Yes, I know this is risky, but I am going to make some predictions about the real estate market this year. First, let me place a big asterisk by the statement *I don’t have a crystal ball.* If I did, I would be on a beach somewhere instead of watching it snow outside of my office.
I could be wrong, but what the heck. I am willing to risk it.
First, let’s talk about how 2019 ended. Of course, each city, town, and even subdivision is its own micro market so I have to be careful not to speak in generalities too much. Each part of town can and does operate independently of its adjacent neighborhoods. That being said, I am comfortable saying that many areas of KC ended 2019 with more housing inventory than they had seen in several years.
For example, at the end of 2019, the city of Leawood had 6.4 months of housing supply, meaning it would take a little over six months for all of the homes for sale in Leawood to sell. That is the highest housing inventory that Leawood has seen in December in several years. The annual average of inventory is 3.9 months which is technically still a seller’s market. But the front line indicators such as days on market and current inventory levels are suggesting otherwise. Lastly, median home prices in Leawood are down 9.8 percent when you compare the last two Decembers, or $49,425.00 in real dollars.
Other towns in NEJC aren’t seeing quite the same market correction, but a correction nonetheless. Let’s take Prairie Village for example. PV ended the year with 2.3 months of housing supply. That is still quite low and is technically in a strong seller’s market (three months of supply or less). It is, however, up 6.4 percent from December 2018. The average days on market is also up 5.8 percent to 36 days from December 2018. Yes, these are small changes but again appear to be front line indicators that “a change is a comin’.”
Now let’s consider the luxury housing market in Mission Hills. This may complete the picture for you and give you a hint as to how the market is changing and will continue to change in 2020. Mission Hills ended 2019 with 13.5 months of housing supply. Yes, that means it would take over a year for all of the active homes for sale to sell in Mission Hills. You might think, “oh that’s normal for luxury homes. They probably don’t sell that quickly and there probably aren’t that many buyers for those homes, right?”
Not really. Just a few months earlier in April 2019, there was only 4.4 months of housing supply, which is technically a seller’s market. That is right, a seller’s market in Mission Hills, Kansas. Oh how quickly things can change. The annual average of housing inventory in Mission Hills is 10.6 months, which means that they are now in a buyer’s market. This is most evident when we look at median home prices in Mission Hills. The two year average median home price is $935,000.00, but in December 2019 it was $790,000.00 which represents a 24.7 percent drop in home prices.
Isn’t if fascinating that two cities just minutes from each other in NEJC can be in two completely different markets at the same time? Or am I just being a geeky Realtor? Don’t answer that.
So what are my predictions? Get to the point, right?
Here you go:
The seller’s market that once existed all over KC and in almost all price ranges is now being compressed. Please visualize our real estate market in layers with the luxury home market on top (750K+) all the way down to the last of the starter homes under 200K that are still available in areas like Prairie Village, Mission, Roeland Park, Merriam and Lenexa. Now visualize the market correction as a big foot stepping on our market and pressing downward. The pressure from the foot (market correction) is pushing the seller’s market down to only the most approachable price ranges while leaving anything over 300K to feel the effects of the market correction such as an increase in housing supply, higher days on market, and a drop in median home prices.
I predict that the Spring market will come early this year and potentially end early. Each of the last three years has felt a little less intense than the prior year. If you own a home in one of the under 300K neighborhoods that I mentioned earlier and you intend to sell this year, we should be talking as soon as possible. Your opportunity to reap the benefits of the market is on the horizon. You don’t want to miss it!
If you are in a home above 300K and you intend to sell your home in 2020, we should also be talking as soon as possible. The timing of when you hit the market this year needs to be strategic. You want to be on the market when you have the least competition to get the best price possible in the shortest amount of time.