In 2020, the U.S. housing market looked very different than it does today. The average 30-year mortgage rate hovered around 3%, existing home sales nationally reached historic levels 5.6 million transactions, and the median home price sat around $329,000. Over the next few years, the market accelerated rapidly. Home prices nationally climbed more than 40% between 2020 and 2023, and investors from all over jumped in this market. We saw Real Estate be the hot topic for those looking to place extra cash or equity.

Fast forward to today, and the market is vastly different. Mortgage rates have more than doubled from their pandemic lows, buyers have narrowed their criteria, and homes are taking longer to sell compared to the frenzy years. While demand remains strong in many markets — including Kansas City — the way investors approach deals today looks very different than it did just a few years ago.

Interest Rates Changed the Math

One of the biggest differences between buying in 2020 and buying today comes down to financing. If you look anywhere online or forums this is where many struggle with.

During the pandemic era, many investors were able to borrow at rates close to 3%. With borrowing costs that low, deals didn’t always need perfect margins to make sense. Investors could accept thinner cash flow or even break-even scenarios because appreciation and cheap debt helped make the deal pencil out.

Today, financing costs are significantly higher. That means the math behind each deal is the focus. Mortgage now eats up a chunk of your monthly cashflow.

Tip: Run your numbers based on today’s interest rates and conservative assumptions. If rates eventually drop, refinancing becomes a bonus rather than something the deal depends on.

Competition Has Calmed Down

Another major difference is competition.

The 2020–2023 market was extremely competitive. Multiple offers were normal, inspections were many times waived, and investors often had to make quick decisions just to secure a property.

Buyers today generally have more time to evaluate properties, negotiate repairs, and carefully run numbers. While desirable homes still attract interest, investors are no longer forced to rush through every decision.

Tip: Use the extra breathing room to analyze deals thoroughly. Don't jump into a deal for the sake of it. Patience leads to better decisions which equal a solid long term deal.

Pricing Carries Weight

A few years ago, sellers often priced homes aggressively and let bidding wars push the price higher. Many properties sold above asking price within days or hours.

Today is different. The #1 factor in buyers mind is pricing. They consider other factors but pricing sways if they offer or walk. This is for homeowners or investors. Every dollar counts and that means the listing price holds weight.

Tip: Watch properties that have been on the market for 30–60 days. Sellers in that situation are often more open to negotiation, they have an urgency to sell.

Appreciation Expectations Are Different

Between 2020 and 2023, home values rose rapidly in many parts of the country. They rose at a historic and unhealthy rate. Some investors relied heavily on appreciation to continue with a deal.

While Kansas City continues to show steady growth, appreciation today is seen at a linear growth. One of the draws with Midwest markets like Kansas City is the linear and steady growth. We see rises and decreases in prices but it comes in smaller chunks. Not a roller coaster like other markets.

Tip: Treat appreciation as a bonus rather than the primary reason to buy a property. Factor in rent and price growth but look at the whole picture.

Investors Are Looking At The Fundamentals

One of the biggest difference between 2020 and today is mindset. During the peak years, many buyers focused on buying a property quickly because of the craziness. With that investors sometimes stretched their numbers or accepted more risk than they normally would. They were willing to stretch to make it "work"

Now buyers aren't settling for a property. The fundamentals and looking at true cashflow is keeping investors buying.

Tip: Narrow you buy box. Understand expenses vs income. Know what exit strategies a property may have.

The Big Picture

Kansas City continues to attract investors because of its relatively affordable price points, steady population growth, and diverse employment base. Yes the conditions today are different from 2020 but there is deals out there.

You can find success in understanding the basics and fundamentals, then making a decision off that.

If you’d like to talk through the Kansas City market or a deal you’re considering, feel free to reach out and we can book a call.