Is the Kansas City housing market headed for a crash?

The Shift: Why Kansas City's Housing Market Is Rebalancing (Not Crashing)

If you're tracking housing trends across the country, you've likely heard talk of markets crashing, prices plummeting, and massive new construction overwhelming cities like Dallas or those in Florida. But something different, something more subtle, is happening right here in the Kansas City metro.

Kansas City is experiencing a shift. It's not a crash; it's a “healthy rebalancing” that is setting the stage for long-term sustainable growth. This shift is creating both challenges for unprepared sellers and significant opportunities for savvy buyers.

Here is a breakdown of what makes the Kansas City market unique right now, and what you need to do whether you're buying or selling.

Inventory is Climbing—And That's Causing the Shift

For years, buying a home in Kansas City was a sprint, characterized by multiple offers, waved inspections, and homes going under contract in hours or days. That environment is shifting due to rising inventory.

By the Numbers:

* We currently have about 8,000 homes on the market in the Kansas City metro, which is about 10% more than this time last year (around 7,200).

* We've essentially doubled inventory since the pandemic low point in October 2021, when we had only about 4,000 homes on the market.

* Zooming out, this inventory level is simply getting us back to "normal," similar to what we saw in 2019 before the pandemic housing frenzy.

The current twist in the market is that inventory keeps climbing into the fall and winter months. Typically, sellers pull their homes off the market by October for the holidays, causing listings to slow down and the market to cool. This year, sellers are staying put, and new listings are continuing to hit the market while buyer demand is softening.

Currently, we are sitting at about 2.7 months of supply. While supply is growing (up from 2.4 months last year and 2.2 months the year before), we are technically still in a seller's market, as a balanced market is typically defined as 4 to 6 months of supply.

However, with more supply, buyers now have more options and are gaining slightly more negotiating power. Sellers are getting slightly less than their asking price, currently averaging about 97.5% of the list price, compared to 98% last year.

The Micro-Market Reality: Location, Location, Location

It is a mistake to think of Kansas City as a single market. It is comprised of dozens of “micro-markets” that behave differently based on price point, location, and condition.

Consider these two contrasting examples from the same week:

1. The Overpriced Listing: A home in Leavenworth KS, was priced too high, sitting for weeks with great activity but no offers. After several price reductions, the seller received a VA offer but passed on it due to appraisal and repair concerns. That seller sat for another 45 days, ultimately selling for 7% less than the first price reduction. The lesson: ignoring the market cost the seller tens of thousands of dollars.

2. The Competitive Listing: A client placed an offer on an immaculate home in Basehor listed at $540,000. This home received multiple offers and sold over the asking price.

If you do not understand which micro-market you are in, you risk making the wrong move.

KC Is Not Oversaturated: The New Construction Story

Unlike other markets where national builders have flooded the area with thousands of new homes, driving down prices and forcing massive incentives, that is not happening in Kansas City.

New construction inventory in KC is actually down 6.7% over the last 12 months, as builders have pulled back due to elevated interest rates. The median sales price for new construction is down 4.3%, and sales are down almost 10% year-to-date. While builders are offering incentives ($10,000 to $15,000 in deals), the volume of inventory simply isn't present in the way it is elsewhere.

This balanced approach to new construction, trending higher in permits than last year but well below the 2021 peak of over 6,500 permits, is a good thing for long-term stability.

The Neighborhood Deep Dive

Specific neighborhoods demonstrate the depth of this market shift:

* Johnson County: Remains hot. The median sales price is up 4.3% to $469,000, and supply is still low at about 2.2 months. Sellers whose homes show well are still in great shape.

* Brookside (KCMO): The most desirable urban neighborhood has just over 1 month of supply. Homes are selling in a median of 3 days at a list-to-sold price of $509,000 to $515,000. If you are buying here, you must move fast.

* KCMO Urban Core (Slower Areas): Here, the slowdown is most obvious. Sellers are taking about $10,000 less than asking (median list-to-sold: $275,000 to $265,000). The median days on market for active inventory is 63 days (with an average of 85 days). This area has older housing stock that often needs updates, and buyers are being picky and demanding concessions due to elevated interest rates.

The Economic Context: A Rebalancing Act

The broader Kansas City economy is experiencing a slowdown, which directly impacts housing. Job growth has been slowing significantly, with some recent months (April and May 2024) even reporting job losses (5,100 and 2,900 jobs, respectively). The unemployment rate has increased to 4.4% from 3.9% last year, though it remains slightly better than the national average (4.6%).

Fewer buyers can qualify with today's rates, and job security concerns are making people more cautious. However, the Kansas City economy is fundamentally strong and diversified . Major long-term investments, including the new airport terminal, the streetcar extension, Panasonic's battery plant in De Soto (expecting 4,000 jobs), and the upcoming World Cup in 2026, suggest a positive outlook.

The market is rebalancing, not heading for a crash.

The Bottom Line: What You Should Do Now

This is a market where ego and emotion can cost you tens of thousands of dollars. Success depends on understanding your specific market conditions.

For Buyers: Opportunity Awaits

1. Target Motivated Sellers: Look for homes that have been sitting on the market for 30, 40, or 50 days, and watch for clear signs like price drops.

2. Ask for Concessions: We are regularly seeing $5,000 to $10,000 in closing costs and repair credits, sometimes more, especially if the home has been sitting.

3. Explore New Construction Incentives: Builders are actively offering rate buy-downs that can significantly lower your initial monthly payments.

4. Be Strategic About Location: While Johnson County and Brookside remain competitive, if you are flexible on location and target suburban neighborhoods with higher inventory, you gain significant negotiating power.

5. Move Fast in Hot Spots: If you find a home you love in a competitive neighborhood, like Overland Park, make your best offer and do not hesitate.

For Sellers: Price Right From Day One

1. Price is Your Number One Strategy: If you overprice, you will get showings but no offers. The longer your home sits, the more momentum you lose, and buyers start wondering what is wrong with it. You will ultimately sell for less than if you had priced correctly from the start. Follow the 10-10-0 rule. If in 10 days on the market you haven’t had 10 showings or if you have 0 offers, you should consider a price adjustment.

2. Ensure Your Home Shows Well: Buyers have more choices now and are picky. Either make necessary updates and repairs or price accordingly. Staging matters and can help your home sell faster and for more money. Ask me about my List with Me, Staging is Free program.

3. Be Realistic About Timing: Expect sales to take longer during the winter months. If you need a quick sale, you must price aggressively.

4. Listen to the Market: Do not let pride or emotion cost you money. If your agent advises a price reduction, it is because the market data demands it.

Kansas City is simply pulling back to pre-pandemic inventory levels and rebalancing. This steady, reliable correction contrasts sharply with the "boom and bust" cycles seen in other major cities, making it an excellent market for long-term sustainable growth.

If you are thinking about buying or selling in the Kansas City area, my team and I can help you navigate these unique market conditions. Reach out today