Kansas City’s Pandemic Housing Market is Increasingly Pricing Out Millennials A new study found Kansas City is one of the housing markets where affordability has declined the most

Travis Stull was on a walk around his neighborhood in Kansas City, Kansas, when he saw it. A house with a sign that read: “For sale by owner.” It was three blocks from his Strawberry Hill apartment. 

He contacted his real estate agent. A few days later, they noticed an open house sign out front. They were the only ones there.

Stull, 39, liked the home — it had a remodeled kitchen and was centrally located. He immediately went under contract with the sellers and bought the house. 

“Because everything is so competitive, you don’t really have a lot of room to think about it,” he said. 

Stull knows if he had been competing with other prospective buyers, he would have been outbid. He doesn’t think he would have gotten the house had it not been listed by the owner.

“If I hadn’t got it, I think I would have stopped looking for a house,” he said. “After all I’ve been through.”

This is the reality of the pandemic housing market in the Kansas City metro and across the country. More homes are being sold, often within days and at amounts far above asking price. 

But for middle-class, millennial, first-time buyers, the cutthroat housing market is making the American dream of owning a home — often considered the best way to build wealth in this country — increasingly out of reach and unaffordable.

According to a study from March by First American Financial, Kansas City, Missouri, was among the top five housing markets that saw the greatest year-over-year decline in affordability. 

The study attributes this to a 4.3% decline in household income and a 16.5% increase in nominal house prices compared to last year. 

Data from the Kansas City Regional Association of Realtors listed the median price of a home in Jackson County at $240,000 as of May 2021. Last May, the median home price was $194,500. 

Here’s the other problem: There isn’t enough supply to meet the demand. According to data from the same association, the housing inventory in Jackson County in May is down 49% from last year. 

All of this has created a highly competitive environment where Kansas City’s middle-class homebuyers are regularly priced out of prospective homes or have to make concessions to buy one.

“Sometimes you get 15 minutes, like really, literally, 15 minutes, to come in and make a decision,” said Kansas City Realtor Amy Carlson. “It’s an unreasonable thing to expect of people making a huge investment.”

Why is the Housing Market Like This?

What creates this kind of housing bubble in the first place? A confluence of factors: low inventory, low interest rates, high demand. 

“Our supply is very low, but the demand is still very high,” said Tony Conant, president of the Kansas City Regional Association of Realtors. “This is not a good thing, by any means.”

Before the pandemic, Conant said the housing market was already in short supply. 

“We’re building the fastest we can but I mean, obviously … that won’t get us out of this crisis,” Conant said.

The pandemic drove up the cost of construction supplies like lumber, making it more expensive to build new homes. At the same time, millennial first-time homebuyers are flooding into the market. But they’re not the only ones.

Conant said large private equity firms are also buying up housing inventory to flip them as rentals. 

Because inventory is low, homes are being sold above their list price and market value. Carlson said the price that buyers will pay for a house is outpacing what appraisers call the appraised value. 

“We’re running into problems with appraisers and then having to renegotiate pretty often with contracts,” she said. “It just adds another layer of trickiness to transactions that are already pretty hard, because there’s so much competition.”

Low interest rates are also driving up demand for a home. The current interest rate for a 30-year fixed-rate mortgage is 2.812%, according to the website NerdWallet. In January 2020, the interest rate for a 30-year mortgage was about 3.7%. In 2016, mortgage rates averaged around 3.65%, according to Rocket Mortgage.

Low rates mean a buyer can have lower mortgage payments or afford to borrow more. 

Stiff Competition Means Making Compromises

Robbie Wegley, 28, and his wife wanted a house with a basement, garage, more than one bathroom for the couple and their 5-year-old son.

But searching for the perfect home in Johnson County, Kansas, was difficult. Whenever they found a home they liked, it would fly off the market within days. 

Wegley and his wife placed offers on five homes. They got beat every time. 

“We put in offers that were up to $30,000 over listing and still lost,” he said.

Not only were the other offers higher, Wegley said, but they were all cash, with waived appraisal and waived inspection. 

“None of those things are things that are even possible for us,” Wegley said. “So we didn’t really stand a chance.”

In early 2021, the couple’s real estate agent heard of a duplex that was back on the market after a previous deal had fallen through. 

“They pretty much just said, ‘If you match the offer, and you do it tonight, you’ll get it,’” Wegley said. “So we found out about it after work, saw it a couple hours later and had an offer within four hours of hearing about it, and it was accepted that night.”

The couple hadn’t originally wanted a duplex — they wanted a single-family home. But the circumstances meant making compromises.

Wegley feels lucky they found the duplex. But he said they didn’t have much choice in where they lived or the house they got. They were at the mercy of the market. 

Kayla Burns, 26, of Lee’s Summit, Missouri, felt hopeful when she began looking at homes in Kansas with her fiance. But that hope quickly eroded. 

“Every time we went to look at a house, it was already over (valued) by $20,000, $30,000,” she said. “Then we’d go and look at it, and it would still need updating … and these big-ticket items that you kind of expect to be done if something’s listed for that much.”

They had a budget between $225,000 and $260,000. Burns and her fiance put in their first offer in April — they went $16,000 over asking price.

“We waived our inspections, we did all of the things that everybody’s kind of doing in this market right now,” Burns said. “And still didn’t get the house. So after that, we were like, ‘Wow, this really sucks.’”

The couple felt defeated. They stopped searching for homes in Kansas. In May, Burns and her fiance purchased the home they were currently renting in Lee’s Summit. 

“It was like, if we’re going to buy a house, in this market, we have to take this opportunity because we’re literally not going to get that anywhere else,” she said. 

Bidding Wars

The current market has also made homebuyers like 39-year-old Brandon Smith of Kansas City, Missouri, feel like they can’t compete. 

Every time Smith, who was renting in a neighborhood north of the Missouri River, saw a home he liked, he called his real estate agent. But it wasn’t quick enough. 

“By the time I got home for the day, it had already had a pending offer on it so I couldn’t even go see it,” he said. 

Smith noticed homes selling for $10,000-$15,000 over asking price. But he didn’t have the money to compete in a bidding war. Not when he makes between $35,000 and $40,000 a year.

Then, from his apartment balcony, Smith spotted a dumpster in front of a house nearby. He walked over and asked the people if they were selling the house. 

They said yes and asked if Smith wanted to see the house.

“It looks like an older, much more wealthy version of myself had bought all the furniture,” he said. “So it was fully furnished, and I just said, ‘I’ll take it as is.’”

Smith bought the home for $190,000, with his parents cosigning on the mortgage. It never went on the market. If Smith hadn’t stumbled on the house, he said, he’d still be looking in a market where the houses are outside his price range. 

“I just got really, really lucky with this house,” he said.

When Lauren Allen, 32, of Kansas City, Missouri, began looking for a home toward the end of 2020, there were times when she would be one of the top bidders. But there were other times when she noticed buyers offering cash down or waiving appraisal. 

“There were times where I was still shocked by how far a buyer would go,” she said. 

Allen went under contract for a home three times before finding her current home. The first two homes fell through after inspection. After Allen went under contract on the third house, it was between her and another buyer, who ended up offering to waive the appraisal. Allen would have won the house, but the sellers backed out. 

Then Allen noticed a “coming soon” sign in front of a home in Kansas City’s Hyde Park neighborhood. She alerted her real estate agent and a week later, the home went on the market.

Allen and her agent were the first people to see the house. It checked off all her boxes: It was in the city and had a backyard, front yard and garage. She bought the house for $250,000 — under her budget — and closed within 10 days. 

“Everything fell into place with that house,” Allen said. 

She and the others in this story reveal how difficult and stressful it can be to buy a home now. It’s not the market many young Kansas Citians thought they would find.

“That’s one of the things that, growing up, you hear is so great about Kansas City, is the cost of living here,” Wegley said. “People my age grew up hearing that, and then they go to buy a house, and they find out that it’s actually not going to be that great anymore. And it’s getting worse.”

Carlson, the real estate agent, said it feels like affordability is almost nonexistent on some levels. 

“It’s hard with folks, even with generous budgets, to be able to compete, especially in certain high-demand areas,” she said. “So they end up getting priced out of there, where they would really like to be part of the community and put down roots, and then having to look for other areas or settle for much smaller homes.”

The situation also hurts lower-income buyers looking for affordable housing. 

“I feel like we’re pushing people who need that more affordable housing, too,” Wegley said. “Where do those people go if everyone’s kind of getting priced down?”

Celisa Calacal covers economics and civic engagement issues for The Beacon, an online news outlet based in Kansas City focused on local, in-depth journalism in the public interest.