The Kansas City Real Estate Market: Investor's Guide For 2021

Kansas City has been named as one of the top 10 housing markets for buyers to consider. Looking at the recent performance statistics for the real estate market in Kansas City, it’s easy to understand why. 

Active listings are down by nearly 50% year-over-year, while median sales prices have increased by almost 15% over the last 12 months. As homes become more expensive and harder to find, many households in Kansas City are choosing to rent rather than own.

In fact, growth and demand are two words that best describe the real estate market in Kansas City, according to one local economist. Today, it seems like Kansas City is growing everywhere you look: downtown, in the first-ring suburbs, and in the outlying areas. 

Kansas City, Missouri (nicknamed “KC” for short) is the largest city in the state and spans the Missouri and Kansas state lines. Located where the Missouri and Kansas Rivers meet, KC is known for its jazz music, pro sports teams, and delicious Kansas City-style barbecue. The economy is diverse, and the government is pro-business, two of the many things that help keep the real estate market in Kansas City growing strong and steady.

>>Explore Roofstock's Kansas City investment properties here.

 

Population Growth

There are about 500,000 people in Kansas City itself and more than 2.1 million residents in the metropolitan area. The population of Kansas City has grown faster than St. Louis and other large Midwestern cities including Cincinnati and Cleveland.

Key Population Stats:

  • With more than 2.1 million residents, Greater Kansas City is the 38th most populated metropolitan area in the U.S.
  • Population of Kansas City has grown by 0.73% year-over-year.
  • The population of the nine-county Kansas City metro area is about the same as Austin, Las Vegas, and Pittsburgh, based on data from the Mid-America Research Council.
  • People moving to Kansas City from other parts of the country account for about 50% of KC’s population growth, according to a recent report from station KCUR in Kansas City.
  • Over the last 10 years the population of Kansas City grew by 7%, and is expected to add another 400,000 residents by 2040.

 

kansas city

Job Market

Unemployment in the Kansas City MSA is down to just 4.5%, according to the BLS (as of Oct. 2020). The U.S. Bureau of Labor Statistics reports that some of the employment sectors in Kansas City showing the fastest signs of recovery include construction, trade and transportation, education and health services, and government.

Kansas City is a major transportation hub and is also home to high-growth tech sectors like IT and finance. Going forward, it’s likely that employment in the management and business, sales and office, and production and transportation sectors in Kansas City will continue to match or outpace U.S. averages.

Key Employment Stats:

  • GDP of Kansas City is nearly $138.5 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 38% over the last 10 years.
  • Kansas City, Missouri accounts for 56% of the metro area workforce with employment growing by 0.85% over the last 12 months.
  • Largest employment sectors in Kansas City are education and health services, professional and business services, retail, trade, and manufacturing and construction.
  • Major companies with headquarters in Kansas City include American Century Investments, Commerce Bancshares, Dairy Farmers of America, Garmin, Hallmark Cards, Interstate Bakeries (maker of Twinkies and Wonder Bread), Sprint Nextel, and one of the largest freight shipping companies in the world, YRC Worldwide.
  • Ford and General Motors both have large manufacturing and assembly facilities in the Kansas City metro area, and Sanofi-Aventis has one of the largest drug manufacturing plants in the U.S. in south Kansas City.
  • Largest federal government employers in Kansas City include the Department of Defense, Internal Revenue Service, Social Services Administration, and the Department of Veterans Affairs. The Kansas City Federal Reserve Bank is also headquartered here.
  • Companies in Kansas City that recently created new jobs include Amazon Flex, CarMax, Hostess, U.S. Department of Agriculture, and Zillow Home Loans.
  • Major universities in the Kansas City metro area include University of Kansas, University of Missouri-Kansas City, University of Central Missouri, and Park University.
  • 92.8% of people in the metro area are high school graduates or higher, while 37.7% hold a bachelor’s degree or advanced degree.
  • Four major Interstate highways (I-70, I-49, I-35, and I-29) pass through Kansas City.
  • Major cities less than 800 miles from KC include Atlanta, Chicago, Dallas, Denver, Houston, and Minneapolis.
  • Freight railroads serving Kansas City include Burlington Northern Santa Fe and Union Pacific.
  • Shipping channels in Kansas City have 41 dock and terminal facilities in the metro area.
  • Kansas City International Airport (KCI) is served by major airlines including Air Canada, American, Delta, Southwest, and United.

 

iStock-468967442

Real Estate Market

The Kansas City real estate market is booming with buyers “snatching up new homes especially in the mid-price range.” 

As FOX4 recently reported, the surge of home buying in the Kansas City metropolitan area was completely unpredictable, even while building permits are up 15% compared to this time last year. Rising construction and materials costs help to make resale homes an attractive option, which further increases the demand for single-family homes in Kansas City.

Key Market Stats:

  • Zillow Home Value Index (ZHVI) for Kansas City is $196,318 (as of May 2021).
  • Home values in Kansas City have increased by 17.8% over the last year.
  • Over the past five years home values in Kansas City have grown by 59.3%.
  • Median list price of a single-family home in Kansas City is $199,900 based on the most recent report from Realtor.com (May 2021).
  • Median listing price per square foot for a home in Kansas City is $112.
  • Of the 222 neighborhoods in Kansas City, KCI - 2nd Creek is the most expensive with a median listing price of $365,000.
  • Most affordable neighborhood for home buyers in Kansas City is Blue Hills where the median price of a home is $44,000.

 

Attractive Renters’ Market

Kansas City is ranked as one of the top markets for renters by WalletHub. The report measures key criteria such as activity in the rental market, affordability, and quality of life rating. A low supply of housing inventory may also be helping to drive the demand for single-family rentals in Kansas City. As the Kansas City Business Journal notes, the metro area had the second-largest decline in active housing supply in the entire country.

Key Market Stats:

  • Average rent in Kansas City is $1,071 per month based on the most recent research from RENTCafé (as of May 2021).
  • Rents in Kansas City have increased 4% year-over-year.
  • 47% of the rental units in Kansas City rent for more than $1,000 per month.
  • Renter-occupied households in Kansas City make up 46% of the total occupied housing units.
  • Neighborhoods in Kansas City with the lowest rents include Blenheim Square - Swope Park Campus, Mount Cleveland - Sheraton Estates, and Oak Park where rents all average $620 per month.
  • The most expensive neighborhoods to rent in Kansas City include River Market, Paseo West, and Columbus Park where rents range between $1,401 and $1,427 per month.

 

iStock-1033802228

Historic Price Changes & Housing Affordability

Each month Freddie Mac publishes its House Price Index report (FMHPI) that allows rental property investors to track both short- and long-term historical price trends. 

The most recent FMHPI from Freddie for home price trends in metropolitan Kansas City reveals:

  • May 2016 HPI: 132.3
  • May 2021 HPI: 203.4
  • 5-year change in home prices: 53.7%
  • One-year change in home prices: 17.3%
  • Monthly change in home prices: 1.5%

Affordability is another tool real estate investors can use to help forecast the current and future demand for rental property in Kansas City. According to the annual report from Kiplinger that tracks the affordability of housing in the top 100 U.S. markets:

  • Since the last real estate cycle market peak in May 2006, home prices in Kansas City have decreased by 0.3%.
  • Since the last real estate cycle market bottom in March 2012, home prices in Kansas City have increased by more than 66%.
  • Kansas City has an affordability index of 3 out of 10, meaning the metro area is one of the more affordable places to own a home in the U.S.

 

Quality of Life

Cost of living has a major effect on the quality of life in an area. According to the cost of living calculator from NerdWallet, the cost of living in Kansas City is more than 40% less than big expensive urban areas such as San Francisco, New York City, and Seattle.

Key Quality of Life Stats:

  • Forbes ranks Kansas City as one of the best places for business and careers, job growth, and education in the U.S. with a cost of living 3% below the national average.
  • Total per capita tax burden in Kansas is about 10% less than the national average.
  • Kansas City is one of the least-congested metro areas in the U.S. and has one of the shortest commuting times.
  • The RideKC Bike system has 42 locations across Kansas City, and the city plans to build 1,000 miles of bike lanes and pedestrian walks over the next 20 years.
  • KC Streetcar serves the Central Business District, and connects the River Market, Crown Center, Union Station, and Crossroads Art Districts.
  • Kansas City has more boulevards than any city in the world except Paris, earning it the nickname “Paris of the Plains”.
  • The NFL Kansas City Chiefs, MLB Kansas City Royals, and MLS Sporting Kansas City soccer teams give residents of Kansas City and real estate investors plenty to cheer about.

 

Get Out the Map

Where to begin your search? Roofstock created a heat map of Kansas City based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.

KansasCity_NeighborhoodScores

DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood

Ready to invest in the Kansas City housing market? If you haven't already done so, create your free Roofstock account and set up alerts. We'll notify you when we have a Kansas City investment property that matches your search criteria.

 

 

Click me
This article, and the Roofstock Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, legal, or real estate advice. Roofstock is not your advisor or agent. Please consult your own experts for advice in these areas. Although Roofstock provides information it believes to be accurate, Roofstock makes no representations or warranties about the accuracy or completeness of the information contained on this blog.
Jeff Rohde

Author

Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

Join 100,000+ Fellow Investors.

Subscribe to get our top real estate investing content.

Subscribe Here!