Kansas experienced significant shifts in its housing market from 2018 through 2023.
Urban vs. Home prices in urban counties rose faster than local incomes, making them increasingly less affordable.
Rural Housing Challenges
Rural Kansas faces its own housing challenges.
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New development tends to concentrate in cities, so rural markets have seen relatively few new homes built.
Such declines in vacancy reflect a tight housing supply in both rural and urban prefs but the consequences differ.
The 20202023 period saw interesting migration patterns.
The relatively lower home prices in the Midwest began attracting some out-of-state buyers looking to escape expensive coastal markets.
However, Kansass overall population growth remained modest.
Nationwide, the first-time buyer share fell to historic lows as prices and interest rates climbed.
In other words, repeat buyers (existing homeowners) have vastly outnumbered first-timers recently.
First-time buyers in Kansas tend to be younger adults or young families, and they are very price-sensitive.
As homes became less affordable, many delayed buying and remained renters.
Those who did buy had to be older and earn more income than first-timers of the past.
Kansass population is aging, with the 6574 age cohort growing the fastest since 2010.
There is evidence that many Kansas seniors are staying in-state after retirement.
This mismatch pushed buyers to bid up prices on single-family listings.
Alternative Housing Options
Some buyers explored alternatives to the classic detached house.
For households under $250K annual income, true vacation-home purchases have been relatively uncommon in Kansas during 20182023.
Second-home buying tends to be the domain of higher-income families or investors.
This indicates that the vast majority of Kansas home purchases are for primary residences.
Stories abounded of Kansas City area buyers bidding aggressively to win homes in suburban neighborhoods with more square footage.
Downsizing Patterns
Downsizing has been a notable trend mostly among older homeowners in Kansas.
Many Baby Boomers reached retirement or empty-nest stage during this period.
However, one obstacle for downsizers in Kansas has been the lack of suitable inventory.
There are limited townhome or ranch-style condo developments where seniors can move.
Those who did downsize often had to compete with first-time buyers for the same small houses.
The eras historically low mortgage rates made these intra-state moves feasible and attractive.
People who might have upsized or downsized chose to wait, resulting in a kind of stalemate in 2023.
When rates were low (20182021), nearly everyone locked in fixed rates to take advantage.
By late 2021, the national average 30-year mortgage rate was around 3.1% incredibly favorable for buyers.
Starting in 2022, however, financing costs soared.
In Kansas, where home prices were still rising in 202223, this created a crunch.
Even though prices hadnt fallen, the spike in mortgage rates was pricing some buyers out.
Government-Backed and Alternative Loan Products
Many buyers turned to government-backed loans and creative financing to cope.
Another notable shift was the comeback of adjustable-rate mortgages (ARMs) in 20222023.
During the ultra-low-rate years, virtually everyone chose fixed rates.
This threefold increase indicates borrowers were using ARMs more to qualify for homes as prices climbed.
Instead, they used 3-5% down programs or maybe 10% if they had help from family.
Recognizing the down payment barrier, the state and various local agencies offered assistance.
Kansass rental market tightened considerably in these years, which put pressure on many households.
Rents rose rapidly after 2019, especially in metro areas.
This gap highlights that renters were feeling the squeeze far more acutely.
Kansass rental vacancy rate declined to around 6.5% by 2023, one of the lowest in decades.
Fewer vacant units means landlords have more pricing power, so rents remained elevated.
When the market shifted in 20222023, the rent/buy equation shifted too.
Suddenly, with 6-7% mortgage rates, buying became a lot more expensive on a monthly basis.
Many nice apartments could be rented for that or less.
In the wake of the 2008 financial crisis, Kansas home prices stagnated or even dipped in some areas.
Combined with low interest rates, this made the early 2010s a very affordable time to buy.
By contrast, 20182023 saw affordability erode.
The median value of owner-occupied homes in Kansas rose about 40% from 2018 to 2023.
This outpaced income growth, so the affordability index fell.
The Great Recession brought a spike in foreclosures; properties lingered on the market and vacancy rates were elevated.
Many buyers back then had the luxury of choosing from plenty of listings and even negotiating prices down.
Fast forward to 20182021, and inventory hit record lows.
The transition from surplus to shortage over the decade is clear.
The volatility was much greater.
Buyer Psychology and Market Dynamics
In the late 2000s, buyers had the upper hand.
There were fewer buyers than sellers; houses could sit unsold for months.
Fast-forward to 20182021, and the psychology reversed sellers had the upper hand.
