The Kansas City Real Estate Market: Everything You Need to Know

Jazz music, sunshine, barbeque, and pretty prairie village vibes- it is no wonder so many people are interested in moving to Kansas City. Combine that with affordable housing options and great employment opportunities, and you have the perfect recipe for a hot real estate market.

Low active listings inventory may mean bidding wars for buyers, but with sales prices below the national average and median rent on the rise, it shines brightly as a top choice for real estate investors.

Split between Jackson County and Johnson County, the Kansas City Metro area is home to around 2.2 million people. The Downtown Loop of Kansas City connects many neighborhoods, making it easy to travel around the city by car or public transport- something that adds to the appeal of living there.

Here is all you need to know about the housing market climate in Kansas City for 2023 so far- and the predictions for what way it may move next.

Kansas City Housing Market In a Nutshell

In short, Kansas City is a hot seller's market with a lot of buyer competition and fast-moving sales. Prices have been up and down compared to the previous year- but are fairly consistent- and are expected to remain much the same.

That said, a lack of housing inventory could see prices begin to climb a little quicker- since more people will be bidding for the same homes. Higher mortgage rates could curb the price increases. If not, they could rise too quickly and price out a lot of first-time buyers.

As far as property investment goes, Kansas City offers plenty of opportunities, and it is considered a good time to invest by many real estate experts.

Housing Market Trends for 2023

Average Sales Prices

The median and average sales prices in Kansas City have been fairly consistent for most of 2023- especially in terms of year-over-year comparisons. Overall, the numbers are fairly close to the performance in 2022- which is a promising sign for the city's growth despite higher interest rates. However, the trends have lacked a pattern for this year so far. Let's take a look at the numbers.

January set a high benchmark for the year ahead- with a year-over-year increase of 6.9% and a median value of $229,900. Things dipped in February to $225,000- representing a 4.3% year-over-year decline. March followed January's lead- again increasing YOY by just over 5% to $254,000. April went the other way once again, dropping to $250,000 (3.8% less than the previous year).

As you can see, there is no clear trend in home prices in 2023 so far, but the figures are not far off the numbers from last year. This is a positive sign that shows consistency- especially considering that early 2022 was a real estate boom across the country.

Median Listing Price

The median listing price is almost exactly the same as the sale price- since most properties in the city sell for close to asking. See below for more details.

Total Volume of Home Sales

There has been an undeniable cooling in terms of home sales volume between 2022 and 2023- which was expected- and is a trend seen across the US right now.

615 homes were sold in April 2023 in Kansas City- 23.8% less than the same period in the previous year. This percentage is fairly consistent with the results from the previous months (22.2% drop in January, 21.9% drop in February, and 16.5% drop in March).

Although reduced sales are generally a concern for the heat of a housing market, these are good results all things considered. The fact that the market shows reasonable consistency for the year so far should be reassuring to potential property investors.

Average Days Spent On the Market

In line with the cooling sales volume, the average time spent on the market has increased year-over-year. Again, this shows a slowdown from the year before- which was not unexpected.

There is, however, a positive trend for average days on the market in Kansas City for 2023. With each consecutive month, the year-over-year increase has reduced- showing that things are warming slightly, and the demand is still very much there.

The numbers for April 2023 show that Kansas City homes spent an average of just 21 days on the market- eight more than April 2022. At the beginning of the year, the number was 42- 14 days longer than the same month from the previous year.

With each month, the gap is closing- and if this trend continues, Kansas City homes could be moving on and off the market at the same pace as they were before by the end of the year.

Sale-to-List Price Ratio

Kansas City real estate had a sale-to-list price ratio of 99.4% at the end of March 2023- meaning most properties sell for just 0.6% less than the list price on average. This is a good figure given the current climate- and is a testament to the demand and competition for properties in the city.

Interestingly though- almost half (49%) of the Kansas City properties sold in March 2023 reduced their list price before selling- compared to 31.2% that sold for higher than the asking price.

What Influencing Factors Impact the Kansas City Housing Market the Most?

There have been some up-and-down changes recently in the Kansas City housing market. Here are some of the leading influencers on the market trends right now.

Supply and Demand

Rising home prices in Kansas City are mainly influenced by the lack of housing inventory compared to the buyer demand. There are more people looking to purchase property in the city than the market has provision for, so sellers can expect multiple bids at a competitive price point.

Demand is high in the city, and the population is increasing. As long as the supply is short, the sellers hold the power. As of April 2023, Kansas City has less than a month and a half worth of housing inventory- compared to the six-month supply that is considered optimal for a balanced market.

Mortgage Interest Rates

One thing holding the prices back and slowing the market down is the inflation on mortgage rates that have hit the entire country. Many people are finding it hard to afford the monthly payments on new mortgages, so they are choosing to rent rather than buy.

It also has an effect on supply. If people can't afford to pay a new mortgage, they are unlikely to list their current home and move. Homeowners are holding off on selling until rates (hopefully) reduce- which in turn damages the supply of available properties for purchase.

Rising Employment

Kansas City sits across two states: Kansas and Missouri. It sits in a zone of self-sufficiency and prosperity- and has an unemployment rate of less than three percent. As the largest city in Missouri, it is home to many businesses, enterprises, and start-ups- all providing jobs and attracting people from the rest of Missouri, Kansas, and beyond.

The employment rate is much higher than the national average of 94% (current numbers sit at 97.8%), so people in the area can afford to pay good rent- attracting property investors and heating up the real estate market.

How Likely Is a Housing Market Crash in Kansas City?

A real estate market crash is not likely to happen in Kansas City any time soon. Demand remains high- as the figures reflect- and as long inventory is low and people still want to move, the market is likely to continue moving along at a decent pace.

If, however, sellers raise their prices too high because of demand, it could end up pricing people out, and they may be forced to start cutting the asking price.

Summary

Sellers have the power right now in Kansas City because of the high demand, but that doesn't mean home buyers can't get a property for a good price. There are many affordable neighborhoods- but prices are slowly creeping up in some areas.

Overall, the forecast is unclear about what way prices will go- especially since recent trends are somewhat unpredictable. It is believed that home values will rise again as buyer competition heats up- but there have been signs of the market slowing when we look at the average time spent on the market month-to-month and year-over-year.

If you are interested in buying property for yourself or to rent, it is best to pick neighborhoods with good connections to the city center and leading employment zones.

A crash is not something to worry about right now- the main concern is the longer market stays and up-and-down price changes. All-in-all, the Kansas City real estate market looks strong heading into the second half of 2023.

Frequently Asked Questions

Is the Kansas City Metro area a good place for property investments?

Generally speaking, Kansas City is considered a good choice for real estate investors to buy- especially if they want to rent their properties to others. Home prices are relatively affordable, unemployment rates are low, and there are many people looking to move to the city without buying.

It is also considered a good time to invest in Kansas City property because median house values are predicted to rise in the future.

What is the rental market like in Kansas City?

The rental market in Kansas City is booming. Because of the size of the area covered by the Kansas City Metro area- and its location in the culturally rich and prosperous part of Missouri State, it is home to a huge jobs market. It attracts many people moving to the area for employment- and those people need places to rent.

Rent prices are a little higher in Kansas City than in some other major cities- despite the more affordable average sales price. As such, there is plenty of opportunity for investors to make a profit through their rental properties.

Does Kansas City have a balanced market for real estate?

Although the real estate market in the Kansas City area is reasonably stable, somewhat predictable, and not overly expensive- it is still considered a seller's market because of the lack of inventory.

There are currently more people looking to buy property in the city than there are homes available, so sellers have the power- and are more likely to have multiple offers to drive prices up.

How big a range of home prices does Kansas City have?

Overall, Kansas City property is reasonably affordable- but the average price of a home varies greatly between neighborhoods.

Some of the most affordable areas offer houses for less than $100,000- Ingleside, for example, has an average sales price of just $70,000 right now. At the other end of the scale, affluent neighborhoods such as Sunset Hill West sees properties sell for more than $1.2 million. Country Club Plaza home buyers pay more than half a million.

Homebuyers in Downtown Kansas City can expect to pay a little less than the median for the city- with the prices averaging out around $244,000.