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. However, real estate in Kansas City has one particular indicator working in favor of investors that most other cities can’t come close to: demand for entry level homes. While every market exhibits at least some degree of demand for affordable homes, Kansas has seen one of the country’s largest increases in FHA buyers, which should work heavily in favor of budget conscious investors.
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Median Home Price Kansas City
Capping off what has been a considerably generous upward trend in prices, real estate in Kansas City has appreciated as much as 5.9% in the last year (June 2018 to July 2019). 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 $147,900, compared to the national average which is now somewhere around $227,700. It is worth noting, however, that the appreciation rate in Kansas City is expected to temper, and it has already started doing so. In fact, it’s safe to assume real estate may only appreciate at on-third the rate of the last year, or around 2.0%, over the next 12 months.
Kansas City Foreclosure Statistics
According to data presented by RealtyTrac, a national leader in real estate foreclosure statistics, the Kansas City housing market is currently home to approximately 356 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 have been on the decline. As recently as June, foreclosure filings were 47% less than the previous month and 35% lower than a year earlier.
With foreclosure filings inching down, the majority of Kansas City’s distressed homes have transitioned from defaulted properties to bank-owned homes. In fact, 54.9% of the distressed real estate assets identified by RealtyTrac are bank owned. As their names suggest, bank-owned homes have officially been repossessed by their loan originators and are now fully in possession of the bank. It is worth noting, however, thank bank-owned homes represent the perfect opportunity for Kansas City real estate investors. Due to holding costs, these financial institutions would rather sell the homes in their possession other 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. That said, here’s a list of the neighborhoods in Kansas City with the highest distribution of distressed properties:
64136: 1 in every 491 homes is currently distressed
64125: 1 in every 834 homes is currently distressed
64133: 1 in every 932 homes is currently distressed
64132: 1 in every 1,181 homes is currently distressed
64134: 1 in every 1,233 homes is currently distressed
Kansas City Real Estate Investing
Kansas City real estate investors are currently the beneficiaries 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 6% in one year’s time, 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. Perhaps even more importantly, however, is the type of buyers taking over the Kansas City real estate market. Kansas City 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% up front) in the second quarter of this year. In fact, 17.6% of all sales were made to buyers with an FHA loan. 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 for the foreseeable future.
Kansas City Real Estate Market Summary
The Kansas City real estate market has enjoyed a good run for the better part of a decade, and there’s no signs of it slowing down anytime soon. While appreciation rates are expected to temper soon, prices will continue to rise. More importantly, however, is the demand from new buyers that will remain intact. That unique combination, in addition to a strong economy, makes real estate in Kansas City an attractive investment at the moment.
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.
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