Location, Location, Location
June 23rd, 2023
As the old saying goes, the three most important things about a house are location, location, location. The idea behind this saying is that the same built home in two different cities will have two very different prices. The same is true about real estate statistics. When you are looking at the stats to try and get an indication about what is going on within your market you have to look in your own backyard first if you really want to have a complete understanding. Local factors have a much greater influence than national ones. Things like school districts, local infrastructure, amenities, and transportation can affect the values of homes far more than the national average home price.
Take for example two of my favorites indicators for whether prices will increase or decrease: current inventory and percent over list price. Nationally there were 21.5% more homes for sale in May 2023 compared to the same time in 2022. This means that there were 103,000 more homes available to buy on a typical day this past month compared to one year ago. In Kansas City, our inventory is DOWN 3.3% year over year. This means in the month of May we had 160 FEWER homes for sale during the month of may this year than we did last year. This shows a vastly different picture between a national market versus our local market.
When there are fewer homes for sale it makes every available home that much more valuable to those who are looking to purchase. This is why looking at percent over list price is a great indicator to know if home prices are going to continue to go up or if they will be coming down. It indicates if homes are still getting multiple offers as buyers are having to pay over asking price in order to beat out other potential buyers. Nationally for the first half of 2023 the percent to list price averaged below 98%. While that might sound like a lot, anything under 100% is an indicator that pricing will start to go down. In fact, this is the first time since pre covid that this percentage has come below 100%. In Kansas City for the month of May that ratio was at 100.6%. While that is down from May of 2022 when the ratio was at 103.6%, it is still above the 100% mark, which indicated Kansas City will continue to see year over year increases in home prices.
While percent over list price is a great leading indicator, I want to also point out a very important and very telling difference between national stats and local stats- whether homes prices actually increased year over year. Nationally Existing Home Sales Median Price is down 3.1% compared to May of 2022. While in Kansas City existing home sales prices are UP 2.6%. That is a difference of 5.7%, showing that Kansas City home values are rising while the nation as a whole is decreasing.
All of these stats are important to consider, but even in Kansas City these numbers vary from neighborhood to neighborhood. Every neighborhood has its unique characteristics and trends that influence its real estate market. Local statistics shed light on neighborhood-specific details, such as price per square foot and historical appreciation rates. While national real estate statistics serve as a general benchmark, they lack the depth and precision required to make informed decisions in the local market. Local statistics, on the other hand, provide the necessary context to understand the unique dynamics of a specific area. When location means everything it is all the more valuable to have an agent who not only understands the unique neighborhoods, but also is able to analyze the stats within those neighborhoods and help you make the best possible decision when buying or selling. All the more reason to call one of the many area experts at Kansas City Realty.
