Why I’m Bullish On Real Estate For 2020

As you may have noticed, I’ve been pretty optimistic about the outlook for the real estate market this year however, that is not always the case as I call it like I see it.  The reason for my optimism is based upon what a true data geek like myself would base it upon, data!  So, what’s the data that has me believing 2020 will be a good year for the housing market in St Louis and beyond?  Several things:

  • As I have been reporting here for the past couple of years now, mortgage delinquency and foreclosure rates have continued to decline which show the strength of the economy as a whole as well as the housing industry.
  • As the US Economic Indicators charts below show, since peaking around 2010, the unemployment rate, 30-year mortgage rate and mortgage delinquency rates have all steadily declines to either record lows or at least the lowest rate in recent history.
  • As the St Louis unemployment, home prices and rent chart below shows, unemployment in St Louis has fallen to the lowest level in decades and the relationship between home prices and rents show home prices lagging behind rents indicating that we’ll likely see continued, good housing appreciation rates.
  • As the 30-year fixed rate mortgage chart below shows, mortgage rates are at near record low rates giving buyers much more buying power.  In my market update video I shared here a day or two ago I illustrate just how much more buying power this translates into.
  • As I reported last week, St Louis home sales last year managed to top the prior year slightly, in spite of the low-inventory market we have been stuck in.  This shows the demand that is out there.
  • As I reported earlier this week, the home sales trend for 2020 in St Louis is in positive territory has well.

Is There a Market Correction Coming To The St Louis Real Estate Market?

This morning I watched a video from a firm that reports on the real industry and does so from a blunt, “call it as they see it”, perspective (pretty much my style too) in which they say “market correction indicators continue to roll in” and suggest that, to some extent, the party is over.   This report looked at the national real estate market as a whole and specifically looked at the west coast so is not necessarily indicative of what is happening in the St Louis real estate market, however, can often be an early indicator.

As a result, I spent my early morning looking closely at the St Louis real estate market in search of market correction indicators.  So, did I find indications that the St Louis real estate market is headed for a correction?

Yep.  It’s called “spring is over“.  :)

At about this time every year, we see a correction, of sorts due to the seasonality of the real estate business.  It’s no secret that spring and early summer are always the best time for the real estate market with increased home sales and prices.  As that season passes there is always a “correction” in home prices as they adjust downward for the decreased demand.

However, what I am really looking at is the “bigger picture”, is there an overall market correction taking place in St Louis or headed our way?

While it would be unrealistic to think that if a true market correction is going to be experienced by the bulk of the country that it won’t have an impact on the St Louis market, however, at this time there doesn’t appear to be any sort of serious correction imminent in the St Louis market.  That’s not to say we won’t see the normal downturn in home sales and prices we expect to see due to seasonality.

Below are some charts and tables that I think are good indicators of the health of the St Louis market as well as good indicators of things to come.  I’ll briefly give some comments on each as well as how I have applied the data shown to my opinion I have shared today.

February home price index hits eight year low; St Louis is sixth best of the 25 metros

RPX Composite Home Price Fell to Lowest Level since March 2003 – St. Louis ranks 6th of 25 metros on one year rate of change of home prices.

Radar Logic published it’s Housing Market Report for February showing that it’s “RPX Composite Price”, for the 25 metro areas covered by the index, including St. Louis, fell 0.7 percent from January and 4.3 percent from the year before. St. Louis home prices fell 2.4 percent from January and 4.4 percent from a year ago. Continue reading “February home price index hits eight year low; St Louis is sixth best of the 25 metros

St Louis Housing Market

Weekly I produce a short (roughly 5 minute) video update on the St. Louis Real Estate Market that is published on various web sites. I do a quick recap of the news in the St Louis real estate market for the week, then an overview of the St Louis housing market itself. The update includes charts with up to the date data on the St Louis housing market including St Louis home prices, average time to sell a home in the St Louis area as well as other data and charts to show where the St Louis real estate market is and where it is headed. Continue reading “St Louis Housing Market

St Louis Housing Market has 6.8 percent increase in homes sales in July

Dennis Norman

Dennis Norman

By: Dennis Norman

The St. Louis housing market is showing some signs of strength with St Louis home sales increasing in July to a seasonally adjusted rate of 21,038 homes, an increase of 6.8 percent from June’s seasonally adjusted rate of 19,691 homes.  This increase for the month is very close to the  increase in home sales in the U.S. according to the report released today from the National Association of REALTORS(R), existing home sales in July rose 7.2 percent to a seasonally adjusted rate of 5.24 million units up from a level of 4.89 million units in June.

However St Louis home sales for July 2009 were the same as July 2008 showing no gain or loss in sales compared with an increase of 5 percent for the year on US home sales according to the National Association of REALTORS report.  To read about all the home sales and housing market data from the National Association of REALTORS(R) please click the following link:    Home Sales – Existing Home Sales July 2009 Continue reading “St Louis Housing Market has 6.8 percent increase in homes sales in July