Thanks to a strong economy and low-interest rates, the actual cost of a home today in St Louis is lower than it was a year ago, in spite of the fact that the median price of homes sold in St Louis has increased by 5.64% in the past year. Â Most people buying a typical home in St Louis finance nearly all of the purchase price, therefore, the cost of financing plays a significant role in the true cost of a home. Â Buyers decide what they can afford (as do lenders) based upon the house payment, not the price of the home.
The cost of a home today in St Louis versus a year ago…
As our STL Market Chart below shows, the median price of a home sold in the St Louis 5-County core market in October of this year was $200,000, 5.3% higher than last October when the median price of homes sold was $189,900. Â However, as our mortgage interest rate chart below shows, the rate for a 30-year fixed-rate mortgage is currently 3.78%, over a full percentage point less than October 2018 when the rate was 4.83%.
If we do a little math and use our mortgage payment calculator, we find that if someone bought a median-priced home in St Louis in October of 2018 at $189,900 and financed 100% of the purchase at the current rate at the time (4.83%), their payment would have been $1,027 per month.  If a person were to buy a median-priced home in St Louis today at $200,000 and finance 100% of the purchase at the current rate of 3.78%, their payment would be $958.  So, even though the price of the home increased over 5%, the payment on the home (at current prices) actually dropped by 7.2% showing just how much impact interest rates have on the cost of a home.
What are buyers waiting for?
We are entering the “slow season” for real estate, winter, a time when, year after year, home prices typically decrease until hitting a low around January and then start to increase as the weather warms. Â Therefore, we are in the period when home prices will be the lowest they will be for the year, interest rates are near the lowest they have been, so, if I were considering buying a home, I would jump into action as I just don’t see how it’s going to get better than this anytime soon.
St Louis 5-County Core Market – Home Prices And Sales – Past 13 Months
(click on chart for live, interactive chart)
Mortgage Interest Rates – 2010-Present – 30-Year Fixed Rate
(click on chart for live, interactive chart)
