The largest community in Missouri, Kansas City is an attractive place for many. Nicknamed “Paris of the Plains,” Kansas City has more boulevards than any other city in the world, except for Paris. Nicknamed “the City of Fountains,” this city houses over one hundred beautifully built water fountains. Famous for its art, culture, and sports, Kansas City is also an affordable place to invest in. Real estate investing in Kansas City, in fact, could be your ultimate strategy for this year. Explore the Kansas City real estate market below. In this article, we will go further in depth to talk about the Kansas City real estate market, and the city’s economy, and other key indicators that you and every real estate investor should be wary of.
A Healthy Economy
The economy of Kansas City is one of the top performing in the United States. In fact, Kansas City recorded a job growth of 3.95% in 2017. This is about 2.36% higher than the national average. The city has, moreover, created about 3,046 jobs in 2017 alone.
Many market segments choose Kansas City for its central prime location, highly educated workforce, and civic-minded entrepreneurs. Particularly, freight-based, and shared-service companies invest in Kansas City and foresee that growth within its parameters is bound to continue to rise. Major employers in Kansas City are H&R Block, Sprint, Westar Energy, and amc.
The increase in job growth translates into more consumer spending and higher living standards. People start to look into buying a home and improving their status through financial stability. This is particularly true since the growth within the job market is focused in medium-to-high paying jobs. More people are moving to Kansas City for the vast job opportunities, healthy economy, and affordable housing and therefore investing in Kansas City real estate.
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A Growing Population
The population of Kansas City has been increasing greatly in the past years. Just up until this year, the population of Kansas City reached 2.1 million. This is more than double what the population was in 2000. There are two elements that contribute to this growth, and these are natural births and migration into Kansas City. More families are settling in and making Kansas City their home. Additionally, both international and domestic migrations contribute fairly to the increase in population. As far as domestic migration, it is clear the people are choosing Kansas City over others for its good and stable economy as compared to other cities and even states.
Whether its migration or natural births, Kansas City ought to accommodate its increasing population. People need more shops, homes, and offices spaces. The increase in population, in fact, translates into more real estate activity. More people are settling down and investing in Kansas City real estate.
Well… There’s a Very Tight Inventory
Inventory remains a challenge for Kansas City real estate. Although home sales have risen up in recent years, new listings have not. In fact, inventory has dropped by over 17% as compared to 2016. As of March 2018, only about 4,500 homes were available in the Kansas City real estate market. This is equal to only a 1.5-month supply of available homes. In comparison, a balanced market accommodating both buyers and sellers would be a 5-6-month supply.
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With the tight inventory, competition increases among buyers. Kansas City real estate investors jump on opportunities fast and even have to acquire investment properties through competing bids. This, in return, makes the Kansas City real estate market a seller’s market. If you are thinking about selling your home, then now might be a good time. However, beware when you are shopping for a new home, as prices have gone up because of the tight supply. Many sellers have sold their homes at a property price higher than the listing price. The tight inventory, however, will not affect those Kansas City real estate investors who are switching to larger homes. This is because inventory increases the higher the property price point.
Kansas City Real Estate Property Price, Sales, and Construction
The tight inventory translated into a slower home sales growth in 2017. Sales in 2017 reached a little over 37,000 units. This is about 2.9% below 2016. Home sales in 2018 are expected to reach 38,500 units. To mitigate the low inventory and to accommodate the growing demand for housing, construction activity has accordingly increased. Construction activity last year rose about 17% and will continue to rise throughout 2018. By the end of 2018, experts predict that the Kansas City real estate market will create over 500 new homes. The strong and growing demand will continue to encourage new construction. However, competition will most likely remain as the new construction will not have caught up to the demand. Competition, in fact, will grow even stronger for real estate investors looking for a property price between $100,000 and $250,000. With this range, supply may be better measured in days rather than months. (Beware, Kansas City real estate prices are rising at their fastest rate since 2001!)
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Overall, reports show that home prices will rise about 4.1%. Single-family homes will also increase at a brisk 7%. Moreover, experts predict home sales to increase by 7% by the end of 2018 while existing home sales are predicted to increase by only 2.5%. The increasing home sales is comforting for many real estate investors wanting to invest in Kansas City real estate. More home sales actually show and emphasize the strength of the economy. Despite the tight inventory, we still encourage investing in Kansas City real estate. Buying property in Kansas City is certainly a good choice.
Top Neighborhoods in Kansas City (and Affordable!)
Below we provide you with some data pertaining to those neighborhoods. We hope to have given you an idea of Kansas City investment properties and their prices.
Overall Kansas City Real Estate Market Indicators
Airbnb rental income: $967
Traditional rental income: $1,175
Airbnb cap rate/Cash on Cash return: 5.2%
Traditional cap rate/Cash on Cash return: 6.83%
Airbnb occupancy rate: 49.05%
Arnour Fields
Population: 2,061
Median Income: $144,375
Median Home Value: $394,000
Armour Hills
Population: 2,511
Median Income: $107,496
Median Home Value: $237,850
Morningside
Population: 1,496
Median Income: $87,789
Median Home Value: $248,000
Ward Parkway
Population: 3,550
Median Income: $79,687
Median Home Value: $194,250
Holmes Park
Population: 1,213
Median Income: $75,132
Median Home Value: $184,500
You can find the best Kansas City investment property by beginning your search right here.
Despite the low inventory, home sales continue to rise as more people are demanding Kansas City real estate. The job growth, population growth, and overall healthy economy have encouraged real estate investing in Kansas City. Additionally, this growing demand, whether due to population or job growth, has translated into more construction. New homes will be readily available soon but you better purchase before prices are too high. This is especially true since home prices are expected to grow by 4% by end 2018. Hurry and make your investment today.
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