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House Prices in St Louis Increase in June; St Louis ranks 5th in 2-year house price change

Dennis Norman

Dennis Norman

According to the Housing Market Report that was issued this morning by Radarlogic, home prices increased in June from the previous month in 23 out of the 25 metropolitan areas tracked by their company.  St. Louis was among the 23 metros that showed an increase in home prices in June over May.

Overall the composite for all 25 metros showed a 3 percent gain in price from May to June representing one of the largest monthly gains reported by RadarLogic since June 2000.   St. Louis home prices increased 2.2 percent over May.

There has been a trend of price increases reported for the 25 metro areas for the past few months. In fact, the increase in the Radar Logic Composite from February to June outpaced the house price gains over the same period during the previous threes years, and the increase in house prices from April to June was the largest since the beginning of Radar Logic’s date in 2000. radar logic

According to the report, which monitors the average price per square foot of homes in 25 metro markets including St. Louis, for June 2009 St. Louis home prices represented an average price of $105.45 per square foot.  This is an increase of 2.2 percent from May, a decline of 7.7 percent from June 2008, and a decline of 5.7 percent from June 2007.  While losing 5.7 percent in the value of your home in a two year period may not sound good, considering the market over the past couple of years it is actually not bad.  In fact the two year decline in St. Louis home prices was low enough to have St. Louis be 5th on the list of the metros with the best best two year home price change.

Radar Logic Leading 5 Metro Areas based on 2 year house price change

The Radar Logic report states “observing the current upward momentum in prices, it is reasonable to believe that the housing sector may see a late seasonal peak this year.” While I personally think it is optimistic to expect a “peak” this year I am definitely glad to see some stabilization and stalling out of declines in the market.

What’s interesting about the Radar Logic Housing Report, and I think makes it more representative of the market is that the Radar Logic Housing Report is based upon the price per foot that homes sell for rather than just median home price of the houses selling as many reports do.  This would tend to lead to a more “apples to apples” comparison in my opinion as just looking at sale prices would skew data when there are periods where there is a flurry of activity of smaller homes, or larger homes.  For example, over the past few months the first-time home buyer market has been where the action is.  Therefore the most active price range in St. Louis has been, depending on which part of the metro, below about $200,000 – $250,000 while, until recently, the move-up market was pretty quiet.  This is going to bring the median price down for St. Louis because of the predominance of the lower priced homes, but that doesn’t necessarily mean the home values in St. Louis have dropped.  For example, the RadarLogic data shows St. Louis home prices have declined 5.7 percent in the past two years while the National Association of REALTORS shows that the median home price for St. Louis has declined 8.1 percent in the past two years.  The difference doesn’t necessarily sound significant, but the REALTOR number is actually 42% higher than Radar Logic’s number and that is significant.  Don’t get me wrong, I’m not knocking the REALTORS, I am just pointing out that their methodology differs significantly from RadarLogic’s and I happen to think Radar Logic may be more representative of actual values, particularly when focusing on a smaller market.

 

 

 end up skewing the data in areas where the size and/or type of housing stock changed over time.

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