Hey everyone! Today, we're diving into a question I get a lot: "Are home prices in Kansas City still increasing, and if so, how much longer can this continue?" Whether you're in Kansas City, thinking of relocating here, or just keeping an eye on the market, you've probably noticed the crazy Kansas City home prices and rising mortgage rates. So, how much longer can this trend go on? Let's break it all down.

Home Prices in Kansas City: What's the Deal?

First off, let’s look at some data from the past few years. Redfin has this great interactive tool where you can see Kansas City home price trends in different counties around the metro area. Over the last year, Johnson County has seen about a 6% price growth, Jackson County around 6.4%, and Clay County (north of the river) about 2.3%. If we zoom out to a 5-year timeline, the trend is a steady upward climb in home prices in Kansas City.

Even if you just pull up median list prices in the Kansas City metro area over the last few years, you'll see a significant uptick around May 2023. Now, as of April 2024, it's a bit lower, but Kansas City home prices are still climbing. It's interesting to see that while list prices have had some dips due to rising mortgage rates, the median sale price has still gone up by about 6% from last year.

Mortgage Rates and Kansas City Home Prices: What's Happening?

Now, let’s talk about mortgage rates and how they impact home prices in Kansas City. According to the St. Louis Fed, rates have been on a roller coaster over the last 5 years. From 2022 onwards, there was a big uptick, a spike in November 2023, then a bit of a decline, and now they’re rising again. As of today (May 8th), conventional loan rates are around 7.5%, and FHA loans are just under 7% at 6.94%. If you qualify for an FHA loan, it might be worth considering. Fifteen-year loans are sitting around 6.75%.

Despite all these financial pressures – high inflation, rising everyday costs, and climbing mortgage rates – Kansas City home prices are still going up. If we look back to the 2007-2008 recession, mortgage rates then peaked around 6.52%. We’re well above that now, but the key difference is that supply is incredibly low, which continues to drive home prices in Kansas City upward.

Supply and Demand: The Real Driver of Kansas City Home Prices

The fundamental reason home prices in Kansas City are still rising is all about supply and demand. Even with high mortgage rates, the demand for homes far outstrips the supply. For every active home buyer, there are about 10 to 15 others waiting on the sidelines, hoping for better affordability or lower rates. This imbalance keeps pushing Kansas City home prices up.

I found some interesting articles to help explain why mortgage rates aren’t likely to drop soon. Forbes and US News & World Report suggest that while rates might lower slightly in 2024, significant cuts are unlikely. The Consumer Price Index update on May 15th will give us a better idea, but predictions keep shifting, and the outlook isn’t rosy for major drops anytime soon.

What Does This Mean for You and Kansas City Home Prices?

At the end of the day, Kansas City home prices are still going up mainly due to the low supply and high demand, not so much because of mortgage rates. Even if rates were to drop tomorrow, we’d still see home prices in Kansas City climb because we simply don’t have enough homes.

If you’re thinking of buying or selling, I’d love to help you navigate this market. Whether you need specific advice for your situation or just want to chat about your options, feel free to give me a call, text, or email. I'm here to help and never too busy to talk to you.

So, make sure to subscribe to stay updated on the Kansas City real estate market. And if you’re into new construction homes, check out this playlist of videos touring different new home communities around KC. Click here or here to watch, and I'll see you on the other side!

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