In Kansas City, in 2010, it was higher than 4.5%. It's growing with 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.
7. 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 of all amenities residents and non-residents alike can take advantage of and put their investments in..
8. Kansas City's Favorable Weather
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 they 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 summer month of June.
9. City's Rich Culture
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 “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 ambience and accommodating culture is 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.
10. 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 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, in average, 10.56% higher than in Kansas City, KS.
- Cost of living rank 105th out of 465 cities in the world.
- Kansas City has a cost of living index of 67.00.
Investing in Kansas City Real Estate: Advice For New Buyers
Maybe you have done a bit of real estate investing in Kansas City, MO but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. The Kansas City real estate market is expected to see an incredible amount of growth in 2o20 with a year over year growth of 6.16% in the median household income.
Low median sales prices, which in return, drives a solid rent is another reason to look into the Kansas City housing 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 making an investment 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.
A 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 a key to your success. If you invest wisely in the Kansas City real estate, you could secure your future.
The three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Kansas City investment real estate and you should be able flip it for a lump sum profit.
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. 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.
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. If it is your first time to invest in Kansas City real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Let Us Help You In Buying Your First Investment Property in Kansas City
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 area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability. Consult with one of investment counselors who can help build you a custom portfolio of turnkey cash flow rental properties in the various growth markets across 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 top real estate growth markets and structuring complete turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Other Good Markets To Invest in Real Estate in 2020
Another great housing market to go for diversifying your investments is in Huntsville, AL. The Huntsville AL real estate market is a solid market with long term potential, excellent opportunity at the moment, and market niches any investor could take advantage of. The median rent for an apartment in Huntsville is around $1000 a month. When you factor in the premium charged for the privacy and space you get when renting a home, landlords charge much higher monthly rents for detached single family homes. When combined with the relatively low price you can pay for properties, this yields a decent return on the investment unless you pay too much at the beginning.
Another place in Alabama to go for diversifying your investments is the Birmingham housing market. Birmingham, AL remains among the most affordable markets in the nation, which bodes well for homeowners, investors and renters alike. The median home in Birmingham, Alabama is around $60,000. It is incredibly stable and steady, and investors can purchase Birmingham investment properties for $80,000 to $100,000. Birmingham AL real estate values are going up year-over-year.
Remember, caveat emptor still applies when buying a property anywhere. The aim of this article was to educate investors who are keen to invest in Kansas City real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
- Latest Market Data, Trends and Statistics