Despite high mortgage rates, inflation, and renewed fears of a broader recession, the Kansas City real estate market isn't budging. In this article, we’re breaking down three major Kansas City real estate market trends for 2024: mortgage rates, the Kansas City housing shortage, and the resurgence of cash buyers in the market.

Mortgage Rates Impacting Kansas City Real Estate Market Trends

Mortgage rates have been a significant factor in the Kansas City real estate market trends. As of the latest updates, mortgage rates have fluctuated significantly. Two weeks ago, rates were over 7.5%, which is historically high. Recently, they have slightly dropped to around 7.25% for a 30-year conventional loan. For a jumbo loan, the rate is about 7.14%, and FHA loans, which are popular among first-time homebuyers, are at 6.86%. A 15-year mortgage is around 6.94%.

Current economic conditions, including inflation and unemployment rates, suggest that mortgage rates will remain high for the foreseeable future. The Federal Reserve's goal is to reduce inflation to about 2% for the entire year, but so far, we're at 3.4% only halfway through the year. This slow progress means that the likelihood of rate cuts is low, and there’s even a possibility of rate hikes, which would drive mortgage rates even higher.

Housing Shortage in Kansas City: A Key Real Estate Market Trend

The Kansas City housing shortage is another critical factor influencing Kansas City real estate market trends. Many homeowners are reluctant to sell due to their low mortgage rates, typically between 2-4%. This reluctance means fewer homes are available for sale, contributing to the shortage.

However, a significant portion of homes for sale now are newly built. About one-third of houses on the market are new construction, which is close to a record high. This increase in new home listings helps mitigate the housing shortage somewhat but doesn’t completely resolve it. The supply of existing homes remains low because many potential sellers prefer to hold onto their low-interest mortgages rather than face higher rates and increased monthly payments.

Builders have also slowed down on new housing starts due to high mortgage rates and dampened demand. This slowdown means that even when mortgage rates do eventually decrease, there will be a lag before new homes are available, exacerbating the supply-demand imbalance.

The Comeback of Cash Buyers in the Kansas City Real Estate Market

One of the most surprising Kansas City real estate market trends is the resurgence of cash buyers. With mortgage rates so high, many buyers are opting to pay in cash. According to recent data, about one-third of U.S. home buyers are paying in cash, the highest share in nearly a decade. Elevated mortgage rates deter those who need to finance their purchase, but cash buyers are less affected by these rates.

This trend is driven by competition in tight housing markets like Kansas City. To win bidding wars, many buyers are making all-cash offers. The typical down payment has also decreased, indicating that more money is being allocated toward monthly mortgage payments due to higher interest rates.

Younger generations, such as Gen Z and Millennials, are also significantly contributing to this trend. Many are receiving financial help from their families to make these cash purchases. This shift means that even in a high-rate environment, these younger buyers are entering the market and competing with established cash buyers.

Kansas City Real Estate Market Trends: Navigating Mortgage Rates

If you’re navigating the Kansas City real estate market trends and considering buying a home, it’s crucial to stay informed about mortgage rates. Despite the current high rates, it’s possible to find deals and opportunities, especially if you’re flexible with your timeline. Building a new home could allow you to lock in a better mortgage rate later, once rates have hopefully decreased.

Addressing the Housing Shortage in Kansas City

The housing shortage in Kansas City continues to shape the real estate market. If you’re looking for a new construction home, there are still opportunities, although they may not be as readily listed online. Working with a knowledgeable real estate agent can help you find these hidden gems and navigate the competitive market.

Cash Buyers Shaping Kansas City Real Estate Market Trends

Understanding the impact of cash buyers is essential when navigating the Kansas City real estate market. If you’re competing against cash offers, it’s vital to have a strong strategy and possibly consider alternative financing options like FHA loans, which offer lower rates and more flexibility for first-time buyers.

These Kansas City real estate market trends highlight the importance of staying informed and adaptable in a volatile market. Whether you’re buying or selling, understanding these trends can help you make better decisions and find the best opportunities.

If you enjoyed this article and want to stay updated with the latest Kansas City real estate market trends, make sure to subscribe to our newsletter. For personalized advice or to discuss your specific situation, feel free to contact me directly. My contact information is below. Let’s navigate the Kansas City real estate market together and find the perfect home for you.

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