After another year of economic recovery, real estate has made overall gains in the Kansas City Metropolitan Area. There are some indications that the market has begun to cool significantly as inventories are down in many counties and the prices have begun to stabilize. The multi-family market is extraordinarily tight with less than 18 listings on the MLS in Johnson County, Kansas and a small number of desirable properties in Jackson, Cass, and Clay, and Platte Counties in Missouri. Wyandotte County has seen a steady uptick in home values, but high property taxes that are being used to pay for The Legends development, keep many investors on the sideline.
Overall, interest rates have not made the climb that many analysts expected, but the fed has indicated that rates will be climbing by the end of this year. This helped small investors to make acquisitions and kept borrowing costs low.
Most investors are in a holding pattern of sorts as rents are stable and climbing and there is not major interest in moving into more risky positions. This has made it difficult for new players to enter into the market, as the inventory is extremely low. The prospective real estate investor is being held down by already established players, which will keep multi-family inventory low and prices overvalued. If the economy continues to improve and fuel prices stabilize, the market should continue to bear fruit for the savvy investor. Expect for a price adjustment in the coming months as many areas including Johnson County have already begun to see a reduction in average sale price and an increase in inventory.
As we approach the 2016 election cycle, expect markets to cool as their will be uncertainty amongst the political powers which will definitely have an effect on the willingness of investors. This uncertainty will keep investors heavy on cash and the potential for liquidation of some asset classes, including real estate will most certainly take place.
Property Management companies, including Kansas City Property Management Group Inc. are encouraging investors to hold on to real estate assets and to make further acquisitions when possible. Population growth is forecasted to remain strong in the coming years before leveling off in the middle of the next decade. This will not only allow for steady growth in values, rents, and new construction, but it will also help to keep vacancies low.
The real estate market has become tough for the average investor to make significant returns. The margins on “flipping” properties has shrunken considerably as banks have liquidated many of the bad assets they were forced to hold after the recession of 2008, though there are still a number of individuals facing financial difficulty resulting in foreclosures. Click on the interactive map below to view foreclosures nationwide.
As we move deeper into 2015, expect real estate values to remain flat or even see a slight 5%-10% reduction. As mentioned above, the fed has signaled in recent meetings that interest rates could start a slow advance over the later half of this year into 2016. This will have the obvious effect of limiting buying power, which could result in additional inventory and a reduced prices.