Don’t Let the Latest Home Price Headlines Confuse You

Are you worried Kansas City home prices are falling? While recent news reports are causing unease among KC sellers, the headlines aren't showing the whole picture.

The truth is that national housing market data for 2023 showed positive home price growth for the year. While these numbers can vary by market, and there were a few months with slight declines nationally, these drops were the exception, not the rule.

The overarching story is that national home prices went up last year, not down. Dive into the data with Just Say Home KC real estate experts to set the record straight. 

2023 Was the Return to More Normal Home Price Growth

Last year signified a return to more typical Kansas City home price appreciation. How do we know? Let's take a look at what usually happens in residential real estate.

Within the Kansas City housing market, predictable ebbs and flows take place each year. This change is called seasonality. Spring is the peak homebuying season, or when the market is most active, and marks the beginning of this pattern. The increase in KC home listings typically stays strong in the summer but starts to wane toward the end of the year. Kansas City home prices follow along with this seasonality because prices rise the most when there's high homebuyer demand.

The graph below uses data from Case-Shiller to demonstrate how this pattern played out in home prices from 1973 through 2022 (not adjusted, so you can see the seasonality):

 

For nearly 50 years, home prices have matched typical housing market seasonality. At the beginning of the year, home prices grow more moderately with less activity in the market as fewer people move in January and February. Activity increases as the market transitions into the peak homebuying season in the spring, meaning KC home prices rise. As fall and winter approach, activity slows again and prices grow at a slower rate.

Let's layer the most recent national housing market data for 2023 (shown in green) on top of this long-term trend (still shown in blue) to see how this year compares to expected seasonality.

The graph shows that the level of appreciation fell more in line with the long-term housing market trend moving through last year. This similarity is evident in how close the green bars match the blue bars towards the later part of 2023.

If current Kansas City home price appreciation is typical for this time of year, why are the headlines reporting differently? Many recent headlines are only focused on the two bars outlined in red. It's important to have context to put those two bars into perspective. The long-term trend shows it's normal for home prices to moderate in the fall and winter. That's typical seasonality.

Since the 49-year average is so close to zero during those months (0.10%), it's not unusual for KC home prices to fall ever so slightly during those times. In the bigger picture, those drops are just blips on the radar. When you look at the year as a whole, home prices still rose overall.

What Do You Need To Know?

Kansas City and national real estate headlines will call attention to the small month-to-month dips instead of the bigger year-long picture. This emphasis can be misleading because it only focuses on one part of the story.

When you hear these news reports, remember we saw the return of seasonality in the KC housing market last year. This is a very good thing after national home prices skyrocketed unsustainably during the 'unicorn' years of the pandemic.

Are you still worried home prices in the Kansas City area will fall? There's no need to be concerned. KC mortgage rates continue to trend down compared to last year, meaning home prices are expected to appreciate as KC buyers re-enter the market. As buyer demand boosts and more people move, the low supply of homes for sale will continue the upward pressure on prices.

Bottom Line

Are you looking to buy or sell a home in the Kansas City area? Don't let recent home price headlines stir up confusion. National real estate data indicates that home prices increased last year, and home price appreciation is typical for average housing market trends. Do you have questions about what's happening with KC home prices? The Just Say Home real estate experts can give you insight into current housing market trends and what they mean for you!

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