For the 12-month period ended October 31, 2023, there were 3,097 condominiums sold in the St Louis 5-county core market which, as the Condo 12-Month Sales and Price Trend Chart below (available exclusively from MORE, REALTORS®) shows, is the lowest total for 12-month sales since August 2014. The St Louis Condominium sales trend is faring slightly better than single-family homes sales are because, as I reported earlier this week, St Louis home sales have fallen to the lowest level since early 2013.
St Louis Condo prices increasing a slower pace….
As the chart at the bottom illustrates, the median price per foot for Condominiums sold in the St Louis area increased this year 8.1% from last year which, while it is a higher percentage increase than seen during the same period for homes, is a lower rate of price appreciation than the 11.0% seen in 2022 and 9.0% in 2021.
St Louis Condo 12-Month Sales Trend and Price Trend
For the 12-month period ended October 31, 2023, there were 22,555 homes sold in the St Louis 5-county core market which, as the STL Market Report below (available exclusively from MORE, REALTORS®) shows, is a 17.38% decline in home sales from the the prior 12-month period when there were 27,200 homes sold. The median price of homes sold during the most recent 12-month period was $275,000, an increase of 3.777% 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 since 1999. 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 levelsince April 2013.
St Louis home price trend falling as well….
The red line on our chart tracks the median price per square foot for St. Louis homes sold over each 12-month period ending in the month indicated. It’s a given that home prices ebb and flow annually, peaking typically in the early summer months before tapering off during the winter. This year, the peak median price per square foot hit $194 in July, marking a modest 2.6% climb from the peak of the previous year. To put this in perspective, the previous year’s peak was a more robust 9.9% above the peak price of 2022.
STL Market Report – St Louis 5-County Core Market
(click on report for live, complete report)
St Louis 5-County Core Market – 12-Month Home Sales & Price Trend – Since 1999
The St. Louis housing market is undergoing some noteworthy changes, according to the latest data from MORE, REALTORS®. As of today, the supply of homes for sale in St. Louis stands at 1.43 months, a slight uptick from the 1.38-month supply reported at the end of September and the highest level in over 3 years. Additionally, the median price has settled at $260,000, and nearly half (48%) of the active listings have reduced their asking price from their original figures.
A Closer Look at Pricing Trends
Two additional reports from MORE, REALTORS® offer a nuanced view of the market’s pricing dynamics:
October 2, 2023 Report: Homes sold during the 30-day period ending on October 2nd had a median price of $285,000 or $191 per square foot.
October 27, 2023 Report: Homes sold from October 3rd through October 27th had a median price of $270,000 or $185 per square foot.
These reports indicate a slight softening in home prices, which could be attributed to various factors, including seasonality.
Seasonal Impact on the Market
As we transition from fall into winter, it’s essential to acknowledge the seasonal effects on home sales and prices. Historically, the colder months tend to see a slowdown in market activity, which could explain the recent changes in pricing and supply.
The St. Louis real estate market is experiencing a fascinating divergence in trends between luxury and non-luxury homes. According to the latest data from MORE, REALTORS®, the market for luxury homes—those priced at $750,000 and above—is on the rise, reaching its highest level in eight months. In contrast, the market for non-luxury homes, priced below $750,000, has been on a steady decline for about two years. This article delves into these trends, referencing two illuminating charts from MORE, REALTORS®.
Luxury Home Sales on the Upswing
The first chart from MORE, REALTORS® illustrates the upward trajectory of luxury home sales in the St. Louis area. As the chart shows, for the 12-month period ended September 30, 2023, there were 1,351 luxury homes sold in the combined markets of the city and counties of St Louis and St Charles County, which is the highest 12-month trend since January of this year.
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..
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 levelsince 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%.
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?
First and foremost, I’ve pondered this question extensively, and I honestly can’t recall a time in this industry when the supply of homes for sale was not at least 4 to 6 months’ worth. Although there was a brief period in 2015 when the inventory of homes in St. Louis fell below 4 months, it quickly returned to nearly 5 months. From 2016 until early 2020, the inventory fluctuated between approximately 2 and 3 months, and then began a downward trend, hitting a record low of less than a 1-month supply in the latter part of 2021. While the supply has slightly increased since then, it still hovers around 1 month.
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?
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.
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.
A report released today by Redfin reveals that the median U.S. home sale price in March was $400,528 marking a 3.3% decline from March 2022 when the median home price was $414,196. However, the situation in St. Louis is quite different. According to the STL Market Chart (available exclusively from MORE, REALTORS®) below the median price of homes sold in St Louis in March was $260,000, which represents an increase of 4% from March 2022 when the median home price was $250,000.
The chart also depicts the 12-month home sales trend for St. Louis, indicated by the dark green line, which shows a decline since September 2021. During the 12-month period ending on September 30, 2021, there were 30,728 homes sold in the 5-County Core St. Louis market. However, this has fallen monthly, reaching 24,577 for the 12-month period ending last month.
There were 28,500 homes sold in the St Louis 5-county core market during the 12-month period ended February, 28, 2023 a decline of 16.80% from the prior 12-months when 34,256 homes were sold according to MORE REALTORS® exclusive STL Market Report below. As the report below shows, the median price of homes sold in St Louis increased 7.62% during the same period.
While the supply of St Louis homes for sale is still historically very low, it has increased significantly over the past two years rising from under a 1-month supply to the current 1.64 month supply of homes currently active on the market in St Louis.
Below is our St Louis Real Estate Market Report for February 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.
There have been a fair number of reports about the increase in distressed home sales in various markets around the country and on the national level. However, in St Louis, distressed home sales are on the rise, they are still at levels that are historically quite low.
Distressed home sales that involve some sort of distress or other condition that would typically result in the home not selling for a normal “retail” price like it would if it were a typical listing in market ready condition with normal marketing time allowed. The chart below shows distressed home sales in the St Lous 5-County core market over the past years and also shows the 12-month sales trend. For our purposes, we include probate sales, short-sales, foreclosures, and bank and government owned homes as distressed sales. As the chart illustrates, the 12-month sales trend has increased for 5 consecutive months but is still at a level that is significantly lower than it has been for the bulk of the 5-year period illustrated on the chart.
Last week, there were 405 new listings of homes for sale in the St Louis 5-county core market, according to the STL Real Estate Trends Report from MORE, REALTORS®. During the same week, there were 365 new sale contracts written on homes for sale resulting in a new listing to new contract ratio of 1.11. As the tables below illustrate, the only county that had more new sales last week than new listings was Franklin County with 16 new sales and 15 new listings.
Listing supply remains low…
As the table at the bottom shows, as of today, there is just a 1.22 month supply of listings on the market for the St Louis 5-County Core market. While the current months supply is about double what it was a little over a year ago, it is still very low, historically speaking.
For the 12-month period ended January 31, 2023, there were 24,993 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 17% decline in home sales from the the prior 12-month period when there were over 30,000 homes sold. The median price of homes sold during the most recent 12-month period was $266,500, an increase of 6.6% from the prior 12-month period.
St Louis home sales trend falling fast….
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 16-months. The 12-month home sales trend in St Louis is now at the lowest level (24,993 homes) since November 2015 when 12-month St Louis home sales were are 24,772.
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. However, the decline this year, from the peak in June at $189/foot to $172 in January (nearly a 9% decline) is a much larger decline than last year when were was just a 1.7% decline in price during the same period. In 2021 the price decline during the same period was just 1.3% .
A report just released by ATTOM data shows that St Louis home prices are rising at a rate significantly higher than the rate wages in St Louis are rising and St Louis rental rates are increasing at rates higher than home prices. As the chart below shows, during the past year, wages in the St Louis metro area increased 3.8% however, home prices in St Louis increased 7.9% and rental rates increased 11.2%.
The median price of homes sold in Franklin County increased from 2021 to 2022 at nearly double the rate the price of homes sold in St Louis County did during the same period. As the chart below shows, the median price of homes sold in Franklin County during 2021 was $206,000 and then increased 6.7% to $219,800 in 2022. During the same period, the median price of homes sold in St Louis County increased 3.4% from 246,500 to $255,000.
Kind of an attention-getting headline, huh? At least it’s not as bad as a lot of the gloom and doom headlines I’m reading today about the real estate market. Many folks out there are predicting a total meltdown of the housing market, and our economy as a whole for that matter. Don’t get me wrong, I’m not drinking the “there’s nothing to see here” Kool-Aid, I do believe we are in for some rough times ahead, I am just not convinced it’s going to be as bad here in St Louis as in many parts of the country.
So back to the falling St Louis home prices and sales…
As the infographic below shows, the median price on homes sold in St Louis dropped 12.7% from June to December of last year and, during the same 6-month period, St Louis home sales declined 40%. But, “I thought you said you weren’t gloom and doom?”. Granted, this data doesn’t sound good but remember, the residential real estate market is very seasonal. Prices and sales go up in the spring and down in the winter every year, during good markets and bad. So, since June is often the peak of the market in terms of sales and prices, and December or January the trough where prices and sales fall to the lowest levels, this is normal. The question is, whether the amount home prices sales declined in the past 6-months is pretty typical? As the infographic below illustrates both the decline in price and sales were the largest declines in the past 5-years. The decline in sales in 2018 was close to this past year and the decline in prices in 2019 was close to this past year, but 2022 saw larger declines in both.
It’s something to watch close but not time to panic yet…
While the seasonal decline now is greater than is typical, it certainly is not as bad as some markets are seeing. The big question is what is going to happen in the next couple of months? Typically January sees another decline in sales from December and a slight decline in price and February is about the same or sometimes starts to show an uptick in prices. So, depending upon how things turn out this month and next we’ll have a better idea of whether we’ll see the normal recovery from the winter season or if we’ll see the market continue to deteriorate.
Even though the number of new home building permits in the St Louis area has been on the decline, they’re been on the increase in the midwest region of which St Louis is a part. As the chart below illustrates, for the 12-month period ended last month, there are been 2,850 building permits issued for new privately-owned housing units in the midwest region of the U.S. an increase of 3.6% from he prior 12-month period when there were 2,746 permits issued. For just the month of November 2022, there were 197 permits, down nearly 8% from November 2021 when 214 permits were issued.
New home construction starts on the rise as well…
Depicted also on the chart below is the number of new homes where construction has actually begun, referred to as “starts”. The number of starts always tends to be lower than the number of permits issued as there are many issues that could arise that would cause a home not to be built even though a permit was issued for it. One of those issues could be the developer or builder’s sentiment about the market which, if trending unfavorably, may cause the developer to postpone adding to inventory. However, even though we saw builder sentiment decline every month this year, the number of new home starts in the midwest region for the most recent 12-month period increased 5% from the prior 12-month period. There were 2,657 new home starts in the 12-month period ended last month compared with 2,523 starts during the prior 12-month period. For just November 2022, there were 215 starts, down just one from November 2021 when there were 216 starts.
The National Association of REALTORS (NAR) just released its pending home sales report for October 2022 which revealed pending home sales in the U.S. were down 37% from October 2021. The Northeast market had the smallest decline in year-over-year pending home sales with a decline of 29.5% followed by the Midwest with a decline of 32.1%, the South with a decline of 38.2%. The west region of the U.S. saw the biggest decline in pending home sales with a decline of 46.2% from October 2021 to October 2022.
The St Louis market is performing better…
While the NAR does not publish pending home sales data for St Louis, MORE, REALTORS has its exclusive STL Real Estate Trends Report. This report shows new contracts accepted during a period so, since a pending home sale starts with a contract being accepted, this gives us a very similar caparison. As the table below shows, New Contracts in the St Louis 5-County Core Market for October 2022 were down 24% from October 2021. This is a significantly smaller decline in sales than reported at the national level (37%) or even for the Midwest (32.1%).
Is the St Louis real estate market going to crash? The national news is filled lately with reports of slowing housing markets throughout the country, increasing inventories, falling sales and prices. Some prognosticators are predicting some metro areas will see home prices fall by as much as 40 or 50 percent. Is the St Louis real estate market on a similar trajectory?? While I can’t predict the future, I can share data to help you see where the St Louis real estate market is currently as well as where the data shows it’s headed.
Below is our St Louis Real Estate Market Report for October 2022 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.
As the infographic below illustrates, the time active listings in St Louis have been on the market is much greater than the time it took homes that closed last month to sell. In addition, a much greater percentage of the current active listings have reduced their asking prices versus the sales that closed last month.
The most dramatic increase in days on the market was in St Charles County. Active listings in St Charles County have been on the market a median time of 38 days, almost 5 times as long as the sales that closed in September where the median time on the market was just 8 days. All 5 counties reported below saw the percentage of listings with a price reduction go up about the same, from twenty-something percent to forty-something percent.
Yesterday, Fannie Mae released their October housing forecast in which they forecast, among other things, where home sales and prices are headed. The report incudes a forecast for next year, which included:
Home prices in 2023 to decline 1.5% from 2022
Home sales to finish 2022 down nearly 18% from last year and drop another 22% in 2023
New home construction to end 2022 down 3.6% from last year and drop another 25% in 2023.
Mortgage Interest Rates will continue to rise the rest of these year, ending the year at 6.7% and then will ease back to 6.4% in 2023.
As the STL Real Estate Trends report below shows, as of last week, 43% of the active listings in the St Louis 5-County core market have a current asking price that is lower than the initial asking price. This is more than a 100% increase from the same week last year when only 20% of the listings had a reduced asking price.
Franklin County saw the biggest increase in price reductions on listings from last year with an increase from 14% to 47%. Franklin County also has the highest percentage of active listings with a reduced price and St Charles County, at 38%, the lowest.
Below is our St Louis Real Estate Market Report for September 2022 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. Worth noting and remembering is not all data is created equally nor is all of what you see reported accurate. Given the challenging and rapidly changing economic times we are in which are having an direct impact on the St Louis housing and real estate market, now, almost more than ever, you need to be sure the data you base your real estate decisions on is accurate and the agents you are trusting to get you through the process have the knowledge, information and accurate data they need to do so. At MORE, REALTORS® we have developed proprietary software which uses the database we have created from the REALTOR® MLS (MARIS) to produce what we believe is the most accurate and relevant data and reports for the St Louis residential real estate market. For example, currently, there are other sources reporting (and many, many real estate agents sharing the information without verifying) that the median price for homes sold in the City and County of St Louis during September was over 6% higher than our data shown below. Think what an impact that could have on you if you base your decision to buy or sell a home on pricing data that is over stating the value.
Oh, how do we know we’re right? We have proof, straight from the MLS, see the image below our infographic which is a screen shot straight from the MLS showing date for closed sales during the month of September in the city and county of St Louis. You’ll find that the median price from the MLS is $250,000, the same as our data computed, the number of sales is a little higher in the MLS (20 or just over 1%) because while about 99% of sales are sent out in “feeds” to broker websites etc (including Zillow and Realtor.com) there are a few listings that are not and the DOM (days on market, or days to sell) at 10 is very close to our 12 (this is due to us using a slightly different method to compute median for the data).
St Louis Real Estate Report for September 2022
(click on infographic for complete report including other counties)
A little over two weeks ago I wrote my most recent article addressing St Louis home prices titled “Will St Louis Home Prices Decline?” in which my short answer was “yes”, but kind of tongue in cheek and based upon the seasonality of home prices, but my longer answer was more vague. I mentioned that there certainly is a correction coming but pointed out that there are so many variables that will affect prices that it is hard to say to what extent this correction will be. While this is still true, a lot has happened in the short time period since that article that has caused me to become more bearish on the St Louis real estate market to the point where I’m confident St Louis home prices will decline.
What has changed in the last 16 days…
While it doesn’t directly impact the St Louis market, hurricane Ian has wreaked havoc on a lot of Florida and other areas and will no doubt impact the overall housing market and economy and likely in more of a negative way.
Interest rates have risen another 1/2% hitting and staying near 7%.
The Mortgage Bankers Association (MBA) just announced that mortgage applications dropped over 14% during the last week of September, the biggest one-week drop in 17 months and pushed their index down to the lowest point since 1997.
The percentage of active listings that have reduced the asking price at least once broke the 40% mark.
The 12-month home sales trend for St Louis for the period ending September 30, 2022 fell to the lowest point in over 2-years.
Active listings in St Louis have been for sale a median of 43 days over four times higher than the median time to sell during the past 2 years of 10 days.
Market data pointing to lower St Louis home prices…
The declining sales trend mentioned above. As chart 1 below shows, home sales during September in St Louis were down nearly 19% from last September.
The declining home price trend. Chart 1 also reveals the median price of homes sold during September 2022 was $267,500, only 2.8% from then September 2021 when the median sold price was $260,000 which was a 8.3% increase from September 2020 when the median price was $240,000.
Showings on active listings continues to decline. Chart 2 shows there are almost 10% fewer showings of active listings now then there were in the first week of January (the slowest time of the year). Last year at this time showing activity was over 30% higher than now and in 2020 it was abut 55% higher. Fewer showings mean fewer sales in coming.
The widening gap between home prices and rental rates. Chart 3 shows the home price index (blue line) rising above the rental rates (red line) at a fairly steep rate. Historically, such as the late 1980’s – 2000 shown on the left side of the chart, these two lines track closely with home prices slight below the rental rates line. The last time home prices started increasing more than rents was in the early 2000’s and this continue until the gap widened to the point that something had to give…either home prices had to fall or rents had to increase. In 2008, the bubble burst and home prices fell. While the present gap is not as large as it was during the height of the housing market bubble in 2006-07, we’re headed that way.
CPI and St Louis Home Price Index are hitting bubble levels. Chart 4 shows the rate of change (year over year) in CPI and the St Louis home price index. The rate of change in both has already exceeded what in the past (with the exception of 1979 when it went a little higher) has triggered home prices to fall.
Home price and interest rate increases are killing St Lous home affordability. Table 5 shows that currently, based upon median home prices and interest rates, one year of house payments (principal and interest only) take about 30% of the median household income for St Louis. In 2007, at the peak of the housing bubble, it was only 21% and in 2000, which many economists use as a “normal” or baseline year, it was 20%. So the real cost of a typical St Louis home to a typical St Louis family is about 50% higher now than normal.
There are many headlines out there talking about home sales down 20% from last year on a national level but here in St Louis we are not seeing as large of a decline in home sales. As the chart below shows, for the 12-month period ended August 31, 2022, there were 27,891 homes sold in the St Louis 5-county core market, which as the trend line (dark green) depicts is a declining trend we’ve seen for the past 11 months now. This 12-month trend is the lowest trend since September 2020 when there were 27,572 homes sold in the prior 12-months. However, year to date there are have been 17,480 homes sold in the St Louis area (lighter green line on the chart) which is only a little over 9% less than this time last year when there were 19,875 homes sold.
