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Billy Smith
  • Shawnee Mission, KS
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Kansas City home prices are rising fast — faster than Dallas, Den

Billy Smith
  • Shawnee Mission, KS
Posted Dec 27 2019, 07:07

From the beginning of Allison Hadley’s search for a home this spring, Johnson County houses were flying off the market.

Hadley, 33, grew up in Overland Park and wanted to move back from Durham, North Carolina, to practice medicine here. But the cost of travel and the speed of the real estate market left her in an unusual predicament: She had to buy her house sight unseen.

The day a four-bedroom home hit the market, her father and her real estate agent set out for a tour, with Hadley present only via FaceTime. Within hours, she and four others put in offers, but she beat them out by paying $10,000 above the $335,000 asking price and letting the previous owner off the hook for any needed repairs.

“The first time I saw the house was actually — we drove through the night from Durham straight to the home,” Hadley said. “We left Durham at like 6 p.m. … and came straight to the home. My mom met us here because my dad and his best friend were driving the truck with all of our stuff.”

Realtors across the Kansas City metro area say that kind of story is increasingly common as high demand and low inventory drive up both prices and speed of home sales here.

Data from the Kansas City Regional Association of Realtors shows the average home price reached $229,306 in November, a 4.6% increase over the average in November 2018. At the same time, the average days homes remained on the market dropped 4.8% to 40 days.

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The association’s data includes figures from home sales across the Heartland Multiple Listing Service, which includes the entire Kansas City metro, but also stretches wider to include areas like St. Joseph. The data shows that things are heating up in outlying areas.

Home prices in De Soto, for instance, shot up more than 22% in a year, reaching an average sale price of about $300,000 in November. Liberty saw an increase of about 16%; it was 14% in Oak Grove and Excelsior Springs. At the same time, pockets of the metro close to major Kansas City amenities, like downtown and the Country Club Plaza, continue to soar.

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A recent analysis by the Federal Housing Finance Agency found that Kansas City metro prices are growing faster than rates in most U.S. cities, including boomtowns like Denver, Nashville and Austin. That report showed Kansas City’s prices shot up 6.5% between the third quarter of 2018 and the third quarter of 2019 — ranking 20th among the nation’s top 100 metro areas for home price inflation then.

Northeast Johnson County, with its smaller, older homes and proximity to Kansas City, remains an especially hot market, said Mike Gallagher, an agent with Keller Williams who helped Hadley find her home.

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In one ZIP code covering parts of Prairie Village and Mission Hills, median prices rose more than 20% between fall 2018 and fall 2019. Prices increased more than 10% in Roeland Park, Fairway and Westwood, which are all dotted with smaller starter homes.

Prices are rising in part because those homes are being purchased for the desirable location, torn down and replaced with much larger homes.

The current market means buyers must make competitive offers. To get a home listed at $250,000, buyers might need to offer $260,000, Gallagher said. He said some buyers would prefer to start at lower prices and “see what happens.”

“Well yeah, you’ll see what happens,” Gallagher said. “Then after they lose two of them because they didn’t go over, they realize what the game is.”

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Yet the housing market is complex. And demand for higher-end properties is low, with homes listed above half a million dollars frequently sitting on the market for months. Similarly, new home construction has stalled. That’s because construction costs have generally outpaced the appreciation of existing home values — essentially meaning money spent on existing properties will go further than money spent on new builds.

“Builders can’t make a profit building a $250,000 home — they just can’t,” Gallager said.

WHAT TO EXPECT IN 2020

New home construction isn’t expected to accelerate much next year, according to a 2020 real estate forecast from Wichita State University.

A separate forecast from real estate listing service realtor.com estimates Kansas City home prices will drop by 4% in 2020 — the single largest decline in the nation. But most experts locally and nationally don’t expect much change in Kansas City’s current upward trajectory.

“The theme of this forecast across all the markets in the state, Kansas City included, is more of the same,” said forecast author Stanley Longhofer, a professor and director of Wichita State’s Center for Real Estate.

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He expects home prices in the Kansas City area will rise by nearly 5% next year.

Longhofer said strong economic indicators, like low unemployment rates and growth in jobs, continue to drive the housing market in Kansas City.

“The fundamentals in the housing market are incredibly strong,” he said.

The only real obstacle is supply: Low inventory has kept the number of homes sold in recent years essentially flat, he said.

“There simply are not enough homes available for sale in the neighborhoods and the price ranges that are the most popular, in the meat of the market people are wanting to buy,” he said.

Demand is strongest for homes that cost less than $350,000.

Longhofer said sellers of those homes frequently put their home on the market on a Friday, and essentially have their pick of offers by the end of the weekend. That often drives up the cost above asking price.

“It’s almost an auction for that house,” he said.

This fast-paced market can make many buyers, particularly those purchasing their first home, skittish, said Steve Moyer, who runs the Leawood office for Better Homes and Gardens Real Estate. He said buyers should by pre-approved — not merely pre-qualified — by lenders.

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“There’s a reluctance until you’ve lived through it a couple times,” said Moyer, who is also president of the metro’s Realtors’ association. “You’re going to miss out on a few houses until you get into the flow of the market.”

He said people are staying in their homes longer, which limits supply. And while prices continue to accelerate, he warned against buyers trying to time a transaction to the market.

“It’s impossible to pick the right time,” he said. “It’s a good time now: You’re going to pay at the top of the market, but you’re going to have ridiculous low interest rates.”

“GONE BEFORE YOU KNOW IT”

The current market puts the squeeze on those looking for affordable homes, said Christina Boveri, owner of Boveri Realty Group.

Anything between $150,000 and $300,000 is very competitive, she said. In Waldo and near the Country Club Plaza, Boveri said, small two-bedroom, one-bath bungalows can fetch as much as $200,000 nowadays.

“And they’re not large,” she said. “They might average 850 or 950 square feet. That’s like an apartment.”

Long-popular areas like Brookside, Fairway and Prairie Village remain desirable. But Boveri said demand has spread to new areas, too. Midtown continues its rise — along with any neighborhoods that come close to the planned streetcar expansion. And prices and transactions are accelerating in Kansas City, Kansas, and east of downtown in areas near Troost Avenue and in east Waldo and east Brookside.

For Santana Contreras, it wasn’t the prices that surprised her during her home search.

She found a three-bedroom home in Independence for $159,000, below her max housing budget. But after missing out on other homes because she didn’t act fast enough, she knew she had to pounce. She put in an offer the same day she toured the place.

“I just expected more of a back and forth. I didn’t know it would be that fast,” she said. “My house was only on the market for two days.”

A 24-year-old mail carrier, Contreras paid full list price for her new home. She prepared by looking at many properties online. And she recommends others do the same.

“They should know what they want,” she said. “And if you see something you like, put in an offer or

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