THE INDEXKC- KANSAS CITY MARKET UPDATE
Weekly KC Metro Market Update
Holy smoke! The new year brings in some really interesting trending lines. Homes sold increased dramatically right along with a slight increase in sales values…..At the same time we are seeing record numbers of price reductions. Let’s take a look at why this has happened.
Several months ago, when interest rates were much lower, Sellers brought homes to market at higher price points. This fueled the desire of subsequent Sellers to continue to drive for higher sales values, though rising interest rates stopped those prices dead in their tracks. Higher mortgage interest rates forced monthly payments higher, forcing home Buyers into lower price point homes in order to maintain the same monthly payment. This left many Sellers feeling confused; after all, their neighbors sold their homes for far more just months earlier!
This confusion is unfortunately too common….The net result is frustrated Sellers suffering from a “Jekyll and Hyde” effect…..They want top dollar from their homes, and want to purchase homes at a discount. We’re all in the same fishbowl of expectations….The initial list prices were set against a different economy. Mortgage rates were in the low 5% range, and are now 75% higher, at 7.5%, causing the record number of list price reductions. This in turn, is fueling the rising number of homes sold. In turn this is leveraging the increase in listing numbers, modifying the relationships between supple and demand.
Add a 26% increase in groceries and you have buyers that are slipping into a different/lower price bracket, simply based on the compound effect of higher mortgage interest rates, inflation, and now rising inventories.
For Sellers, this translates to a smaller buyer pool at every price range, as Buyers slip to a lower price point based on the factors outlined above.
If you’ve got questions regarding the impact of the shift on your search or the value of your home, we’ve got answers! Click the button below and let’s get you the information you need to be successful!