KANSAS - As the Kansas City real estate market continues to mature, investors should be prepared to face several challenges. With the cost of acquisitions and borrowing costs remaining high, profit margins on investment properties will be harder to come by. Instead, investors should focus on long-term rental properties. In this way, investors can capitalize on increasing rents and decreased vacancies as demand increases.
Home Prices Have Increased 15.5% In The Last Two Years
As a result of a variety of factors, the cost of living in Kansas has risen steadily, and Kansas home prices have exceeded the national average in recent years. However, despite the rising prices, the median price of a home in the state remains well below the national average. This has led to high competition in the Kansas real estate market, which is expected to continue for the following year.
Real estate affordability in Kansas City has created opportunities for first-time and traditional home buyers. Additionally, the affordability of the Kansas real estate market has led to a boom in the number of FHA and entry-level homes in the area, which means that Kansas real estate investors can purchase affordable properties in a hot market.
Real estate professionals need to know the state's housing market with these factors. This information will allow them to set realistic expectations for their clients and establish their reputation as a real estate expert. Kansas-specific data from NAR's "Housing Minute" can help real estate agents develop their market credibility by providing the latest market statistics.
This increase is likely a result of low-interest rates. Lower interest rates allow homeowners to justify higher home prices with a more down monthly mortgage. At the same time, the prospect of renting out the property becomes more appealing. This makes it easier for investors to pay down their mortgages with other people's money.
Millennials Will Continue To Fuel Home Price Growth In First-time Home Buyer Neighborhoods
Millennials, or young people born between 1981 and 1996, are the most educated generation in history. They make up most of the population and are entering their prime home-buying age. Many of them are also forming families, increasing the housing demand. The growing population is a concern for many cities. With a low housing supply, it will be challenging to keep up with demand.
With 200,000 more Millennials expected to reach adulthood in the next two years, home prices are expected to increase in first-time buyer neighborhoods. The Millennial trend will be especially strong in counties surrounding major cities. Home prices jumped nationwide in the first half of the decade, with some cities seeing as much as a 40% increase. A recent study by Redfin showed a 14% rise in December 2021.
The Millennial generation is creating households at record rates, and experts expect a major wave of first-time home buyers in the next two years. As a result, home prices and rents are expected to increase through 2022. The Fed has increased its money supply by 50% in the past two years to boost the economy after the Pandemic of 2008. More money drives up prices.
With the housing shortage in the United States and Millennials driving demand, home prices will continue to increase in first-time buyer neighborhoods in Kansas. Home prices will continue to climb, but the supply of homes for sale will rebound by 2022. Until then, however, the housing market will remain tight,