A Shockingly Low Supply in the KC Metro – what does it mean?

The big phrase this year with real estate is “low inventory.” The KC market is filled with multiple offers, no available homes and sales that are above asking price. Anyone who is looking to buy a home right now knows what a stressful situation it can cause, but what exactly does “low inventory” mean?


Real estate “inventory” refers to the number of available properties in current active status. More importantly, “supply” refers to the inventory of homes divided by the average monthly closed sales from the last 12 months. A balanced real estate market generally refers to a market with around 6 months of supply. Anything below 6 months of supply is what we refer to as a “seller’s market” and anything above 6 months is a “buyer’s market.” Six months of supply is a “healthy” market. With high inventory comes a drop in average sales price and with extremely low inventory comes an increase in average sales price. 


Over the past couple years, the inventory of available homes in the KC area has continued to decrease as new listings have failed to keep pace with sales and active buyers. Ironically, the shortage of listings is keeping many move-up sellers out of the market because they are afraid they will sell their existing home before they can find a new one to buy.


In the Kansas City metro, current inventory is down nearly 32% from this time last year with supply at 2.3 months.* Remember that a 6 month supply is healthy and anything below is a “seller’s market.” In Johnson county, the supply sits at a shockingly low 1.7 months. The last time we saw numbers like this was in 2005. These decreasing inventories have resulted in fairly strong home price gains which are expected to rise even more in 2016.



What does this mean for you? For sellers who are not purchasing another home, now is an excellent time to sell; buyers are in desperate need and sales prices are high. For buyers, conditions are different. Sales prices are high and because of desperation, many people are overpaying for homes. We are also seeing a trend of buyers “settling” on a home because they need a place to go and are tired of looking. One positive note for buyers is that interest rates remain extremely low. For sellers who are purchasing another home, they are facing these same buyer issues and can also be faced with the problem of transition. If a person needs the funds from the sale of their home to qualify for a purchase, finding a new home becomes a concern. Be prepared to look fast and make strong offers or find alternative housing in the transition period.


What all of this means is that the market desperately needs listings. If you or anyone you know is thinking of selling their home in the next year, we strongly ask that you refer them to us. All of these market variables make it even harder to navigate a home sale or purchase. We pride ourselves on staying deeply informed with both the KC market and national market as well as the ever changing micro-markets within our city. We operate on the principle of giving each client the same advice that we would give our own family. Your referrals are the driving force of our business and are not taken lightly. We would be happy to discuss market information with you or your friends and family. Just give us a call at 913.221.8351 or email [email protected].



*These numbers refer to the inventory and supply of existing homes vs. new construction.