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St. Louis Real Estate Search

 

Number of Equity-Rich St Louis Homeowners Increases In 3rd Quarter

According to a report just released by ATTOM Data Solutions, 16.9% of the homeowners in St Louis with a mortgage are “equity-rich”, meaning their loan balance is 50% or less of their home’s estimated value.  As the table below illustrates, this is an increase from 15.8% during the 2nd quarter as well as the 1st quarter of this year.

St Louis increase in equity surpassed the U.S. average but fell behind Kansas City and Chicago…

As the table below shows, during the past 2 years, the percentage of equity-rich homeowners in St Louis increased from 16.0% to 16.9%, an increase of nearly 6%.  However, in Kansas City, the rate went from 12.0% to 21.0%, an increase of 75% and in Chicago from 15.0% to 16.8% for an increase of 12%.  Nationally, however, the rate increase just 1% during the same period, from 23.4% to 25.7%.

St Louis Equity-RIch Homeowners 3rd Quarter 2018

St Louis Equity-RIch Homeowners 3rd Quarter 2018

 

Number of Underwater St Louis Homeowners Falls To Lowest Level Since Last Year

During the 3rd quarter of this year, 14.4% of the homeowners in St Louis with a mortgage were “seriously underwater”, meaning they owe at least 25 percent more than the estimated value of their home, according to a report just released by ATTOM Data Solutions. This is the lowest rate this year, down from 15.6% in the 2nd quarter and down from 14.7% in the first quarter of 2018.  For the last quarter of 2017, St Louis homeowners that were seriously underwater had fallen to 13.8%.

Kansas City and Chicago have fared better over the past 5 years…

As the table below illustrates, our neighbors to the west and northeast, Kansas City, MO and Chicago, IL, have both seen a greater margin of improvement in their underwater homeowners over the past 5 years.  Kansas City went from 23.1% of their homeowners with a mortgage being seriously underwater in the 3rd quarter of 2013 to 9.8% during the 3rd quarter of this year, a reduction of 58% in the rate of underwater homeowners.  Chicago, during the same period, went from 35.8% to 13.2%, a reduction of 68%. Meanwhile, here in St Louis, the rate went from 25.4% to 14.4%, a reduction of 40%.

St Louis Seriously Underwater Homeowners – 3rd Quarter 2018

St Louis Seriously Underwater Homeowners - 3rd Quarter 2018

 

 

St. Louis’ 10 Fastest Selling Cities In October 2018

Not only did the beautiful fall weather of October draw St Louis area families to the popular apple and pumpkin picking festivities at Eckert’s Millstadt Farm, it also brought out home buyers putting Millstadt, IL at the top of our fastest SOLD cities in the St Louis metro area for October.  As our table below shows (an exclusive feature of MORE™, REALTORS® feature), homes in Millstadt took just an average of 8 days to sell in October.  The next nine cities on the list were all in Missouri with 5 of those in St Louis County, 2 in Jefferson County, 1 in St Charles County and 1 in Warren County.

St Louis Metro Fastest SOLD Cities – October 2018

(click on the table to see the complete table with current data)

St Louis Metro Fastest SOLD Cities - October 2018

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New Home Prices Have Increased At Higher Rate Than Overall Housing Market Over Past 15 Years

I had lunch yesterday with a long-time friend who is a St Louis home-builder who shared with me the continually rising costs of construction he faces.  Our conversation was consistent with conversations I’ve had with other builders as well, who cite a variety of things responsible for the ever-increasing costs of new home construction.  The areas most often mentioned relate to regulatory and compliance issues,  material prices as well as rising labor costs.  According to the National Association of Home Builders (NAHB), the average cost to build a new home has inreased 56% over the past 15 years.  According to the NAHB, over the past 15 years construction costs accounted for a median of 57% of the cost of a new home.

The gap between new home prices and existing home prices widens..

As the chart below illustrates, over the past 15 years, the median price of a new home has increased 68% while, as the bottom chart shows, the price of homes in the U.S. (according to the S&P/Case Shiller Home Price Index) has only increased 43.6% during the same period.  During the past 15 years, new home prices have increased 56% more than home prices overall.

Median Sales Price For New Homes Sold In The U.S. – Past 15 YearsMedian Sales Price For New Homes Sold In The U.S. - Past 15 Years
S&P/Case-Shiller U.S. National Home Price Index – Past 15 Years
S&P/Case-Shiller U.S. National Home Price Index - Past 15 Years

Will Zillow Put Real Estate Agents Out of Business?

It would be an understatement to say that Zillow® has many real estate agents nervous about their future.  It’s not just Zillow® though, it’s Amazon, big banks, and dozens and dozens of new real estate start-ups and changing business models.

A true dysfunctional family…

The most common name that comes up in real estate agent circles when discussing the impact of the internet on the real estate profession topic is Zillow®, and usually in the context of “the enemy“, so to speak.  It seems to me the biggest fear among agents about Zillow® is that they want to eliminate real estate agents and instead give consumers a marketplace to buy and sell homes without the need for an agent.  What is most interesting to me about this, is that Zillow® made something like nearly $1 Billion last year from selling leads to, guess who? Yep, real estate agents. So, the group that is afraid Zillow® is gunning for them, is lining their coffers with cash to do so, see the dysfunction?  To be clear, I’m not blaming agents here for doing business with Zillow®, nor am I saying what Zillow® is doing is wrong, I’m just commenting on what I see and find it rather fascinating.

But wait there’s more…

Going back to Zillow® and all those leads they sell to agents, what makes it even more interesting is the fact that Zillow® is able to generate all those leads as a result of getting more than 1 million real estate agents in the U.S. to send their listings to them and give them permission to market them.  Hmm…

Homeownership Rate In U.S. Hits Highest Rate Since 2014

The homeownership rate in the U.S. hit 64.4 percent during the third quarter of this year, according to data just released from the Census Bureau.  This is the highest rate of homeownership in the U.S. since the third quarter of 2014 when the rate was also 64.4%.

As the chart below shows, homeownership rates increased in the Northeast and West regions during the 3rd quarter, from a year ago, but declined slightly in the Midwest and the South.

Homeownership Rates By U.S. Region – 3rd Quarter 2018 vs 2017

Homeownership Rates By U.S. Region - 3rd Quarter 2018 vs 2017

 

Real Estate Agents Are In The Goldilocks Zone – What Does This Mean For Their Future?

Will technology send real estate agents into near extinction like it did with travel agents and may be doing with taxi-cab drivers today?   This is a topic of frequent conversation in our industry, especially with dozens of new, well-funded startups, many with new and different business models, all gunning for a piece of the residential real estate industry.

I don’t like Kool-Aid® and don’t drink it..

Don't Drink the Kool Aid Before I start, for the naysayers out there that may think since I’ve spent my entire adult life in real estate that, of course, I’m going to come to the conclusion that real estate agents are critical and you can’t live without one.  Well, to quash those fears, just read some of the articles I’ve written here over the past 10 years, you’ll know I don’t drink the Kool-Aid®.   I do not recite the chant of REALTOR® cheerleaders or anyone else unless I completely believe what I’m saying and feel qualified to speak on the topic.  In fact, there have been many times my opinion on a topic, such as on the mortgage interest deduction, was in direct contrast to that of the National Association of REALTORS®.

Real Estate Agents serve as “The Goldilocks Zone” for consumers….

Goldilocks Zone - Rea Estate Agents in the Key ZoneForgive me for dragging a science lesson into this real estate conversation, however, it makes for a good illustration of one of the first areas of significance of a real estate agent I want to discuss.  In astronomy and astrobiology, there is an area around the sun that is habitable, by not being too close to the sun, nor too far from the sun, that is referred to as the circumstellar habitable zone (CHZ), or by it’s “street name”, The Goldilocks Zone.

I think this is a good metaphor for a real estate transaction.  Think of the sun as the buyer and the seller as earth. The seller needs the buyer however, they really need to keep their distance from one another otherwise it will most likely not end with a successful tranasction.  The reason I say this is homeowners often have an emotional attachment to their home and, believe it or not, often think their home is worth worth more than it actually is.  The buyer, on the other hand, has zero emotional attachment to the home, sees flaws and imperfections in it that are invisible to the current homeowner and, in most cases, thinks it is worth less than the seller.  So, with this in mind, if the buyer and seller, with their diametrically different thoughts on the home are put together in one room to negotiate a sale, odds are it won’t end well.

There is a better way!  Real estate agents operate in the “Goldilocks Zone“, that safe place that is close enough to each party to the transaction to be effective, but not so close so as to hinder the negotiation process.  When a buyer and seller are both represented by real estate agents, they (the buyer and seller) normally do not have any direct contact with each other no do any negotiation between them, but instead allow their respective agents to handle those things.  This keeps the emotion out of the picture and also filters what is said through a professional that will filter the message removing anything that wouldn’t be in their clients benefit.  An experienced agent, without an emotional attachment to the transcation, will be able to think and act much more objectively, than their client typically and their experience will help them know when and how is the best manner and method to convey offers, negotiate, etc.

There are many more reasons while agents are critical to a successful real estate transaction, some of which I’ll cover in future articles over the next few weeks, but here’s the first one:

Because real estate agents can operate in the “Goldilocks Zone” which is a critical zone to be in for a real estate transaction to have a successful outcome.

 

St Louis Real Estate Market Holding Steady

In contrast to reports from around the country of a cooling housing market and even a possible bubble in some markets, the St Louis real estate market continues to hold steady. As our exclusive, STL Market Report for the St Louis 5-County core market below shows, during the past 12-months homes have sold at about the same pace as the prior 12-month period, prices are up a little over 5 percent and the supply, while up, is still at a rather low 3 months.

St Louis 5-County core market home sales and prices

(click on table for live current report)
St Louis 5-County core market home sales and prices

 

Mortgage Bankers Forecast Five-Percent Mortgage Rates Next Year

The Mortgage Bankers Association (MBA), in their Mortgage Finance Forecast released this week predicted that interest rates on home mortgages will continue to rise this year and will hit 5% early next year.  According to the report, the interest rate on a 30-year fixed rate mortgage is expected to come in at an average of 4.6% for the 3rd quarter, which just ended and then rise to an average of 4.9% during the last quarter of this year.  Interest rates are then forecast to hit 5.0% during the 1st quarter of 2019, rise to 5.1% by the second quarter, then stay around 5.1% through the end of 2020, according to the report.

St Louis Mortgage Interest Rates

(click on chart for live, interactive chart)

St Louis Mortgage Interest Rates

 

 

Are Homes Going To Become ATM’s Again?

During the housing bubble that peaked around 2006 and then burst in 2008 one of the things that got many homeowners in trouble was using their home’s as ATM’s.  They did this by using, in most cases, home-equity loans to take advantage of the equity they had in their homes to give them access to tax-free cash to make improvements on their home, pay for vacations, buy cars, boats, whatever.  This was fine until the value of homes began declining which resulted in many of these homeowners becoming “underwater meaning they owed more on their homes than they were worth.

Yesterday, I wrote an article about the record amount of equity homeowners in the U.S. have in their homes now, even more than in 2006, and today I read a report from TransUnion in which Joe Mellman, their senior vice president, and mortgage business leader, said “There are ample signs that the home equity lending market is poised for growth. Home prices have surpassed 2005 boom levels and household home equity has grown even faster.”  The report goes on to say that HELOC’s (home-equity lines of credit) represented the “greatest number of home equity originations in 2017 at 1.2 million, showing a 2.3% year-over-year growth from 2016”

Hopefully, homeowner’s will remember lessons of the past and be wiser about the use of their equity this time around.  Below is a table from TransUnion showing the top five uses of home equity loans.

Top Five Uses Of Home Equity Loans

Top Five Uses Of Home Equity Loans

Source: TransUnion

 

Homeowner’s Equity Hits Record High

Homeowner’s equity (the difference between current home value and the total amount of debt against the home) has risen to a record level in the U.S. at $15.189 Trillion as of the 2nd quarter of this year, according to reports from the St Louis Fed Reserve.   As the chart below illustrates, this level is even higher than the previous peak in 2006 at the tail-end of the housing bubble when equity was at $13.417 Trillion.

Homeowner’s Equity In Real Estate

(Click on chart for live, interactive chart with current data)
Homeowner's Equity In Real Estate

St Louis Real Estate Market Update VIDEO – October 2018 – Home sales down but higher than 10 years prior to 2017

St Louis home sales continue to lag a little behind last year, however, through the end of September, year-to-date St Louis home sales are higher than they were for the ten years prior to last year! In fact, the YTD total home sales of 21,043 for the St Louis 5-County core market, falls just 130 home sales short of the 21,173 homes sold at this time back in the banner year of 2006. For the St Louis area, YTD home sales through September for this year are just 5.8% below the all-time high in 2005 when there were 22,344 homes sold YTD at this time of the year.

It’s still a seller’s market in most areas of St Louis and in many price ranges!
Find out more, as well as get information on some of St Louis’s best resources for home buyers and sellers in our just-released market In our MORE, REALTORS, 5 Minute St Louis Real Estate Market Update video below, you can quickly and easily get the latest information on home prices, home sales, trends and more for the entire St Louis area!   update video.


Thinking of selling and want to know if your neighborhood is a seller's market? Contact us and we'll  answer that question for you.
You can now subscribe to our ITUNES Podcast Channel to receive our updated market videos via podcast automatically each week! Just click here, then click on "Subscribe Free".) St Louis Real Estate Market Update Video - St Louis Home Prices

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Home Affordability In St Louis Drops For All Counties In Third Quarter

One of the nice things about St Louis has always been that it’s an affordable place to live and an affordable place to own a home.  However, as St Louis home prices, and mortgage interest rates, continue to increase, home affordability in St Louis has declined.

As the table below, which is based on data from ATTOM Data Research, shows, all of the counties reported on in the State of Missouri saw home affordability decline during the 3rd quarter with the exception of Jackson County (Kansas City).  All of the counties had a decline in home affordability from a year ago with St Louis County seeing the biggest decline at 11%.

St Louis Home Affordability – 3rd Quarter 2018

St Louis Home Affordability - 3rd Quarter 2018

St Charles Homeowners spend the largest percentage of income on a home…

In St Charles County, home buyers spend, on average, 41.3% of their income to buy a home, the highest percentage of the reported counties in Missouri.  In the city of St Louis, the percentage of income spent on housing was just 21.9%.

Percentage of Annualized Wages Necessary to Buy A Home

Percentage of Annualized Wages Necessary to Buy A Home

 

Sellers Have Reduced Prices on Nearly Half The Homes Currently For Sale

It may still be a seller’s market in many areas of St Louis, but, as our table below shows, nearly half (48%) of the active listings in the St Louis market have had at least one price reduction since coming on the market.

St Louis 5-County Core Market – Active Listing Data

(Click on table for current, live data)
St Louis 5-County Core Market - Active Listing Data

The faster seller’s make a price adjustment the better…

Continue reading Sellers Have Reduced Prices on Nearly Half The Homes Currently For Sale

The Most Expensive Homes For Sale In St Louis

One of the great things about living in St Louis is it is a very affordable place to live, including when it comes to home ownership.  Home affordability in St Louis is certainly much better than the coasts but also beats many, if not most, metro areas.  Having said that, we do have our share of expensive homes though.  For example, there are currently 322 $1,000,000+ homes and condos listed for sale in the St Louis 5-county core market (City of St Louis and Counties of St Louis, St Charles, Jefferson and Franklin).   The most expensive St Louis home listed for sale, at the time I wrote this article, is a home in Huntleigh listed for $7,695,000.

42 Huntleigh Woods, Huntleigh, MO 63131

(Click on the image above to see complete details)

See the complete list by clicking here.

Of the 322 $1 million+ homes listed, nearly 82% of them are in St Louis County.  Below is a breakdown of the listings by county:

  • St Louis County  – 263
  • St Charles County – 25
  • City of St Louis – 10
  • Jefferson County – 9
  • Franklin County – 15

See the list of the 30 cities in the St Louis 5-County Core market with the highest average home prices here.

 

Are Homes Prices In St Louis Cooling?

Yesterday, the latest S&P Corelogic Case-Shiller (the biggest name in national home price data) home price indices were released for July 2018 (their reports lag behind somewhat).  Even though in their press release, S&P stated “Data released today for July 2018 shows that home prices continued their rise across the country over the last 12 months” however, the release went on to say point out, with regard to July’s increase in home prices, that is was “down from 6.2% in the previous month”.  This prompted many news outlets to publish articles with headlines about home prices cooling, the market cooling, etc.  One of those outlets, and a pretty well-known one in the real estate industry among real estate agents, is RIS media who published an article that began with “The foot on the gas is letting up.  The explosive growth in home prices is slowing.”

There is no question that home prices cool, and heat up, regularly and, due to the seasonality of the real estate market, are even somewhat predictable in this fashion.  Therefore, should the recent headlines about home prices slowing be of concern to home buyers and sellers in St Louis?  This is a question I’ve been hearing a lot lately and will give my thoughts on here.

Home prices fluctuate EVERY month…

As our 5-year chart below clearly illustrates, St Louis home prices fluctuate every single month of the year, year in and year out.  In fact, if you move your mouse around our live chart (click on chart for live one) you can see the data for each month and I don’t think you will find two months in a row that were the same.  The other thing our charts make it easy to see is the seasonality of home prices.  If you look at the purple line, which represents St Louis home prices over a 5-year period, you will see the same pattern is repeated year after year.  St Louis home prices increase every year going into spring, typically hitting the peak with sales that close in June, or sometimes July.  Then, after peaking, home prices in St Louis start the slow descent downward until hitting the lowest point in January or February, then start the cycle all over again.  In normal times, such as the 5 years depicted on the chart below, each spring peaks higher than the spring before and each winter low is higher than the prior winters low.

St Louis 5-County Core Market – Price Per Foot and Time to Sell – Past 5 Years

(Click the chart for live, inter-active chart)
St Louis 5-County Core Market - Price Per Foot and Time to Sell - Past 5 Years

Are St Louis home prices cooling off though?

Now that we’ve reviewed how St Louis home prices fluctuate, lets address whether they are cooling off though.  In other words, are St Louis home prices trending downward, indicating they will be rising at lesser rates in the coming months?  This is where our proprietary St Louis housing market data software and custom charts come in handy again and make it easy to answer this question.  The chart below shows the median price per foot for homes sold in the prior 12 months for each month of the past five years.  This is a great chart to use to recognize a trend.

In reviewing the data in the chart below, I first looked at the difference between home prices at the peak versus the trough for each year and found the following:

  • 2018 – 15.2%
  • 2017 – 12.2%
  • 2016 – 13.8%
  • 2015 – 16.0%
  • 2014 – 19.3%

Next, I looked at the increase in the peak price each year from the prior year and found:

  • 2018 from 2017 – 3.8%
  • 2017 from 2016 – 4.0%
  • 2016 from 2015 – 6.9%
  • 2015 from 2014 – 4.5%

From the above, it appears to me the seasonal price swing this year has been fairly consistent with prior years and, while maybe slowing just a little, peak home prices have increased year to year at a fairly consistent rate.  The jump from 2015 to 2016, at 6.9% was higher than normal, but the other years are at rates that are close to historical norms.  In summary, while the price appreciation may have slowed slightly, which, quite frankly, is probably god so that a reasonable appreciation rate can be maintained, I don’t see any cause for alarm nor any imminent major shift in St Louis home prices at this point.

St Louis 5-County Core Market – Price Per Foot Trend – Past 5 Years

(Click the chart for live, inter-active chart)

St Louis 5-County Core Market - Price Per Foot Trend - Past 5 Years

 

 

New Home Construction Trend In St Louis Flat Overall

There were 4,642 new home building permits issued for the 7 counties in the St Louis area covered by the St Louis HBA during the 12-month period ended August 31, 2018, just 2 more (0.04%) than the 4,640 that were issued during the prior 12-month period, according to data from the St Louis HBA.

This would indicate that perhaps the new home building market has peaked for the time being which, given that this is the best report for this 12-month period since August 2007 when there were 5,706 permits issued in the prior 12 months, it’s not bad.

St Charles County’s Loss is Franklin County’s gain…

As the table below, which shows the building permit activity by county, illustrates, St Charles County has seen nearly a 14% decline in building permits in the past 12-months from the prior period, while Franklin County has seen nearly a 42% increase.  Granted, 32.9% of all the building permits issued in the 7-county area were issued in St Charles County, but a year ago 38.3% of all the permits were issued in St Charles County.

New Home Building Permits – St Louis Area

New Home Building Permits - St Louis Area

 

 

St Louis Home Sales Trend Remains Flat While Prices Rise

St Louis home sales remain consistent but fairly flat with 27,636 homes sold during the past 12 months, just slightly more than the 27,525 homes sold in the prior 12 month period, for the 5-County core St Louis market.  As the table below shows, while home sales only increased by 0.40% during the period for the core St Louis market (city of St Louis and counties of St Louis, St Charles, Jefferson, and Franklin) the median price of homes sold during the period increased 5.46% from a median price of $184,900 to $195,00.  There is a currently a 2.55 month supply of homes for sale and the median time a home has been for sale in this area is 68 days.

St Louis 5- County Core Market – Home Sales and Prices

(click on table for live report)

St Louis 5- County Core Market - Home Sales and Prices

St Louis City and County market about the same…

As the table below shows, the housing market in the city and county of St Louis is performing pretty much the same as for the larger 5-county area.  There were 16,828 homes sold in the past 12-months in this area, which is just 16 home sales more than the prior 12-month period when there were 16,812 homes sold.  The median price of homes sold in the most recent 12 month period was $185,000, a 5.71% increase from the prior 12-month period when the median home price was $175,000.  There is a 2.46 month supply of homes for sale and the median time a home has been on the market for sale is 63 days.

St Louis City and County – Home Sales and Prices

(click on table for live report)

St Louis City and County - Home Sales and Prices

  

 

St Charles Makes Money Magazine’s 50 Best Places To Live In America List

Money Magazine just released itsThe Best Places To Live In Americalist and St Charles came in at number 32 on the list and was one of only two cities in Missouri to make the list.  The other was Lee’s Summit, in the Kansas City area, which came in at number 41 on the list.

In choosing the best cities to live in, Money Magazine looked at cities with populations of at least 50,000 people, then eliminated any place that had either a crime rate more than double the national crime risk rate, a median income of less than 85% of the state’s median household income, or a lack of ethnic diversity.  After that step, they were left with 583 cities that “qualified”.  From there, Money says they “then collected more than 135,000 different data points to narrow the list. We considered data on each place’s economic health, cost of living, diversity, public education, income, crime, ease of living, and amenities.”  Their reporters then even went so far as to interview residents and checked out the neighborhoods of the best scoring cities to narrow down the list to the top 50 in the country.

Mortgage Delinquency Rates Continue to Improve-St Louis Distressed Home Sales Falling

Mortgage delinquency rates, the precursor to foreclosures, continue to fall as the real estate market continues to perform well.  The 30-plus day mortgage delinquency rate for June 2018 fell to 4.3% of all outstanding mortgages down from 4.6% a year ago, according to a report just released by CoreLogic.  Frank Nothaft, the Chief Economist for CoreLogic, attributed the good news to “A solid labor market” going on to say that June’s national unemployment rate of 4% was “the lowest for June in 18 years“.

St Louis distressed home sales falling quickly…

With the economy and real estate market doing so well, distressed home sales (short-sales and foreclosures) continue to decline.  As our chart below shows, the 12-month trend line for distressed home sales in the 5-County core St Louis market (city of St Louis and the counties of St Louis, St Charles, Jefferson, and Franklin)  fell to 1,137 sales for the 12-month period ending August 2018.  This is a decline of 30% in distressed home sales in St Louis, from a year ago when there were 1,632 distressed home sales during the prior 12-month period.

  

St Louis Distressed Home Sales -12 Month Trend – Past 24 Months

(Click on chart for live chart)

St Louis Distressed Home Sales -12 Month Trend - Past 24 Months

 

 

 

Today’s Headlines Say St. Louis Is “Among worst cities for buying a house” – True or not?

Not that anyone that reads my articles on a regular basis needs any more proof of this, but there was yet another example today of just how “local” real estate is, and why it is so important to make sure you have good, accurate, up to date information before making real estate decisions.  Today, the St Louis Business Journal published an article titled “St Louis among worst cities for buying a home” in which they cited a report from WalletHub that put St Louis at number 55 of 63 large cities on their list of best cities to buy a home in.  The problem isn’t the ranking, as based upon the criteria used, it may very well be accurate, the problem is it really doesn’t paint a true picture of the real estate market in the St Louis area.

St Louis isn’t the “St Louis” most people are referring to…

The report was based upon data from the city of St Louis which I think most everyone knows has been on the decline population-wise for a long time now and has more challenges with the unemployment rate, median income, average credit scores as well as some of the other areas used in the report to rank the city.  However, when locals, as well as many outsiders, talk about “St Louis” they are really referring to the whole, St Louis City and County area, not just the city.

Given that the city of St Louis has a population of just 311,404 people, and that is less than a quarter (23.7%) of the overall St Louis City and County combined population of 1,314,404 people, the St Louis portion of our real estate market is a very small, not so significant part of the market.  Contrast this with Kansas City, Missouri where the city has 70% of the population of the county it is located in.  Therefore, when Kansas City is ranked based upon the city of Kansas City’s real estate market, it is a much truer representation of the overall market there.

 

 

 

Who Wins When Buyer Buys From Listing Agent?

One question that causes much debate among the real estate community and confusion among home buyers is “should you buy a home directly from the listing agent?”.  Many home buyers feel like they will get a better deal buying directly from the listing agent, thinking that it will save the seller some money in the form of commission and that the savings will benefit them, the buyer.  This premise is flawed though as it is extremely rare that this would result in any commission savings (for more info see an article I did on the topic a couple of years ago here) but instead just results in the listing agent making more commission on the sale.  Then, there is the question of representation which, since the listing agent represents the seller, buyers that buy through them are either not represented or, in the case of an agent that does dual agency (which I personally think is a really bad idea) is represented by the same person that represents the seller at the same time.  I’m not going to get into the dual agency issues, or representation issues today though, and instead and just going to address the financial side of the topic.

Being an “Acts 17:11” guy (go to the source) and a data nerd, I’m going to turn to our market data to address the question.  As you will see, how the buyers and sellers come out when the buyer buys directly from the listing agent varies depending on what factors we take into consideration.  So, first, let’s look at listings that hit the market and sell right away.  These seem to be the ones that buyers often think they will have a better chance of not losing out on the house if they go to the listing agent, or buy a “coming soon” listing through the listing agent directly before it actually hits the open market.  For all my analysis today, I’m going to focus on St Charles County since it is such a large and active market.

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Continue reading Who Wins When Buyer Buys From Listing Agent?

House Flipping In St Louis Drops Twenty-Three Percent In 2nd Quarter

House flipping, something that has become quite popular among investors over the past few years and has even spawned several reality TV shows, continues to decline in terms of the number of flips.  This is certainly not due to a lack of interest but instead a lack of opportunities.  Many flipping opportunities are the result of foreclosures and with the mortgage delinquency rates continuing to improve resulting in declining foreclosure rates, the end result is few opportunities for investors to flip homes.

In St Louis, during the 2nd quarter of 2018, there were 835 homes flipped in the St Louis metro area, a decline of 23.0% from the quarter before and a 4.7% decline from a year ago.  This is down 32.5% from the peak during the 3rd quarter of 2005 when there were 1,237 homes flipped in St Louis.

The table below shows the 2nd quarter house flipping data for St Louis, from ATTOM Data Services and includes the median size and age of the homes flipped, as well as median time to flip,  prices and profits.

  

St Louis House Flips – 2nd Quarter 2018

St Louis House Flips - 2nd Quarter 2018

Report Today Says St Louis Housing Inventory Fell 26 Percent In Past Year…Maybe not though…

This morning I noticed the St Louis Business Journal was reporting “In July, the local housing inventory fell to 2.6 months…That marked a 26 percent decrease since the same month last year“.  This report immediately caused me some concern as I didn’t think the inventory was down nearly that much.  Given that I personally spend a ton of time staying on top of local market data and our firm, MORE, REALTORS has even developed its own proprietary software to ensure that our agents and clients have the best and most accurate local housing market data, I would like to think I would know if the inventory had dropped that drastically.

Why data, and the source of it, is so important…

After looking at the reports we have been producing and then digging into the data to double check everything, I found that no, I had not missed anything, and the St Louis housing inventory had not dropped anywhere near 26% from a year ago.   Before I go further, I should mention, I am not bashing the St Louis Business Journal, I like that paper, in fact that is the only St Louis newspaper I have paid any attention to for years and all they are doing is “reporting” the news and information anyway, they are not creating the data.  Also, I’m not criticizing their source of data either, as I’m sure whoever provided the data felt it was painting a true picture as well.

However, the point I do want to make is to say that this is a perfect example of why, if you are a potential home buyer, seller or investor, you really do need to pay attention to the source of your information and market data.  After all, it is data such as this that will help guide you in the decisions you make.  For example, if you are looking for a home to buy in St Charles County and read the article I mentioned and saw there was a 26 percent decline in inventory, you may feel like you better hurry to find a house.  In fact, you may decide you have to lower your expectations of what you want in a home, as well as perhaps pay more than you are comfortable with price-wise, to ensure you don’t miss out.  However, what if you knew instead, as my data below illustrates, that the inventory of homes for sale in St Charles County is in fact just about the same now as it was this time last year?  Would this change your approach?  I think it may.

Remember, all real estate is local…

One of the challenges with housing market data is real estate really is a very “local” thing.  Prices, inventory, etc, can change dramatically, even for similar homes, from city to city, school district to school district and, in some cases, even block to block.  This is why at, MORE, REALTORS, we developed the software we did, and why we spend so much time training and coaching our agents on how to use these tools for the benefit of their clients.  We can produce, accurate and relevant data at any level, for almost any type of housing.

So, what is the story on the St Louis housing inventory?

Below, I have presented several tables and charts to illustrate what I’m talking about, but here is a quick recap of the change in inventory from a year ago:

  • St Louis MSA.   As the first two tables show, the inventory in early August of this year was equal to a 2.67 months supply of homes for sale in the St Louis metro area as a whole (9 counties in Missouri and 8 in Illinois) which is a decline of just 4 one hundreds of a percent (0.04) from the same time last year when there was a 2.71 month supply.
  • St Louis 5-County Core Market. This represents the bulk of the St Louis real estate market in Missouri and is composed of the city of St Louis and counties of St Louis, St Charles, Jefferson and Franklin.  As the tables show, earlier this month there was a 2.43 month supply and the same time a year ago it was just about the same at 2.41 months.
  • St Louis City and County – It’s unusual for the city not to be part of the surrounding county, so we also report St Louis City and county together.  For this market, it was 2.28 months when reported earlier this month and is just about the same again as a year ago when it was 2.30 months.
  • St Charles County – This County had the biggest decline inventory from a year ago dropping from a 2.08 month supply to a 1.96 month supply, a total decline of 5.7%.
  • Franklin & Lincoln Counties saw slight declines and Jefferson County has actually had an increase of 20% in inventory, climbing to 3.64 months from 3.03 months a year ago.

There you have it.  No matter how you look at it, there is nothing that shows a major decline in the inventory of homes for sale from a year ago but instead, for the most part, things look pretty consistent.

Early August 2017 – Months Supply Of Homes For Sale – St Louis Area Counties

Early August 2017 - Months Supply Of Homes For Sale - St Louis Area Counties

Early August 2018 – Months Supply Of Homes For Sale – St Louis Area Counties

(click on table for live, current table)Early August 2018 - Months Supply Of Homes For Sale - St Louis Area Counties

New Home Sales In Midwest Up This Year Over 14 Percent From Same Time Last Year

The sale of new homes in the Midwest region of the U.S. is on the rise according to a report just released by the Census Bureau.  In July, new homes in the Midwest sold at a seasonally adjusted annual rate of 78,000 homes, an increase of 9.9% from June and an 18.2% increase from July 2017 when the rates were 66,000 homes.  Year-to-date this year, though the end of July, there have been 50,000 actual new homes sold in the Midwest region, an increase of 14.2% from the same time last year when there had been 44,000 new homes sold year-to-date.

On a national level, new home sales are not performing as well as the Midwest region, but are still performing well.  In July, new homes were sold at a seasonally adjusted annual rate of 627,000 homes, a decrease of 1.7% from the month before and an increase of 12.8% from July 2017. Year-to-date, through the end of July, there have been 401,000 new homes sold nationwide, an increase of 7.2% from the same time last year when there were 374,000 new homes sold year-to-date.

  

 

Distressed Sale Opportunities For Investors Declined 30 Percent In Past 12-Months

As the interest in investing in real estate in St Louis continues to increase, whether to buy, fix and flip or to buy and hold for rental, the number of opportunities to do so continues to decline.  The primary source of “deals” for investors is typically “distressed” sales; property that has been foreclosed on and being resold, short sales or property in poor condition needing work.  However, as our chart for St Louis MSA below reveals, the number of distressed home sales in St Louis has been steadily declining over the past 5 years.

The chart shows both the number of distressed sales for each month (the pink line) as well as the 12-month trend (green line) and both are on the decline.  During the month of July 2018, there were 187 distressed home sales in St Louis, down 14% from 217 the month before and down 31% from last July when there were 272 distressed homes sold.  For the 12-month period ended July 31, 2018, there were 2,787 distressed home sales, down 30% from the prior 12-month period when there were 3,965 distressed homes sold in the St Louis MSA.

  

St Louis MSA Distressed Home Sales – Past 60 Months

(Click on Chart For Live, Interactive Chart)

 

HUD Files Housing Discrimination Complaint Against Facebook

The U.S. Department of Housing and Urban Development (HUD) just announced that they have filed a formal complaint against Facebook for violating the Federal Fair Housing Act by “allowing landlords and home sellers to use its advertising platform to engage in housing discrimination“.

Some of the ways HUD alleges that Facebook platform violates the Federal Fair Housing Act include:

  • display housing ads either only to men or women;
  • not show ads to Facebook users interested in an “assistance dog,” “mobility scooter,” “accessibility” or “deaf culture”;
  • not show ads to users whom Facebook categorizes as interested in “child care” or “parenting,” or show ads only to users with children above a specified age;
  • to display/not display ads to users whom Facebook categorizes as interested in a particular place of worship, religion or tenet, such as the “Christian Church,” “Sikhism,” “Hinduism,” or the “Bible.”
  • not show ads to users whom Facebook categorizes as interested in “Latin America,” “Canada,” “Southeast Asia,” “China,” “Honduras,” or “Somalia.”
  • draw a red line around zip codes and then not display ads to Facebook users who live in specific zip codes.

You can read the contents of the HUD complaint against Facebook here.

This is an example of why it is imperative that real estate agents, investors, landlords, and home sellers that choose to handle their own home sale know and understand the Federal Fair Housing Act including things that are prohibited under the Act.  It never ceases to amaze me how many FSBO’s (for sale by owners) feel they are exempt from all housing laws and regulations just because they are not a real estate agent.  I’m surprised as well by how many real estate agents really don’t fully understand it either and think things like what they do on Facebook is different than if done in a classified ad in a newspaper or just because a platform gives you the ability to do something (such as target just one sex) it makes it ok, which it obviously does not.

In any event, when it comes time to buy or sell real estate, I would encourage you to, first off, not try doing it on your own but use an agent, and then select an agent based upon he or she’s experience, qualifications and knowledge.  A good starting point is here – “How To Choose A Real Estate Agent“.

 

St Louis Real Estate Market Update VIDEO – August 2018

While St Louis home sales are flat this year the overall market conditions remain good. The low inventory of homes for sale continues to benefit St Louis sellers! Find out more, as well as get information on some of St Louis’s best resources for home buyers and sellers in our just-released market In our MORE, REALTORS, 5 Minute St Louis Real Estate Market Update video below, you can quickly and easily get the latest information on home prices, home sales, trends and more for the entire St Louis area!   update video.


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You can now subscribe to our ITUNES Podcast Channel to receive our updated market videos via podcast automatically each week! Just click here, then click on "Subscribe Free".) St Louis Real Estate Market Update Video - St Louis Home Prices

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Why Aren’t More Millennials Buying Homes?

I may have the answer to the $64 question, why aren’t more millennials buying homes? The real estate industry spends a fair amount of time discussing the millennial generation trying to determine where they want to live, urban or suburban, and whether they want to own a home or are happier being a renter.  I have found many answers are contained In the Census Bureau Report, “The Changing Economics and Demographics of Young Adulthood: 1975–2016“.

There are some fascinating facts in the report, many of which give a lot of insight into this generation as well as their housing needs and plans.  Below a few highlights:

  • Young people are delaying marriage.  In the 1970’s 8 in 10 people were married by the time they turned 30, today it won’t be until the age of 45 that 8 in 10 are married.
  • More young people today live in their parents’ home than in any other arrangement. In fact, 1 of every three 18 – 34-year-olds lived in their parents home in 2015.
  • Between 1975 and 2016 the share of young women that were homemakers dropped from 43% to 14% of all women aged 25-34.
  • Of the young people living in their parents home, 1 out of 4 doesn’t work nor go to school.

Find the complete report here.

St Louis Zip Codes Where Home Prices Have Increased The Most In Past 12 Months

Home prices in the St Louis metro area increased at what is a pretty “normal” rate (historically speaking) of about 3.5% in the past year.  However, as you hear me say often, all real estate is local, so the market varies significantly from neighborhood to neighborhood.  For example, on our St Louis Median Home Price Change by Zip list (part of which is shown below), of the 101 zip codes shown, 87 had an increase in home prices in the past 12-months from the prior 12-months, 1 remained even, and 13 saw a decline in home prices.  For the increases in home prices, they ranged from .06% to 115% and for the declines from 2.5% to 21.19%.

St Louis Median Home Price Change Year over Year by Zip Code

(click on list for current, complete list of all zips)

St Louis Median Home Price Change Year over Year by Zip Code