Now that it’s 2020 we are going to start hearing questions about the housing market in Kansas City. People are going to ask how the market is doing and what they can do to get their home ready to sell.
Answering the first part of that question isn’t easy. In order to understand what the Kansas City housing market is doing is going to require an understanding of the local economy.
For a basic understanding of the real estate market, however, let’s look at three indicators.
Generally when an area’s labor market is weak and struggling, people don’t typically buy homes. This includes people that are unemployed but also those that have a job who feel their job could possibly be in jeopardy. When this happens it results in soft housing demand.
The good thing is that right now the unemployment rate in the United States is at 3.5 percent, which is 50 year low, according to the Bureau of Labor Statistics.
Employment grew in a number of areas, such as healthcare and the leisure and hospitality industries. Professional and tech jobs also saw large growth. Across the country, states are struggling to find workers in construction, manufacturing, cyber security and other major industries.
Unemployment isn’t the only factor that determines if people can afford a house or not.
There are actually three components to home affordability.
- Home prices
- Household income
- Interest Rates
Home prices are result of the economic principal of supply and demand. This is something that is easy for your real estate agent to help you find.
Right now in Kansas City we are experiencing a sellers market. There is a high demand for houses from buyers and because of that house prices have steadily gone up. In some parts of the metro demand is so high that there has been a drastic increase in house prices over the last few years. Then, there’s the opposite, when there are few buyers in the market and many homes for sale (known as a “buyers’ market”), prices tend to soften.
Household income must be high enough to afford homes. The median household income in the U.S. in October of 2019 hit a record high at $66,465. It took a dip in November, however, to $66,043.
The median price of a home, nationwide, is $271,300.
Lenders want to see a monthly housing payment that takes up no more than 28 percent of your income (pre-taxes). In this case, the median wage earner has about $1,541 a month in income to go toward a mortgage payment.
Interest rates, however, are key to affordability. As you can imagine, nobody really knows what will happen with mortgage rates in 2020. Some economists are forecasting an increase, others say the opposite. Keep an eye on interest rates because when they increase, the homebuyer pool shrinks.
Getting ready to sell
As you’ve probably guessed, nobody has a crystal ball when it comes to forecasting the future of the housing market. But, being ready for anything will put you in the best position.
Ready the home for the market by making basic repairs, painting and cleaning. We’re happy to walk through the home and help you decide which tasks to tackle based on a likely return on your repair dollars.
If you’ll also be buying another home, it’s not too early to choose a lender. Then, when the time comes to obtain your loan pre-approval, you’ll be ready to jump right in.
Again, feel free to reach out to us with any questions or concerns. We’re happy to help.