Intense Competition Among Kansas City Residents Due to the Real Estate Market Dominance of Just 5 Companies

Kansas City homebuyers in Missouri are now competing with 5 major corporations that own nearly 8,000 properties.

To provide context, we cite the example of Brenna Dwyer, a Missouri resident who, along with her sister, faced a tough battle to buy her first home. They did not anticipate the fierce competition or the powerful players they would be up against.

The sisters took about six months to secure their home in Shawnee, Kansas. During the process, they discovered that entering the real estate market meant competing against large investors buying properties to turn them into rentals. This significantly reduced the number of homes available for individual buyers, forcing them to make such an important financial decision very quickly.

Faced with the situation, Brenna Dwyer said: “If we found a house we liked and needed time to think, it would sell in a matter of days, so we had to act fast or lose it.”

As this is just one of many examples of the situation Kansas City residents and the state as a whole are facing today, Josh Akers, research manager at the Mid-America Regional Council (MARC), says that large investors, often from out of state, are deliberately targeting homes that were traditionally meant to be purchased and are converting them into rental properties.

Real estate agents and corporate investors argue that this competition in the market is due to a housing shortage. Additionally, rising interest rates have made it harder for buyers to afford homes, a situation that discourages smaller investors from purchasing properties to generate rental income.

However, a 2023 MARC study revealed that nearly 25% of single-family homes in the nine counties surrounding Kansas City are rentals. Of the region’s 157,000 single-family rental homes, approximately 20% are owned by individuals or companies with 10 or more properties.

This same MARC research shows that 33 companies own nearly 14,000 homes in the Kansas City area, and just five of those companies control almost 8,000 properties. In Jackson County alone, nearly 45% of single-family rental homes are owned by investors with 100 or more properties.

Among these companies, one of the most prominent is VineBrook Homes, which owned 24,657 homes across 18 states as of December 2022, according to its SEC filings. In the Kansas City area alone, it owns 1,118 properties.

Mr. Akers continues by saying that this increase in corporate ownership dates back to the wave of foreclosures triggered by the 2008 housing crisis. Banks issuing high-risk loans caused the housing bubble to burst, leading to millions of foreclosures. Investors took advantage of the situation to buy properties at bargain prices.

The crisis deepened with the COVID-19 pandemic, which accelerated this trend. Small landlords with fewer than 10 properties struggled to stay afloat during eviction moratoriums, which allowed tenants to remain in homes without paying rent. Once again, large investors swooped in to acquire properties that smaller landlords could no longer afford to maintain.

Akers concludes by saying: “What began as a response to a surplus of foreclosed homes has now become a standard business model for institutional investors. Now, they are competing directly with families in the real estate market, rather than focusing on foreclosures.”

Available Foreclosures:

Shawnee: 12 homes available

Jackson County: 45 homes available

Northland: 18 homes available

By Elías DaSilva | 9 de diciembre de 2024.