Having worked in the Kansas City real estate market as an investor, Realtor and appraiser for many years now, we’ve seen cycles of real estate supply highs and lows, but have never seen such an imbalanced market as what we have right now.
Kansas City home sellers are loving this crazy sellers market and buyers are hating it! We’ve moved from a market where it was the norm for years to be able to look at houses $10k+ over budget, with the idea of negotiating sellers down, to being in a market where you have to look at houses at least $20-30k under budget to even begin to have a chance of getting a contract.
Historically low inventory levels paired with high demand have created this perfect storm.
Why is Kansas City Home Buying Demand Demand So High?
Interest rates are at historic lows so people can upgrade houses without having a significantly larger mortgage and more first time buyers are able to qualify which is increasing the number of buyers in the market Covid has created many work from home scenarios so people need houses with more dedicated office space and/or can live farther from job without worry of commute
Influx of people from coastal cities wanting to have more space and lower prices
Why Is the Real Estate Supply of Kansas City Homes for Sale So Low?
People hesitant to list and make a big move during uncertain times of pandemic and presidential election and fear of not being able to get their next home under contract because of the extreme seller’s market we’re in There has been a federal moratorium in place on foreclosures of federally backed mortgages since shortly after the pandemic swept across the country, meaning that those homes cannot be foreclosed on even if owners are not paying their mortgages. This has almost entirely eliminated one source of homes which are hitting the market for resale. This is especially affecting investors as foreclosed homes are one of the main sources for investor projects. The moratorium is in effect until the end of June 2021 as of right now, but it’s possible it will be extended again.
Other Factors Affecting the Kansas City Housing Market:
Building materials, especially lumber, have soared as a result of pandemic related supply chain issues. This is greatly increasing the costs that builders and investors incur, therefore, driving asking prices up on new and renovated homes
Effects of the Kansas City Real Estate Supply & Demand Imbalance
- Bidding wars resulting in very inflated contract prices, sometimes up to 20-30k+ over asking price
- Buyers are waiving inspections in many contracts and also waiving their appraisal contingencies in an effort to make their offers more competitive. This is removing two of the biggest protections buyers have in the purchasing process and could hurt them in the long run.
- The inflated prices are making it nearly impossible for buyers with lower budgets to get a house under contract
- Appraisers are faced with the challenge of not being able to find comps that support the most recent, highly inflated contract prices
Have more questions about the Kansas City real estate market? Contact the cash home buying pros at Black Door Signature Homes today.