The percentage of people in St Louis with a sub-prime credit score (below 660) has continued to improve since peaking in most St Louis area counties around 2008, according to the latest data released by Equifax. As the interactive map below shows, 30.63% of the people in the city of St Louis had sub-prime credit in the 4th quarter of 2016. This is a decline from the 4th quarter of 2008 when it was 38.42% and even down from 2006, the year of the peak of the St Louis housing market, when 34.21% of people in the city of St Louis had sub-prime credit.
As the map shows, from the 5-county core St Louis market, St Charles County has the lowest percentage of sub-prime borrowers at 21.07%. From the entire St Louis metro area, Monroe County in Illinois has the lowest percentage of sub-prime borrowers at 16.11%. At the other end of the spectrum, the city of St Louis has the highest percentage of sub-prime borrowers from within the 5-county core St Louis market and Washington County, at 35.09%, has the highest percentage of people with sub-prime credit in the St Louis MSA.
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Happy home builders? Wow, I remember those days, back before the real estate bubble and market collapse, boy were those the days! Well, the good news is, while builders still have their challenges, according to the latest Housing Market Index (HMI) from the National Association of Home Builders (NAHB), builders in the Midwest are more optimistic about the new home market than they have ever been! (or, at least since the beginning of the regional level index records that are published).
The NAHB Housing Market Index is based upon results of a survey done of the builders and other members of the National Association of Home Builders in which members are asked to rate market conditions in 3 ways:
The sale of new homes at the present time
How they feel about selling new homes over the coming six months
The traffic of prospective buyers through their new home displays and developments.
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The St Louis downtown loft market had a slow start back in the early 90’s and then picked up some steam later in the 90’s after Missouri launched its historic tax credit program which gave developers another tool to use to make loft projects more financially feasible. The loft market, as the chart below illustrates, peaked in 2005, stalling out before the majority of the residential hit its peak in 2006. The St Louis loft market saw a kind of double peak with prices rising in 2007 after dipping the year before, but then loft prices followed suit with the rest of the market and started a long slow decline until hitting bottom in 2011.
In looking at the St Louis downtown loft district market from 2002 through the end of last year, as depicted on the chart below, you can see that loft prices, while they have increased from the bottom reached after the housing bubble burst in 2008, have not recovered to pre-bubble levels, not even back to 2002 levels. The median price of St Louis downtown loft district lofts sold in 2002 was $192,975 in 2002, rose to a peak of $236,000 during 2005, dipped down to $205,505 during 2006 however, it should be noted, that the number of lofts sold peaked during 2006, hitting 131 sales, the highest level for the entire 15 year period covered here. St Louis loft prices then hit the second highest level in 2007 with a median price of $209,000, however, there were only 51 lofts sold that year, less than half the year before. Loft prices then continue to tumble until hitting bottom in 2011 at $128,250 with only 34 lofts sold that year. Last year, there were 71 lofts sold at a median price of $152,000. To recap, for the loft market, 2016 prices were just 19% higher than the bottom reached in 2011 and 36% lower than the peak in 2005. Loft prices in 2016 were 21% lower than the 2002median price of $192,875.
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A lot has happened to affect the real estate market where I grew up in the little town of Ferguson in North County over the past decade. First, like the rest of the country, beginning around 2000, Ferguson saw home prices increase at rates outpacing inflation until finally peaking in 2006 which then led to the housing market bubble burst shortly thereafter. Home prices in Ferguson, and everywhere else, then declined over the next few years until hitting bottom around the end of 2011, or beginning of 2012.
Then, as pretty much most of the St Louis housing market was enjoying a slow and steady comeback in home prices and sales in 2014, came the shooting of Michael Brown by Ferguson police officer Darren Wilson which resulted in riots and violent protests that unfortunately made Ferguson a household name not only around St Louis but around the country and even beyond. Surprisingly, even though that put yet another damper on the real estate market in Ferguson, as the chart below shows, home prices continued the increase begun after hitting bottom in 2012 in spite of it.
For comparison purposes, I decided to put a 10 year chart of home prices for Ferguson next to the same for the City of Chesterfield. Chesterfield is an affluent city in west St Louis County that has enjoyed a fairly robust housing market for a long time now and has not had anything to deal with like Ferguson did with the shooting. When you look at the two charts (which you can click on to see a live chart with actual prices shown as you move your mouse over data points) you will see there is quite a disparity between the two cities. For example, during 2016, the median sales price for a home in Chesterfield was $387,000, a 3.2 percent increase from 2006 when it was $375,000. For Ferguson, the median price of homes sold during 2016 was $43,509, a decline of nearly 42 percent from 2006 when the median home price in Ferguson was $75,000.
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Home prices in St Louis, like most places in the country, peaked around 2007 at the height of the bubble, then, when the housing bubble burst in 2008, home prices began falling and didn’t hit the post bubble bottom until around late 2011 or early 2012 in most areas. Since hitting bottom, home prices throughout the St Louis area have recovered not only regaining what was lost after the bubble burst, but, in most cases, rising back above the peak levels from the height of the bubble nearly 10 years ago.
Where are home prices today in relation to the bubble?
Below I have 10-year charts for the St Louis MSA, the St Louis Core Market (the 5 major Missouri counties that make up the St Louis market) as well as the 5 major St Louis area counties individually, showing home sales, listing prices and sold prices for the past 10 years. As the charts show, home prices in all counties have fully recovered home values lost when the bubble burst and, with the exception of St Charles County and Jefferson County, all have returned to levels above the peak during the bubble in 2007. St Charles County and Jefferson County home prices are teetering around 2007 levels. If you click on the charts you will go to our live charts and can put your mouse over the chart to see actual home prices for each period.
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Up to 17 million first-time homebuyers may buy a home during the next five years according to a new study just released by TransUnion. Of these 17 million homebuyers, almost three million are expected to buy next year throughout the U.S. The study reveled some interesting facts about the first-time homebuyer market, as well as the impact of the millennial generation on the market, such as:
4th Quarter 2010 (during the “bubble burst” period for housing market) – 493,000
4th Quarter 2015 – 550,000
Millennial Generation Market-Share of First-Time Homebuyer Market:
4th Quarter 2000 – <1%
4th Quarter 2005 – 13%
4th Quarter 2010 – 32%
4th Quarter 2015 – 49%
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There were 293,190 foreclosure filings in the U.S. during the 3rd quarter of 2016, which is a decrease of 10 percent from a year ago, according to a report released today by Attom Data Solutions. This marks the fourth consecutive quarter in which foreclosure activity has decreased on a year-over-year basis and continues the steady downward decline in foreclosure activity we have seen for 6 years and has now finally fallen back to levels we saw prior to the housing bubble.
St Louis Distressed Home Sales Decline
Given the downward trend in foreclosure activity, it is not surprising that distressed home sales in St Louis (foreclosures, REO’s and short-sales) have declined as well. As the chart below shows, over the past 24 months distressed home sales in the St Louis core market (the city of St Louis and counties of St Louis, St Charles, Jefferson and Franklin) peaked in April of 2015 with 300 distressed home sales but have trended downwardly since to 165 distressed home sales last month. St Louis distressed home prices have remained fairly constant over the past 24 months. with a median sales price of $61,276 over the 2-year period and a median sold price of $60,550 in September.
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After the housing bubble burst in 2008 we saw several years of declining home prices before home prices finally reached bottom in late 2011 and early 2012. Due to the tremendous growth in foreclosure activity, as well as artificially inflated home prices as a result of sub-prime lending, many of St Louis’ lowest priced neighborhoods were hit the hardest. So, now that we have seen a solid real estate market in St Louis for a couple of years, and prices are recovering, how have home prices in these hard hit zips recovered? To determine this I have assembled the data on the first table below, showing the zip codes with the lowest median home prices during the first half of 2012 and then the zip codes with the lowest median home prices during the fist half of 2016. As you can see, while there were a few differences in 2016, the zip codes on the list are largely the same.
The crash also impacted the high price zips too….how have they done since?
Certainly the highest priced areas of St Louis were impacted as well by the crash, but, in most cases, not as bad percentage-wise as the lower priced zips. To examine this, as well as how the prices in these higher-priced neighborhoods have done since, I also assembled the data for the St Louis zip codes with the highest median prices during the first half of 2012 as well as 2016. Once again, most of the zips on the 2012 list remain on the 2016.
Low priced list zip, 63118, has seen home prices increase nearly 250% since the crash and high-priced zip, 63341, over 40%!
In the second table below, I ranked the zips from both the low priced zip code list as well as the high priced zip code list to show those zips where home prices have recovered the most since the bottom. On the low priced list, 5 zips have seen home prices increase by double digits, 3 of which are located in the city of St Louis and 2 in St Louis county. On the high-priced zip list, the highest recovery was in 63341, the Defiance area of St Charles County, then of the next 4 highest increases in prices, 3 zips are in St Louis County and 1 in the City of St Lous. (We work hard on this and sure would appreciate a “Like”)[iframe http://www.facebook.com/plugins/like.php?href=https%3A%2F%2Fwww.facebook.com%2FStLouisRealEstateNews&send=false&layout=standard&width=50&show_faces=false&font&colorscheme=light&action=like&height=35&appId=537283152977556 100 35 ]
There were 2,290 St Louis Existing Homes Sold in April (in the 5-county core market), an increase of 1.0 percentfrom April 2015 when there were 2,265 homes sold. The median home price of homes in the St Louis 5-county core market (city of St Louis and counties of St Louis, St Charles, Franklin and Jefferson) during April 2016 was $173,850, an increase of 4.4 percent from April 2015 when the median price of existing homes sold was $166,500.
For the combined markets of the City of St Louis and the County of St Louis, there were 1,241 existing single family homes sold during April 2016, an increase of 9.6% from the prior year and the median home price of homes sold during the month was $158,250, an increase of less than 1% from the prior year.
Distressed home sales still account for over 1 of every 10 home sales….
During the month of April in the St Louis core market, there were 243 distressed home sales (foreclosures, short sales, bank-owned property) which is 10.6% of the total home sales during the month. The median sales price of these distressed sales in April 2016 was $51,780, a decline of 1.0% from a year ago when distressed homes sold for a median price of $52,314.
St Louis home prices in April, on non-distressed existing home sales, rose just 1 percent from year ago…
In spite of some recent news reports boasting much bigger increases in home prices (as much as 17%) based upon the data I have compiled, courtesy of MARIS, the REALTOR regional MLS, the increase in home prices is nowhere near that. If we remove distressed home sales from the data, and look at what the “normal” housing market looks like, in April 2016 there were 2,045 homes sold, an increase of 5% from a year ago when there were 1,947 non-distressed single-family home sales in the St Louis 5-county core market. The median price of these home sales in April was $185,000, an increase of 1.0% from a year ago when the median home price for non-distressed single-family home sales in the St Louis 5-county core market was $183,000.
Why a 17% increase in home prices would not be good and 1% is better…
If St Louis home prices had in fact, as reported by some of the media, increased in the past year by as much as 17% that would mean home prices rose about 17 times more than the rate of inflation. As the table below from the US Labor Bureau shows, the St Louis rate of inflation from the 4th quarter of 2014 to the 4th quarter of 2015 was 0% and, the best I can tell, the most recent rate only indicates about a 1% rate of inflation. Therefore, a 1% increase in home prices in the past year, as I have reported above, is consistent with the current rate of inflation and is a good thing for the long term health of the housing market as we don’t want home prices to rise significantly faster than inflation. How do I know this? Well, as the chart below shows, where I have graphed historically, there has definitely been a relationship between home prices and CPI with the two normally rising at a fairly consistent rate with the big exception being in the early 2000’s. As the chart shows, being in early 2000, home prices began rising at a rate higher than the inflation rate eventually reaching the tipping point in the 4th quarter of 2007 when home prices had increased 42% during the prior 7 year period and the rate of inflation only 20%. We all know what happened next, the housing bubble burst and home prices plummeted back to where they should have been. So, during the period that lead to the housing bubble, home prices were, on average, just increasing just a little over double the rate of inflation and look what happened. Now do you see why I say a 17% increase in home prices in the past year would be bad and the actual 1% it was is good?
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For those that have been reading my articles for a while, you know I am not a Pollyanna when it comes to the real estate market, opting instead to tell it like it is, even when the news is not so encouraging. For that reason, as well as the data behind my opinion, I think my suggestion that now is a good time to buy a home in St Louis should be considered to be a credible opinion from an industry insider.
So, why buy a home in St Louis now?
Interest rates are LOW. As the chart below shows, the current average 30 year fixed rate mortgage interest rate in the U.S. is 3.65%, almost an historic low. Interest rates are not forecasted to remain this low. Freddie mac, as the table below shows, is forecasting that mortgage interest rates will rise this year to 4.5% by year end and continue to rise in 2017 until hitting 5.25% by the end of 2017. An increase from the current rate, even to just the projected rate by year-end of 4.5% increases the payment on a typical St Louis home by over 10%, therefore, the same money buys less house!
Home prices are on the rise. As the chart below shows, St Louis home prices have risen about 4% during the past year and the trend has been fairly consistent. As the median list prices show (the blue line on the chart) list prices of homes for sale is on the rise at a greater rate than the increase in recent sold prices. Granted, this may be the result of overly optimistic sellers that believe spring will bring increased home prices (as is the norm) but even if prices remain flat, increased interest rates will still make the home more costly.
Gas prices are low and forecasted to remain the same. As the chart below from the U.S. Energy Administration illustrates, gasoline prices this year have hit the lowest price level in about 14 years and the forecast for the rest of this year and through 2017 shows gas prices remaining low. This, along with the other issues noted, should help the St Louis real estate market remain healthy and fairly strong in the short term which will most likely result in continued price appreciation, particularly for areas that are farther out and subject to gas prices.
More affordable to buy than rent but may change soon. There are two charts at the bottom of this article that illustrate what I’m talking about here. The first is a chart from the St Louis Federal Reserve that shows the St Louis home price index and home rental rates from 1970 to present. The chart illustrates that rental rates increase at a very consistent rate and home prices follow along at a similar pace. Presently, home prices have fallen behind rental rates which, based upon history, will result in home prices increasing. Therefore, currently, in many markets it is more expensive to rent than it is to buy but the savings of homeownership will probably shrink, and perhaps disappear, as home prices rise going forward, particularly if home price appreciation begins outpacing rental rate appreciation, which is likely the happen. The next chart, the Housing Affordability Index from the St Louis Federal Reserve, also illustrates how affordable home ownership is presently. Granted, not as affordable as when home prices hit bottom in 2012, the result of the housing bubble burst in 2008, but illustrating that home ownership is more affordable now than at any time prior to the housing bubble burst in 2008.
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As 2015 quickly comes to an end, we close out what has been one of the better years for the St Louis real estate market in many years! Homes in St Louis sold at a steady pace and St Louis home prices showed solid appreciation! We saw a spring market that brought home buyers racing to new listings often competing with other buyers to see who could make the best offer the quickest, often-times with the final sale price equaling or exceeding the asking price followed by a steady market throughout the summer and into the winter months.
Too much to read? No problem, watch the video below instead!
St Louis Real Estate Market – Recap for 2015:
While the year is not quite yet over, and there will be some additional sales closing in the 4 business days left in the year, I think there is enough data available to tell the story for this year. With that in mind, below is a recap of the St Louis housing market for 2015:
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According to a report just released by TransUnion, the mortgage delinquency rate for borrowers that are 60 days or more delinquent, declined almost 30 percent during the 3rd quarter of 2015 from a year ago. During the third quarter of this year, the mortgage delinquency rate was 2.40%, down from 3.36% during the third quarter of 2014.
Mortgage Delinquencies Down 65% From Peak
The current mortgage delinquency rate of 2.40% is down 65% from when the delinquency rate peaked at 6.94% in the 1st quarter of 2010 as a result of the housing market bubble bursting in 2008.
Millennials Pay Their House Payments!
According to the report, the age group with the lowest mortgage delinquency rate fell in the millennial category having a delinquency rate of just 1.62%. Right behind the young borrowers were the old ones (well, relatively speaking) with the 60+ age group having the 2nd lowest delinquency rate with 1.77%.
Out with the bad in with the good…
Joe Mellman, vice president and mortgage business leader for TransUnion, attributes the mortgage delinquency improvement to a combination of factors including:
Continued “funneling” of delinquent accounts through he foreclosure process
Strong performance by recent borrowers
Improving home prices
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Since the real estate market bubble burst in 2008, the number of foreclosed homes that the U.S. Department of Housing and Urban Development (HUD) has had to manage and sell to investors and new home owners has increased significantly, averaging around 100,000 homes sold per year and hitting a peak of 111,416 HUD homes sold during fiscal year 2013. As a result, HUD has proposed several changes with regard to the disposition of REO properties, or, in plain terms, how they sell HUD homes. According to HUD, these changes “seek to provide greater efficiency in the administration of HUD’s property disposition program for REO properties….and provide flexibility in anticipation of future changes to the property disposition program for REO properties.”
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St Louis home prices have made a strong recovery since bottoming out in 2011 as a result of the housing market bubble bursting in 2008. In fact, for the 5-county St Louis area I often focus on (the city of St Louis and counties of St Louis, St Charles, Jefferson and Franklin) home prices have increased 27 percent to a median price of $168,313 after hitting a post-bubble low of $132,500 in 2011. In fact, as my chart below shows, the median 5-county home price for 2015 has topped the peak price of $160,000 at the height of the market in 2007 by over 5 percent.
St Louis County home prices have had a strong performance with home prices increasing 32 percent from the post-bubble bottom of $134,000 in 2012 to the current median price of $174,900. As the chart below shows, St Louis county home prices peaked during the bubble at $160,000 in 2007 so have not only recovered the losses but are now 9 percent higher than at the peak during the bubble.
Nationally, according to data just released by Homes.com, the average increase in home prices today from the peak during the bubble was just 1 percent for markets with moderate price declines from peak prices, so, here in St Louis, we are doing much better!
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One year ago today, the small city of Ferguson gained international attention after Ferguson Police Officer Darren Wilson shot and killed Michael Brown, an incident which spurred weeks of violence and property destruction in Ferguson. This delivered a blow to the Ferguson real estate market which was, at the time, already struggling to recover from the housing bubble burst in 2008 which had severely impacted the area. Now that a year has passed, I wanted to see how the real estate market in Ferguson was doing.
Time to sell a home is down…
As the chart to the right shows, the median days on market for homes for sale in Ferguson shot up immediately after the shooting. Since then the trend has been downward and last month the time had dropped back to slightly below a year ago.
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The St Louis real estate market continues to be hot with many sellers benefiting from the low inventory of homes for sale resulting in buyers flocking to new listings and, when the homes are priced right, multiple offers being received in the first day. Happened for one of my clients again this week…took the listing live on Tuesday at noon, had over 8 buyers through that afternoon and evening and multiple offers in hand by the next morning, all above listing price. Granted, we did a lot of pre-listing marketing to generate interest, and the seller worked hard to make sure the home was in show condition, but if the market wasn’t there, it wouldn’t have mattered.
Is all this activity causing St Louis home prices to rise to quickly and too much? I get asked this question frequently today as none of us have yet forgotten what happened when the housing market bubble burst in 2008 so I spend a lot of time watching home prices in relation to the economy. One of the things I look at to gauge how home prices are doing is to compare the rate home prices are increasing with the inflation rate…afterall, the two should be increasing at roughly the same rate. As the charts below show, St Louis home prices tracked the CPI rate pretty closely through the 1980’s and 1990’s until late in the ’90’s when home prices began increasing at higher rate peaking around 2006 and then falling until around late 2011 early 2012 it was beck in line with CPI. If you look closely, you will see, currently, home prices are just slightly above the CPI line indicating that, so far, so good, with regard to home prices. If you want to take a closer look, click on the chart to be taken to the live chart on St Louis Real Estate Search.
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The median price of homes sold in St Louis (the 5-county core market) this year thus far has been $169,000, an increase of 5.7 percent from when the market peaked in 2006 at $159,900. While the peak of the housing bubble is considered to be 2006, as the chart below shows, St Louis home prices actually peaked in 2007 at $162,000 but, in either event, St Louis home prices have regained what was lost when the housing bubble burst and then some.
This is in contrast to what is happening at the national level with regard to home prices as evidenced by comments made by two of the top economists as teh National Association of Real Estate Editors (NAREE) conference last week. At the conference, Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) said he “anticipates home prices will return to their 2006 peak sometime this year” and Frank Nothaft, Chief Economist for Corelogic (and formerly for Freddie Mac) predicted home prices nationally would not return to 2006 levels until the end of 2017.
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The St Louis real estate market is definitely recovering from the housing bubble burst that sent it into a tail spin about six years ago. With the recovery, home sales have increased, although at a slower pace in 2014 than the year before, and St Louis home priceshave increased but, in spite of this, are St Louis home prices too low?
To address this question I looked at the relationship between St Louis home prices, rent amounts and income over the past 15 years to see how the trends look and how where we are today compares. Below are the following charts as well as what I think they may indicate:
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The bursting of the real estate market bubble back in 2008 led to opportunities for investors to buy up homes at attractive prices throughout the country and even attracted some large firms backed by Wall Street such as Blackstone, American Homes 4 Rent, Colony American Homes and Fundamental REO. While institutional ownership of commercial real estate, apartments and land has been very common, and in fact, predominant, since entering the business in 1979, firms like this investing in single family homes has not. The best I can tell, St Louis has not attracted any of the four largest institutional investors (although it is hard to tell because they could own property in LLC’s not easily identified to be them) however, there has been plenty of investor activity here, including some by institutional investors.
So, what is an “institutional investor”? Well, for the purposes of this article, and the data below, we’ll consider it to be an entity that buys at least 10 homes a year thereby separating them out from the small and/or occasional investor. One such investor that has been active in St Louis is BLT (Building Land & Technology out of Connecticut) which, at this time, appears to own around 700 single family homes in the St Louis area. However, as the table below shows, ownership of homes in St Louis by institutional investors is pretty minimal, with those types of investors having acquired over the past 3 years (the most active period for this type of investment) at total of just over 6,000 homes or, just over 1 percent of the total housing stock in the five-county core St Louis market.
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The Mortgage Delinquency Rate, the pre-cursor to, and leading indicator of, foreclosures, which play havoc with home prices, is expected to decline to 3.12 percent by the end of this month and continue to decline next year hitting 2.51 percent by the end of 2015, according to a forecast just released by TransUnion. If mortgage delinquency rates fall as lowest as forecast, it will hit the lowest level since the housing bubble burst. A home mortgage that is 60 days or more delinquent is counted in the mortgage delinquency rate for this report by TransUnion.
The report goes on to state that, even though the forecast is good and the rate will be low relative to what we have seen the past 6 years or so, even if the mortgage delinquency rate hits 2.51% as projected, it will still be significantly higher than the historical norm of 1.5% – 2.0%.
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Even though, for a while now, foreclosures have been on the decline in St Louis as well as in most parts of the country, there are still many St Louis neighborhoods that are being impacted significantly by foreclosure activity. While after the housing bubble burst in 2008 we foreclosures appeared in most every neighborhood in St Louis from areas with the lowest values to areas with the highest, there has been a concentration of foreclosure activity in a few areas of St Louis. The city of Florissant, for one, is an area that has had more than it’s fair share of foreclosure activity and has seen pretty severe impact on home values there as a result.
Which St Louis Neighborhoods Have The Highest Foreclosure Rates?
As I mentioned previously, Florissant has been pounded with foreclosures, however, as the table below shows, there are many areas throughout the St Louis area, including areas in St Louis City as well as the counties of St Louis, St Charles, Jefferson and Franklin, that are on the list of the 19 highest foreclosure rate areas of St Louis. Below the table is an interactive foreclosure map for Missouri where you can find foreclosure rates for any county in Missouri or, click on the county and find foreclosure rates for any area within that county.
While the St Louis real estate market is recovering from the aftermath of the housing bubble hurst, the market is still very price sensitive and therefore I cannot over emphasize the importance of pricing your home right from the outset at the beginning of the listing.
However, many sellers fear this strategy as they think no matter what price they list at the buyer will still offer less than the asking price. I will address this issue by saying that is simply not true. Buyers today, in my humble opinion, are more educated and savvy than homes buyers were during the boom (not to mention cautious) and are looking for a home that meets their needs and will be a good investment. Home buyers today realize that the good ones are selling quickly, so when a home comes on the market, is properly prepared for the market and priced correctly, it often sells quickly at full price or above and if not, then very close to full price. The over priced homes sit on the market, become market worn and stale by the time the seller finally gets the price down to where it should have been to start.
Oh, you don’t believe me and want proof? No problem! Below are statistics from MARIS, the St Louis REALTOR® MLS showing homes that sold within the first week of being listed in St Louis and St Charles County in the past 30 days sold for, on average, 100% of the list price!
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The St Louis Luxury Home Market is concentrated within the central corridor of the St Louis area with the highest median home prices (of homes listed) currently being found in Frontenac, with a median price of $1,326,654, followed by Ladue, Town and Country, Clayton and Creve Coeur.
Like the rest of the St Louis real estate market, The St Louis Luxury Home Market suffered when the housing bubble burst a few years ago but is it on the road to recovery like the bulk of the St Louis housing market? To address this, I looked at the market from several angles and analyzed the following data for the top 25% of each market (based upon price):
St Louis home prices have, in some areas, recovered to around 95% of home prices during the peak of the housing bubble. Get the specifics on this as well as much more in our June 2014 5-Minute Market Update Video below.
Many areas of St Louis have become sellers markets due to increasing demand and lack of inventory. If you have considered selling, or perhaps tried and failed in the past year or so, now is the time to consider it again. Give us a call and we’ll be happy to let you know the value of your home in today’s market or, try our new online home valuation siteand find your homes value in under a minute – go to StLouisHousePrices.com and find your home’s value now!
Thinking of selling and want to know if your neighborhood is a seller’s market? Contact us and we’ll answer that question for you.
The St Louis housing market bubble of 2006 was followed by the bursting of the bubble shortly thereafter and, even though many of us tried to convince ourselves it would not happen, reality set back in. The reality was, when it came to home prices, the “greater fool theory” would only work so long until the reality of the underlying fundamentals of what makes up the value of a home would rear it’s ugly head and bring everyone down from their real estate high.
So, now that several years have passed, and many market prognosticators (including yours truly) say the St Louis housing market is in a recovery, I thought I would take a look at which St Louis area county (of the 5 county core market I frequently talk about) is recovering the best from the housing market bubble burst. As the table below shows, St Louis County has recovered the best, with a median home sales price of $156,000 during the bubble year of 2006 and a median home price of $151,500 in 2013 for a decline of only 2.88%.
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It doesn’t take a rocket scientist to know that home prices typically rise in the spring as the St Louis real estate market heats up however, it is more of a challenge to find those areas that may out perform the others. So, which St Louis neighborhoods are poised for a strong spring housing market?
As I wrote about earlier this week, a recovery of the St Louis real estate market is underway, however, some areas will fare better than others of course. For some home buyers the “investment” aspect of their next home is secondary as the school district, location to work or something else will take precedent, but for those home buyers that are more flexible, as well as investors, the promise of better than average home price appreciation may drive their next home purchase.
In doing research for this article, I looked at several different types of current market data for St Louis neighborhoods including home prices, inventory, home sales and then looked at current and historical trends. In the end I came up with the following St Louis neighborhoods that I think are poised for a strong spring market:
It’s hard to believe that it has been over 5 years since the housing market bubble burst but, as we begin this new year, it is good to continue to see market data that supports a St Louis housing market recovery is underway!
As we have been reporting here on St Louis Real Estate News, over the past few months we have seen a solid recovery trend in the St Louis real estate market. Home prices have increased as have home sales, the new home market continues to make progress with new home construction and sales on the rise and distressed home sales (foreclosures, REO’s, etc), which cause downward pressure on home prices and make a sustained recovery difficult, are on the decline.
St Louis, like the rest of the country, began the build up to the housing bubble around 2000 only to see the bubble burst in 2008 and then where we find the St Louis market today; in recovery mode. So, during this period , which St Louis area county saw the most home value appreciation overall? Well, the “winner” isn’t even a county per se, it’s the City of St Louis with a 86.85 percent increase in median home values from 2000 to 2012, according to data from the US Census Bureau. As the table below shows, the median home value in the city of St Louis in 2000 was $63,900 and in 2012 was $119,400. See the table below for data for the other St Louis Counties.
It has only been recently that economists started using the word “recovery” in the same sentence as “housing market” and now there is talk about a possible housing bubble? CoreLogic, in it’s June MarketPulse report, citing a 12.1 percent increase in their home price index from April 2012 to April 2013 cautioned that the double-digit home price gains “prompt caution” and makes some ask “are we witnessing a new housing bubble?”
The CoreLogic report encompasses the largest metro areas in the U.S. so I decided to look at the St. Louis area specifically to see if what we are seeing here, in terms of St Louis home price gains, is cause for concern. In the table below, you can see the one year change in home prices for the 5 main counties of the St Louis MSA on the Missouri side of the river for the period ended April 2013 (same period as the CoreLogic report).
“Nationwide, we’re not in a bubble,” says Glenn Kelman, CEO of online real estate company Redfin, however Washington D.C., Los Angeles, San Francisco and San Diego may be headed that direction, according to Redfin’s data. Redfin is not in St Louis so our city was not on their list but in the coming weeks I plan to do an analysis of the St Louis market in the same manner they did of other markets and will publish what I find at that time. In the meantime, here’s the info from Redfin.
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It doesn’t take a rocket scientist to know that home prices typically rise in the spring as the St Louis real estate market heats up however, it is more of a challenge to find those areas that may out perform the others. So, which St Louis neighborhoods are poised for a strong spring housing market?
