By Dennis Norman, on July 14th, 2023 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“
By Dennis Norman, on June 2nd, 2023 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?
Continue reading “Are Homebuyers Today Grossly Overpaying for Homes and Making Decisions They’ll Regret?“
By Dennis Norman, on May 24th, 2023 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.
Continue reading “St Louis Home Prices Have Increased by 112 Percent Since 2000; Rental Rates Rise by 68 Percent“
By Dennis Norman, on May 12th, 2023 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
(click on infographic for complete report including other counties)
By Dennis Norman, on April 27th, 2023 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?“
By Dennis Norman, on April 19th, 2023 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.
St Louis 5-County Core Market Home Prices and Sales Trend
Click on the chart for a live, interactive chart.
By Dennis Norman, on March 17th, 2023 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.
St Louis 5-County Core STL Market Report
(for the 12-month period ended February 28, 2023)
By Dennis Norman, on March 13th, 2023 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.
St Louis Real Estate Report for February 2023
(click on infographic for complete report including other counties)
By Dennis Norman, on February 15th, 2023 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.
Continue reading “New Listings Continue To Outpace New Contracts In Four out of Five Counties In St Louis Area“
By Dennis Norman, on January 19th, 2023 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%.
St Louis MSA – Housing Affordability
Data source: ATTOM Data – Copyright 2023 – all rights reserved, Guerrilla Brokers LLC
By Dennis Norman, on January 13th, 2023 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.
[xyz-ips snippet=”Franklin-County-For-Sale-and-Open-Houses”][xyz-ips snippet=”St-Lous-County-Homes-For-Sale”]
Franklin County vs St Louis County Home Prices – 2021-2022
(click on chart for live, interactive chart)
By Dennis Norman, on January 6th, 2023 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.
Continue reading “St Louis Home Prices Fall Over 12% And Sales Fall 40% In 6-Month Period“
By Dennis Norman, on November 23rd, 2022 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.
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[xyz-ips snippet=”Seller-Resources—Listing-Targeted”]
By Dennis Norman, on November 11th, 2022 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.
St Louis Real Estate Report for October 2022
(click on infographic for complete report including other counties)
By Dennis Norman, on October 21st, 2022 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.
Continue reading “Time On Market and Percentage of St Louis Listings With Reduced Prices Continues To Increase“
By Dennis Norman, on October 13th, 2022 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.
See Fannie Maes Complete Housing Forecast HERE
By Dennis Norman, on October 12th, 2022 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.
STL Real Estate Trends Report – Price Reductions
(click on report for most recent report)
By Dennis Norman, on October 11th, 2022 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) Continue reading “St Louis Real Estate Market Report For September 2022“
By Dennis Norman, on October 8th, 2022 Click on the image below to see the Infographic
By Dennis Norman, on October 6th, 2022 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.
Continue reading “Why St Louis Home Prices Are Going To Decline“
By Dennis Norman, on September 27th, 2022 Today, the interest rate for a 30-year fixed-rate mortgage hit 7.08% marking the first time in over 20-years the rate has gone above 7%. Historically speaking, as the 2nd chart shows, this is not that high of an interest rate and, in fact, lower than the median rate over the past 50 years, however, it’s a very high rate based upon the the recent past.
The affect of interest rates on home prices…
Interest rates just began increasing in the past few months, rising above the 4% level in February, so it will take time to see the impact of this on home prices. We’re beginning to see the effect in prices somewhat, particularly with the decrease of “overbids” and an increase in reduced prices on active listings, but nothing too dramatic yet. For example, as the bottom chart shows, the median price of homes sold in St Louis in August was $280,000, a nearly 11% increase from the median price of $252,450 a year ago. Since home prices typically peak around June, they are usually lower in August than June or July. If we examine this to see if perhaps there was a bigger decline in those months this year than last we find that last year prices dropped 3/4 of 1% from June to July and then dropped 4% from July to August, for a total decline of 4.7% from June’s peak to August. This year, prices dropped 3.9% from June to July, then 1.7% from July to August for a total decline of 5.6%, only slightly higher than last year. I do think we’ll see a larger impact than this, but thus far it’s not so bad.
Mortgage Interest Rates Based Upon the MND Rate Index
(click on chart for live, interactive chart)
30-Year Fixed Rate Mortgage Interest Rates 1970-Present
(click on chart for live, interactive chart)
St Louis 5-County Core Home Prices and Sales – Past 25 Months
(click on chart for live, interactive chart)
By Dennis Norman, on September 20th, 2022 The short answer is yes. They decline every year as we head into winter due to the seasonal nature of the business. If you look at the first chart below which depicts the median price of homes sold in the St Louis 5-County core market since 1998, you will notice a very consistent pattern of prices rising in the spring and summer, then declining in the fall and winter. For the most part, the other pattern you will see is that the peak each spring is higher than the spring before and the bottom each winter is higher than the winter before, but there are exceptions to that such as after the bubble burst in 2008.
So, as we head into the fall season, we can expect home prices to decline. The question is, given all that is going on in the economy, including mortgage interest rates in excess of 6%, will the decline be more than the typical “seasonal adjustment”? To address this, the first thing we can look at is the percentage decline we’ve seen in the recent past from the summer peak to September which is as follows:
- 2019 – Summer peak to September –10.9%
- 2020 – Summer peak to September – 0% (no change)
- 2021 -Summer peak to September –1.9%
- 2022 -Summer peak to September –10.2%
What this reveals is this years decline, while definitely larger than the last two years, is actually less than the decline in 2019 (which was a good market) so this doesn’t jump out as particularly alarming. I think it’s worth saying that we are no doubt going to have a market “correction” or “adjustment” at a minimum because home prices could not simply keep increasing like they have been so this years seasonal adjustment may just be a return to normal. Having said that though, since the “bottom” of the winter market price-wise doesn’t usually come until January or February, we will need to watch the next couple of months to see if this downward price trend remains consistent with historic norms or in fact picks up steam and looks like it’s headed for a bigger decline than normal. My guess is at this point it the latter. While I’m not a “gloom and doomer” in fact, I like to think of my self as an opportunist and see opportunities in challenging markets, I just think I’m being realistic. There are a lot of moving balls in the air right now with regard to our economy and more unknowns than certainties in my opinion.
We can’t underestimate the impact of interest rates either…
Continue reading “Will St Louis Home Prices Decline?“
By Dennis Norman, on September 6th, 2022 The 12-month home sales trend in the St Louis 5-county core market declined in August to 27,840 homes sold in the 5-county area during the prior 12-months, marking the lowest 12-month sales number since September 2020. As the chart below illustrates, the 12-month home sales trend in St Louis has declined now for 11-months in a row landing just slightly higher than the 12-months sales of 27,573 for September 2020.
The St Louis home sales trend is still higher than any period after August 2006 and prior to September 2020…
At the current level, the St Louis home sales trend is slightly above the trends prior to September 2020 going back to the peak of the bubble in August 2006 when there were 27,974 homes sale in the prior 12-months. However, if it declines further will be in the range of the years 2016 through mid-2020.
St Louis Home Price Trend Outpacing Sales…
The chart below also shows the median price per foot for homes sold during the prior 12-month period. As it shows, the home price trend has continued to increase while the sales trend has been declining however that changed in June when the price trend started declining. If you look back t prior years you will see that is earlier than when the normal seasonal adjustment comes so it is likely indicative of the market.
Continue reading “St Louis Home Sales Trend Declines In August For the 11th Consecutive Month“
By Dennis Norman, on August 12th, 2022 We continue to see more price reductions on listings, or, as some agents prefer to refer to them as “price improvements”, throughout the St Louis area. As the infographic below depicts, as of today one-third of the active listings in the St Louis 5-County core market have a current asking price that is below their original price.
Continue reading “One-Third Of St Louis Homes Listed For Sale Have Reduced The Price“
By Dennis Norman, on July 8th, 2022 Price reductions are quickly showing up more and more on real estate listings in the St Louis area. As the Infograph below illustrates, 31% of the current active listings in St Louis have had at least one price reduction. Since the price homes sell at isn’t known until closing and a home sale typically takes 4 to 6 weeks to close, the actual sold prices won’t reflect these price reductions for a while. For example, in the past 30 days (through today) there have been 2,381 closings of home sales in the 5-county St Louis core market at a median price of 104% of the original list price. In about a month we’ll revisit that stat and see how things look.
Continue reading “Nearly One-Third Of St Louis Homes Listed For Sale Have Reduced The Price“
By Dennis Norman, on July 7th, 2022 Ever heard the expression “It’s not if, but when..”? That is something that I’ve heard for a while now about a recession. With everything that has happened to our economy including rising interest rates, rising inflation, the government printing more and more currency and running up greater debt, it seemed inevitable we would see a recession. To officially be in a recession, the GDP (Gross Domestic Product) has to fall for two successive quarters. For the first quarter of this year, GDP declined at an annual rate of 1.6%. The second quarter GDP numbers won’t be released until later this month (July 28th) however, the GDPNow forecasting model of the Federal Reserve Bank of Atlanta is forecasting a decline of 2.1% in GDP for the 2nd quarter of this year at this point. If their forecast is correct, we will officially be in a recession.
What happens to St Louis home prices during a recession?
There are many factors at play in every recession that make them unique, such as unemployment rates, interest rates, etc, making it unrealistic to think that home prices are going to behave the same way during every recession, however, I thought it would be worth looking at what happened during the last couple of recessions.
2020 Recession (Q1 and Q2)
We had a short recession in early 2020 caused primarily by COVID that only lasted the minimum period of two quarters. During this period, as the chart below shows, St Louis home prices continued to increase at a fairly consistent rate. In 2019 the median price of a home in the St Louis MSA was $188,575 and in 2020 it was $208,000, an increase of 10.3%. Then in 2021, the year after the recession, the median St Louis home prices was $227,000, an increase of 9.1% from the year before.
Continue reading “The Coming Recession and Its Potential Affect on St Louis Home Prices“
By Dennis Norman, on June 17th, 2022 Price reduction, what’s that? All we seem to have heard about the last couple of years with regard to home prices is how much OVER the list price buyers were having to pay in order to buy a home. So, to be talking about price reductions today seems odd. However, as the infographic below illustrates, there have been listings with price reductions over the past couple of years, it’s just the current level of them is higher than we have seen in a while.
Continue reading “Over One-Fourth of St Louis Homes For Sale Have Reduced Asking Prices“
By Dennis Norman, on June 15th, 2022 After over 40 years in the real estate business in St Louis I’ve seen many times just how fast a good, or even great housing market can turn sour as well as the other way around. Two years ago, economic conditions relevant to the housing market included:
Today, the above conditions are:
Does this mean St Louis home prices will come crashing down?
First off, I’m not an economist, in fact I didn’t even attend college and I certainly don’t have a crystal ball showing me the future, but I am a data junkie that has lived through a variety of markets spanning more than 4 decades. My experience as well as my study of past markets as well as current indicators of things to come certainly give me an opinion. In times past, my opinions on the market have been spot on, almost to the point that I even surprised myself (such as in October 2006, at the peak of the housing boom when I predicted the collapse) and other times I’ve been wrong, sometimes way wrong. The reality is that the housing market is affected, or can be affected by so many different economic factors, as well as social issues, consumer sentiment and more that I don’t believe anyone can predict what it’s going to do accurately consistently.
Continue reading “Will Home Prices Come Crashing Down?“
By Dennis Norman, on June 10th, 2022 With the bidding wars we’ve seen on listings resulting in sold prices that exceed the asking price in St Louis over the past couple of years, it’s hard to imagine that home values could be lower today than a year ago. Now, before you call me crazy, I’m not saying that St Louis homes are SELLING for LESS now than a year ago. As our STL Market Chart below shows, the median price of homes sold in the St Louis 5-county core market was $254,950 in May 2021 and $270,000 last month, for an increase in sales price of 5.9%. However, given that, as the chart at the bottom shows, the inflation rate has increased 8.6% during the past 12-months, St Louis home prices have not increased as much as inflation, thereby leaving them worth less today than they were worth a year ago after adjusting for inflation.
Home prices last month would have needed to be $276,829 to keep pace with inflation…
In order to keep pace with inflation and make a median-priced St Louis home worth the same in today’s dollars as it was worth a year ago it would have be worth $276,829 today at the current rate of inflation.
If we look farther back it gets better….
Continue reading “St Louis Home Values Declined In Past 12-Months After Inflation“
By Dennis Norman, on June 10th, 2022 There were 5,138 building permits issued for new single-family homes in the St Louis area during the 12-month period ended April 30, 2022, a decrease of 9.69% from the same period a year ago when there were 5,138 permits issued, according to the latest data from the Home Builders Association of St. Louis & Eastern Missouri (St Louis HBA). Four of the seven counties covered in the report saw a double-digit decrease in building permits from the same period a year ago.
St Louis New Home Building Permits -April 2022
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