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There were 788 homes and condominiums “flipped” during the second quarter of this year in the St Louis M.S.A., according to data just released by ATTOM Data Solutions. As the infographic below illustrates, these flips represent 8.7% of all sales during the quarter, a decrease of 23.9% from the prior quarter and a decline of over 22% from a year ago. St Louis Home Flipping Report Q2 2023(click on infographic to see complete report including prices and profits)
The St Louis Real Estate Market Report for August 2023 is below and combines data for the City and County of St Louis. ¬†This data is presented by MORE, REALTORS, recognized as a leading authority in St Louis real estate market intelligence. ¬†We invite you to dive deeper into our comprehensive demographic, which also sheds light on the St Charles, Jefferson and Franklin County markets as well by tapping on the image below. Navigating the St Louis property landscape requires precision… In the current property climate, likened to a complex chess match, the price for ill-informed decisions can be high. A limited inventory of homes coupled with a surge of enthusiastic buyers has intensified competition, sometimes leading to overvaluation of properties. While there’s no harm in paying a premium for a home, it’s essential that this decision is backed by concrete data and the right motivations. Smart decision-making hinges on reliable data and a knowledgeable real estate professional to interpret it. At MORE, REALTORS our pride lies in our team’s expertise to steer both buyers and sellers through the intricacies of the current market with confidence. Our commitment is to curate and disseminate prime market intelligence, empowering our agents and clientele to make enlightened choices. While no data set is infallible, striving for excellence ensures that our decisions are grounded. Isn’t this data accessible to all REALTORS¬Æ? It’s a common assumption that every agent, particularly those that are REALTORS possesses identical data. Taking St. Louis as a case in point, all REALTORS¬Æ can tap into the extensive MARIS MLS system. ¬†However, mere access doesn’t cut it. Think of it as the web: the real test lies in sifting out credible information. Many agents rely on generic data handed down to them. In contrast, our agents utilize advanced software to tailor-make reports for individual clients. They also meticulously vet the data for discrepancies, emphasizing our commitment to ensuring that you receive nothing but the most reliable insights, even when sourced from a reputable origin like ours.” There were 3,950 building permits issued for new single-family homes in the St Louis area during the 12-month period ended July 31, 2023. ¬†This represents a decrease of 13.38% from the prior 12-month period, during which 4,560 permits were issued, according to the latest data from the Home Builders Association of St. Louis & Eastern Missouri (St Louis HBA). ¬† All seven of the counties covered in the report saw a decline in building permits from the previous period. St Louis New Home Building Permits – July 2023(click on table below for page with live charts showing additional permit data)
According to a recent survey by the Pew Research Center, 57% of Americans say they would prefer living in a community where the houses are larger and farther apart even though schools, stores and restaurants are several miles away.  This is down from 60% when the same survey was done in 2021 and up from 53% from the 2019 Survey. Majority of Americans Prefer Big Houses Over Walkability
As I’ve previously discussed, the National Association of REALTORS¬Æ (NAR) is grappling with a myriad of challenges. These range from multiple class-action lawsuits to scrutiny from the Department of Justice (DOJ). This past week, the organization faced two more setbacks. First, a scandal erupted involving NAR’s President, Kenny Parcell. Reports suggest that Parcell was accused of sexually harassing women within the organization. While this news began circulating about a week ago, it gained significant momentum when the New York Times published an expos√© last Saturday. The report prompted industry-wide calls for Parcell’s resignation. Consequently, Kenny Parcell stepped down as President of NAR yesterday. President-elect Tracy Kasper immediately assumed the role of President. In another blow to NAR yesterday, the United States Court of Appeals for the Ninth Circuit overturned a lower court’s dismissal of a lawsuit. This lawsuit was filed by Top Agent Network, Inc., accusing NAR of violating the Sherman Antitrust Act through its “MLS Clear Cooperation Policy.” Indeed, it’s been a challenging week for NAR, and it’s only Tuesday.” Top Agent Network, Inc. v. National Association of REALTORS, et al Original Lawsuit(click below for entire document)
Last month, city of St Louis mayor, Tishaura Jones, signed into law a new ordinance which provides “access to legal representation for tenants facing eviction or equivalent proceedings”. Surprisingly, it does not appear that the tenant needs to show a final hardship or need for “full legal representation” to be provided at no cost as the bill defines a “covered individual” as “any residential tenant who occupies a dwelling located within the City under a claim of legal right, other than the legal property owner of the dwelling.” Another interesting thing in the ordinance is that it appears to include legal representation for not only in the case of an eviction but also in the case of a non-renewal of a lease as Section Four of the ordinance (General Provisions of Right To Counsel for Tenants In Covered Proceedings) states “A covered individual may access legal representation as provided in this ordinance as soon as a landlord provides notice to terminate or not renew a tenancy, or as soon thereafter as is practicable.” Then, according to reports, yesterday, St. Louis Aldermanic President Megan Green announced that legislation was being drafted to require landlords in the City of St Louis to provide contact information as part of the City’s occupancy permit process. Aldermanic President Green stated “It will help the city better keep track of who is owning certain properties so if there’s issues with properties there’s a local agent requirement, instead of trying to track down a random person registered to an LLC, which is often a challenge,” Landlords will also be required to report the rental amount they are charging according to Green. Green also announced that the Board of Aldermen plan to consider a “tenants bill of rights” as well. Ordinance 71694 – Providing Legal Representation to Tenants Facing Eviction(click on image below for entire ordinance)
As the chart below illustrates, mortgage interest rates on a 30-year fixed rate mortgage hit 7.125% yesterday, the highest rate since April 5, 2002 when the rates were at 7.13%. If you go back far enough in history, you’ll feel better about todays’ rates… There is probably very little comfort in this for current home buyers but while we are experiencing the highest mortgage rates in over two decades, if we go back a couple of more decades or so in history we’ll see the current rates aren’t so bad. As the bottom chart below illustrates, over the 52-year period depicted on the chart, about 55% of the time mortgage interest rates were higher than they are now. If you’re in your 20’s or 30’s you likely don’t care and still think the rates suck since they are about double what they have been since you have paid attention to them. If you’re a baby-boomer like me, it’s a walk down memory lane LOL. Mortgage Interest Rates Based Upon the MND Rate Index(click on chart for live, interactive chart)
30-Year Fixed Rate Mortgage Interest Rates 1971-Present(click on chart for live, interactive chart)
Below is the St Louis Real Estate Market Report for July 2023 for the City and County of St Louis combined from MORE, REALTORS®, one of the most trusted sources for St Louis real estate market data and information. You can access the full infographic, containing data for St Charles, Jefferson and Franklin Counties as well by clicking on the image below. The current St Louis real estate market leaves little room for errors… The real estate market today is like a tough game where making wrong decisions based on poor information can cost you. With few homes listed and many eager buyers, there’s a rush to outbid others, leading some people to pay more than a home’s true value. It’s okay to pay a bit extra if you’re doing it for the right reasons and based on solid facts. To make smart choices, you need accurate information and a great real estate agent who knows how to use it. I’m proud that our team at MORE, REALTORS® is comprised of such experts who can guide buyers and sellers to make rewarding decisions in this tricky market. We work hard to gather and share the best market information to help our agents and clients make informed decisions. While no information is 100% perfect, getting as close to that as possible can help you make smarter choices. Don’t all REALTORS® have this data? You might think all agents have the same information, especially those under the REALTORS® banner. In St. Louis, for example, every REALTOR® can access the same vast data through the MARIS MLS system. But simply having access isn’t enough. It’s like the internet: the challenge is finding trustworthy information. A lot of agents use general data given to them by others. Our agents, however, use special software to customize reports for their clients. They also double-check the information to spot any errors. This shows how serious they are about making sure you get only the best, even when the data comes from a trusted source like ours. Continue reading “St Louis Real Estate Market Report for July 2023 with accurate data you can trust“ As the chart below illustrates, since returning to 7% around the third week in May, the interest rate has pretty well stayed at the 7% level for a 30-year fixed rate mortgage with the rates for a 15-year fixed rate mortgage about 1/2% better. Historically-speaking, it’s not that bad…. This won’t necessarily make you feel better if you are a home buyer today but, if we look at the bigger picture (like the bottom chart that goes back to 1971) we’ll see that our current mortgage interest rates are not as bad as they seem, historically speaking. . In fact, over the 52-year period depicted on the chart, about 60% of the time mortgage interest rates were higher than they are now. If you’re in your 20’s or 30’s you likely don’t care and still think the rates suck since they are about double what they have been since you have paid attention to them. If you’re a baby-boomer like me, it’s a walk down memory lane LOL. Mortgage Interest Rates Based Upon the MND Rate Index(click on chart for live, interactive chart)
30-Year Fixed Rate Mortgage Interest Rates 1971-Present(click on chart for live, interactive chart)
According to a study released earlier this year by WalletHub, Missouri property tax rates are the 29th lowest in the U.S. To determine the tax rates for this list, WalletHub took the median property tax payment for each state and divided it by the median property value to determine the effective tax rate. For Missouri, the median home price was $171,800 and median property tax was $1,676 resulting in an effective tax rate of 0.98%. Hawaii was the state with the lowest tax rate coming in at a scant 0.29% and New Jersey the highest at 2.47%. WalletHub also compared “Blue States” with “Red States” and, as the infographic at the bottom shows, found that Red States impose lower real estate property taxes than Blue States. Real Estate Property Tax Ranking By State(click on map for interactive map showing ranking for each state)
Blue States vs Red States – Property Taxes
There were 4,017 building permits issued for new single-family homes in the St Louis area during the 12-month period ended June 30, 2023. This represents a decrease of 11.05% from the prior 12-month period, during which 4,516 permits were issued, according to the latest data from the Home Builders Association of St. Louis & Eastern Missouri (St Louis HBA). Six of the seven counties covered in the report saw a decline in building permits from the previous period, with the City of St Louis and Lincoln County experiencing double-digit declines. St Louis New Home Building Permits – June 2023(click on table below for page with live charts showing additional permit data)
According to a newly released report by Lending Tree, St Louis is the third-best metro area in the U.S. for homeownership. The report ranks homeownership in metro areas based upon the Median ratio of housing costs to household income for owner-occupied homes. Best Metro Areas In The U.S. For Homeownership(click on infographic below for the complete list with details)
In Ridgefield, Connecticut you only have a 1 in 510 chance of being a victim of crime, according to recent FBI data. This makes Ridgefield, CT the safest city in the U.S.! This is based upon the crime rate for crimes of arson, burglary, larceny-theft, motor vehicle theft, murder, rape, armed robbery, and aggravated assault for cities with a population of at least 25,000 people. As the map below shows, the St Louis metro area has two cities that made the list, Ballwin, Missouri (#41) and Edwardsville, Illinois (#33). See all homes for sale, and recently sold homes in Ballwin here. See all homes for sale, and recently sold homes in Edwardsville here. Safest Cities In The U.S. (click the map to see entire map for the U.S.)
Below is the St Louis Real Estate Market Report for June 2023 for the City and County of St Louis combined from St Louis Real Estate Search (the Official site). You can access the full infographic, containing data for St Charles, Jefferson and Franklin Counties as well by clicking on the image below. In the relentless tug-of-war that characterizes today’s real estate market, it’s imperative not to base your choices on misguided data! The present property market leaves little room for errors, thanks to a deficit of listings and aggressive buyer interest. A combination of these factors has sparked not just bidding contests, but “conditions wars”, making the process exceedingly tough for many. To outshine the competition, buyers often eliminate contingencies from their bids and stretch their financial limits. Frequently, they’re ready to pay a premium beyond the property’s actual worth. As I elaborated in an earlier article, “Are Today’s Homebuyers Exorbitantly Overpaying and Setting Themselves Up for Regret?“, this strategy can be valid, as long as it’s backed by well-informed reasoning. In order to make such informed decisions, one needs reliable data and a seasoned, professional real estate agent capable of dissecting that data and tailoring it to your specific circumstances. This is what makes me incredibly proud of our team at MORE, REALTORS®. Our representatives are experienced professionals adept at steering both buyers and sellers towards a rewarding outcome amidst the complex dynamics of the current market. To assist our representatives and clientele, I devote substantial time to accumulating, examining, and disseminating market intelligence and data. My goal is to offer the most exact data possible, enabling shrewd, educated decision-making. Although no data set can claim absolute precision, inching as close to perfection as we can substantially boosts the probability of making prudent decisions. Doesn’t every agent have the same data at their disposal? It’s a reasonable assumption that all agents, particularly those affiliated with REALTORS®, can access the same information. In our region, every REALTOR® can indeed tap into the broadest and most detailed reservoir of data for the St. Louis residential real estate market — MARIS, the REALTOR® Multiple Listing System (MLS). However, merely gaining entry to this database is just the initial step. It’s similar to the internet: although nearly any data you desire is available online, the real test is in knowing where to look and identifying the most credible sources. This same notion applies to the property market data present in the MLS. While most agents aren’t data enthusiasts and usually rely on consolidated data shared by others, our agents, to some degree, follow a similar pattern. Yet, they stand out due to their proficiency in setting parameters and producing bespoke reports for their clients using our exclusive software. Additionally, they don’t merely accept the data we deliver — they scrutinize it, cross-check it, and pinpoint any discrepancies they come across. This degree of dedication, though humbling, reflects their commitment to precision, even when dealing with data from a dependable source like our firm.. Continue reading “St Louis Real Estate Market Report for June 2023 with accurate data you can trust“ So far this year, up until June 30, there have been 1,973 properties with foreclosure filings in the St. Louis MSA, according to the U.S. Foreclosure Market Report by ATTOM Data. This marks a 5% increase in St. Louis foreclosures compared to the same period last year, a surge of 119% from 2021, and a 5% uptick from 2020. Now, let’s turn our attention to the counties in Illinois with the most significant increases in foreclosures: Macoupin and Bond… As depicted in the table below, Macoupin County in Illinois experienced a 63% rise in foreclosure activity this year compared to last, and Bond County saw a similar upward trend with an increase of 60%. On the other hand, let’s check out the Missouri counties of Jefferson and Warren, where we’ve seen the largest decreases in foreclosures… The table below reveals that both Jefferson and Warren Counties in Missouri enjoyed a 50% reduction in foreclosure activity this year compared to the previous year.” [xyz-ips snippet=”Foreclosures-For-Sale-and-Homes-For-Sale”] St Louis Foreclosures – Jan-June 2023
Every month Fannie Mae surveys consumers to gauge their sentiment toward whether its a good time to buy or sell a home and publishes the result in their Home Purchase Sentiment Index® (HPSI). In the most recent HPSI report, 78% of the people surveyed said they felt now was a bad time to buy a home, this is a decline from 80% in May. Conversely, 22% of consumers think now is a good time to buy a home up from 19% the month before. Interestingly enough, everyone had an opinion as the percentage of those that did not dropped to 0%, the first time it’s hit zero in the history of the survey. Still a good time to sell.. Now is a good time to sell according to 64% of the consumers surveyed, which is down from 65% the month before and 36% think it’s a bad time to sell, up from 34% the month before. [xyz-ips snippet=”Homes-For-Sale”] Fannie Mae Home Purchase Sentiment Index Chart(click on chart for live, interactive chart) Is Now A Good Time To Sell?(click on chart for the complete report)
[xyz-ips snippet=”Homes-For-Sale”] For the 12-month period ended June 20, 2023, there were 23,074 homes sold in the St Louis 5-county core market which, as the STL Market Report below (available exclusively from MORE, REALTORS®) shows, is nearly a 20% decline in home sales from the the prior 12-month period when there were nearly 29,000 homes sold. The median price of homes sold during the most recent 12-month period was $270,000, an increase of 5.47% from the prior 12-month period. St Louis home sales trend continues to fall…. Below the market report is a STL Market Chart showing (also available exclusively from MORE, REALTORS®) the 12-month home sales and home price trend for the St Louis 5-County core market for the past 10 years. The green line on the chart depicts the 12-month sales trend for each month for the past 10-years revealing a decline in the St Louis home sales trend for the past 12-months. The 12-month home sales trend in St Louis is now at the lowest level since February 2015. St Louis home price trend falling as well…. The red line on the chart depicts the median price per square foot St Louis homes sold at for the 12-month period ending in the month shown. Home prices are seasonal and fluctuate every year, through good markets and bad markets, peaking in early summer and hitting a low in during winter. St Louis home prices peaked in June at $192 per square foot, an increase of just 1.6% from June of last year. In comparison, the price increase from June 2022 to June 2023 was 11.2%. Continue reading “St Louis 12-Month Home Sales Trend Drops to Lowest Level in over 8 Years“ There were 3,820 building permits issued for new single-family homes in the St Louis area during the 12-month period ended May 31, 2023. This represents a decrease of 17.28% from the prior 12-month period, during which 4,618 permits were issued, according to the latest data from the Home Builders Association of St. Louis & Eastern Missouri (St Louis HBA). All seven counties covered in the report saw a decline in building permits from the previous period, with all but one of them experiencing double-digit declines. St Louis New Home Building Permits – May 2023(click on table below for page with live charts showing additional permit data)
Below is the St Louis Real Estate Market Report for May 2023 for the City and County of St Louis combined from St Louis Real Estate Search (the Official site). You can access the full infographic, containing data for St Charles, Jefferson and Franklin Counties as well by clicking on the image below. In this competitive market don’t make decisions based upon bad data! Today’s real estate market is unforgiving for homebuyers, driven by a scarcity of inventory and robust buyer demand. This, coupled with not just bidding wars but “terms wars”, has made it challenging for many. In an effort to stand out, homebuyers are waiving contingencies from their offers and pushing their budgets to the limit. Quite often, these buyers are willing to pay more than the actual worth of the property. As I previously addressed in my article, “Are Homebuyers Today Grossly Overpaying for Homes and Making Decisions They’ll Regret?“, this approach is acceptable, provided it’s a well-informed decision. To make such decisions, you need accurate data and an experienced, professional agent who can interpret that data and apply it to your unique situation. This is why I take immense pride in our team at MORE, REALTORS®. Our agents are skilled professionals who can guide both buyers and sellers through the intricacies of the current market to a successful outcome. To support our agents and clients, I invest considerable time in gathering, scrutinizing, and reporting on market information and data. I aim to provide the most precise data possible to empower smart, informed decision-making. While it’s true that no data can be 100% accurate in all respects, getting as close to that ideal as possible improves the odds of making sound decisions. Don’t all agents have the same data? It’s logical to think that all agents, especially those who are REALTORS®, have access to the same data. Indeed, in our area, all REALTORS® can access the most extensive and comprehensive source of information for the St Louis residential real estate market — MARIS, the REALTOR® Multiple Listing System (MLS). Yet, simply having access to this wealth of information is only the first step. It’s akin to the internet: while you can find nearly any information you seek online, the real challenge lies in knowing where to find it and determining the most accurate sources. The same principle applies to real estate market data available in the MLS. While most agents aren’t data nerds and often depend on aggregated data provided by others, our agents, to some extent, do the same. However, a notable difference lies in their ability to define criteria and create their own reports for their clients using our proprietary software. Furthermore, they don’t simply accept the data we provide — they scrutinize it, cross-verify it, and highlight any errors they discover. This level of commitment, while humbling, is a testament to their dedication to accuracy, even when the data comes from a trusted source like our company. Copy and Paste Culture Among Many Agents... Contrary to the scrutiny that our agents apply to our data, many agents merely copy and paste infographics or reports they receive, without cross-checking the information. Take, for example, the infographic below showing the median sale price of homes in May 2023 for the city and county of St Louis combined as $255,000. Yet, numerous agents are sharing a report that states the median sale price for that market in May was $285,000. That’s nearly 12% higher than the actual figure, a discrepancy I deem significant. If you’re a buyer basing your offer, even partly, on market data, wouldn’t it be better to know the median price is actually $255,000 and not $285,000? Your next question might be, ‘How do you know your data is accurate?’ I’ve discussed this in detail in a previous article, which remains applicable today.” Continue reading “St Louis Real Estate Market Report for May 2023 with accurate data you can trust“ As of April 1, 2023, the Federal Emergency Management Agency (FEMA) has put into action the National Flood Insurance Program’s (NFIP) Risk Rating 2.0, a newly devised pricing methodology. According to FEMA, this contemporary approach to flood risk assessment uses state-of-the-art technology and conforms to industry’s highest standards. The aim of this new model is to ensure that FEMA provides flood insurance rates that are not only actuarially justified, but also more equitable and comprehensible, and most importantly, they accurately represent the flood risk associated with a specific property. There has been a fair amount of negative reports about the change in flood insurance pricing with 77% of the people with flood insurance seeing an increase in premiums as a result. For Missouri, 29.3% of homeowners with flood insurance will see a decrease in their flood insurance premium as a result with about 40% of these decreases being $50 per month or more. On the flip side, 62.4% will see an increase up to $10 per month, 6.1% with an increase from $11 to $20 per month and just 2.2% of the homeowners will see their flood insurance premiums increase by more than $20 per month. Resources for more information on FEMA’s Risk Rating 2.0 as well as flood insurance: Last month, there were 460 properties with foreclosure filings in the St Louis MSA, according to ATTOM Data’s U.S. Foreclosure Market Report. This represents an increase of 36% in St Louis foreclosures from April 2023 to May 2023 and a 28% increase from a year ago. Counties of Macoupin, St Charles and St Louis see biggest increases… As the table below shows, Macoupin County in Illinois saw an increase of 113% in foreclosure activity in May from the month before, St Charles County a 71% increase and St Louis County a 67% Increase. [xyz-ips snippet=”Foreclosures-For-Sale-and-Homes-For-Sale”] St Louis Foreclosures – May 2023
There were 3,882 building permits issued for new single-family homes in the St Louis area during the 12-month period ended April 30, 2023. This represents a decrease of 16.34% from the prior 12-month period, during which 4,640 permits were issued, according to the latest data from the Home Builders Association of St. Louis & Eastern Missouri (St Louis HBA). All seven counties covered in the report saw a decline in building permits from the previous period, with all but one of them experiencing double-digit declines. Also worth noting is this month marked the end to Franklin County’s streak of increased building permits over the prior period which lasted 20 months. St Louis New Home Building Permits – April 2023(click on table below for page with live charts showing additional permit data)
I’ve been in the real estate business since I was 17, which means it has been 45 years of experiencing various market conditions, including recessions, inflation, 18% mortgage rates, the burst of the housing bubble, and a myriad of other good and bad things. However, I can confidently say that I have never witnessed a real estate market quite like the one we have been experiencing in the past couple of years. So, what makes the current real estate market so unique? Months of Inventory – St Louis 5-County Core – 2013 – 2023
This situation showcases the basic law of economics—supply and demand. The supply of homes for sale in St. Louis is exceptionally low, and even though the number of home buyers in the market has seemingly declined significantly over the past few years, there still isn’t enough supply to meet the demand of the remaining buyers. Consequently, in accordance with the law of supply and demand, prices tend to rise when supply is insufficient to meet demand. While it’s easy to increase widget production to meet demand, it’s not as simple to suddenly add thousands of homes to the market in the St. Louis real estate market. Factors such as a lack of available land for development in high-demand areas, lengthy approval processes for new developments, labor shortages in the trades, difficulty in controlling construction costs, and the significant time required to bring a substantial number of homes to the market contribute to this complexity. As a developer, I can attest that the development process is lengthy enough for the market dynamics to change entirely before the first home hits the market. So, where did all the houses go in St Louis? Why aren’t there more homes for sale? This might not come as a surprise, given that St. Louis home sales experienced a nearly 20% decline in the past 12 months compared to the previous year, coupled with 30-year fixed-rate loan interest rates approaching 7%. However, mortgage loan originations in St. Louis during the first quarter of this year have reached their lowest level since ATTOM Data began tracking them in the first quarter of 2000. As depicted in the chart below, both home purchase mortgages and total mortgage originations (including purchases and refinances) hit record lows in the first quarter of this year. During the first quarter, the St. Louis MSA recorded 4,733 mortgage originations, marking a 45% decrease from the previous quarter’s 8,666 originations, and a 54% decrease compared to the same quarter in the previous year when 10,410 mortgages were originated for home purchases St Louis MSA Mortgage Originations Q1 2000 – Q1 2023 (Chart)
Today, the U.S. Court of Appeals for the Seventh Circuit denied a motion by the National Association of REALTORS® (NAR) and other defendants in the Moehrl v. The National Association of Realtors lawsuit. The motion sought to appeal the decision certifying this case as a class action lawsuit. As a result of this denial, the lawsuit will be allowed to proceed. Click here or on the image below to see the full ruling.
As the infographic below illustrates (which is available exclusively from MORE, REALTORS®) the median price of a home in St Louis (the 5-county core market) has increased 112% since 2000, from $124,900 in 2000 to $265,000 in 2022. During the same time period, the median lease rate, or rental rate, for a St Louis home has increased by just 68%, moving from $955 in 2000 to $1,600 in 2022. Leasing a home is obviously a better deal, right? If we set aside the benefits (and responsibilities) of homeownership and the long-term investment aspects, simply looking at the monthly cost might lead us to the conclusion that renting a home in St. Louis could likely save us money compared to buying one. After all, if we just consider the fact that during the aforementioned 22-year period, the cost of buying a St. Louis home increased by nearly 65% more than the cost of leasing one, we would certainly lean towards that conclusion. However, if we account for interest rates, which impact the monthly cost of owning a home (assuming financing is involved), we find that the gap significantly narrows. This is because even though interest rates are higher now than they were just a year or two ago – in fact, roughly double – they are still lower than they were in 2000. Factoring in interest rates, the gap between buying and leasing narrows significantly. In 2000, interest rates for a 30-year fixed rate mortgage varied but averaged roughly 7.5%. In contrast, they were around 6% in 2022. As the infographic shows, when we take these rates into account to assess the monthly cost of owning a home, we observe that even though home prices have risen by 112% since 2000, the house payment on a median-priced home has only risen by 82%. While the increase in house payments at 82% is still greater than the 68% increase in leasing, the gap is much smaller. Once other benefits of homeownership are factored in, it becomes easier for many people to justify the additional cost of ownership. To clarify, I am not claiming that homeownership is for everyone or that leasing is inherently inferior. In fact, I’ve been one of those people who have consistently said that homeownership isn’t for everyone. For many individuals, based on factors like their likelihood of relocating, job and financial stability, money management skills, and others, leasing can be a better alternative. I am simply trying to highlight that the cost gap between the two options may not be as wide as it initially appears. Below is our St Louis Real Estate Market Report for April 2023 for the City and County of St Louis combined. You can access the full infographic, containing data for St Charles, Jefferson and Franklin Counties as well by clicking on the image below. St Louis Real Estate Report for April 2023 There were 3,920 building permits issued for new single-family homes in the St Louis area during the 12-month period ended March 31, 2023. This represents a decrease of 16.58% from the prior 12-month period, during which 4,699 permits were issued, according to the latest data from the Home Builders Association of St. Louis & Eastern Missouri (St Louis HBA). Six of the seven counties covered in the report saw a decline in building permits from the previous period, with five of them experiencing double-digit declines. In contrast, Franklin County saw an increase of over 4%, marking the 20th consecutive month of increases. St Louis New Home Building Permits – March 2023(click on table below for page with live charts showing additional permit data)
First and foremost, let me emphasize that home selling methods and practices are not a “one size fits all” approach. There are certainly situations where a different or unique strategy is required, including, in extreme cases, one that may not be in the seller’s best financial interest but favors a higher priority for the seller. For instance, I once handled a home sale for a woman with a stalker ex-husband who wanted her home sold discreetly – no sign, no ads, no MLS, etc. In her case, privacy and conducting the sale “under the radar” for her personal safety were more important than money. This article addresses the broader market and my opinion will apply to most sellers looking to sell their homes. Now, let’s discuss an “office exclusive” listing.
Understanding this concept is a great starting point and highlights one of the reasons I’ve been writing articles about St. Louis real estate, St. Louis REALTORS®, and the St. Louis real estate industry. I believe that, in general, consumers lack sufficient knowledge about these matters to make the best choices for themselves when selecting agents to work with. As a result, I aim to share the insights I’ve gained from over 40 years in the industry. For example, most non-agent readers may not know what an “office exclusive” listing entails or whether it’s advantageous or disadvantageous for them as sellers. So, what is an office exclusive listing? In short, it’s a listing that the agent will “keep secret” to a large extent, only informing agents within their real estate brokerage and withholding your listing from the REALTOR® Multiple Listing System (MLS). Consequently, your listing will not be distributed to the thousands of websites that obtain listing information from the MLS (Zillow, Realtor.com and StLouisRealEstateSearch.com?agent_id=02107 to name a few). Wait, my listing won’t be in the MLS?? What strange and confusing times we live in! Some seemingly credible predictions made by qualified experts suggest that our banking system could collapse, our currency may become worthless, and our country may face a significant downturn. Meanwhile, others claim that there is no cause for alarm. Here in St. Louis, the real estate market continues to thrive as if everything is great in our economy, despite the fact that interest rates have doubled in the past year. I have been in this business for 43 years, and although I have seen many ups and downs in the market, I have never seen anything quite like this before. It appears that there is a stark dichotomy between the economy and the St. Louis real estate market at present, as if they are two entirely separate entities. Could this be the result of the low inventory and high demand for housing, leading homeowners to throw caution to the wind? Or is it possible that the St. Louis economy is stronger than the national economy? Whatever the reason may be, despite talk at the national level of a looming housing market crash, the St. Louis real estate market continues to thrive. Is the St Louis real estate market going to crash? Now, onto the question of whether the St. Louis real estate market is going to crash. This is a fair question, given the current issues outlined above. However, so far, there are no clear signs of a crash. That’s not to say that there won’t be any changes to the market, as I believe we’ll see some, but nothing that indicates a crash is imminent at this point. Almost a year ago, I wrote an article in which I stated that “I don’t think St. Louis home prices will come crashing down, in fact, I don’t even think they are going to decline necessarily.” This prediction has proven to be accurate. However, I also said in that same article that “I think the premiums buyers have paid over and above the value of the home they were buying are going to quickly come to an end,” and this has proven to be inaccurate. Despite my prediction, there are still bidding wars happening between buyers on new listings. The STL Market Chart table below shows that last month, the median price of homes sold was equal to 100% of the current list price at the time of sale. Given that the median is indicative of the midpoint of the frequency of values, if the midpoint is 100%, then it appears that plenty of homes are selling in excess of the list price. The data for the St. Louis real estate market shows that there is a strong buyer demand. In addition, the market is facing the persistent issue of low inventory. These factors have contributed to the resilience of the St. Louis housing market, making it unlikely to succumb to a crash at this point. However, if there is increased economic uncertainty, inflation, and rising interest rates, we may reach a tipping point and see St. Louis home prices decrease. Despite this possibility, it is unlikely to happen anytime soon based on current data. Continue reading “When will the St Louis real estate market crash?“ |
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