St. Louis Real Estate-Market Watch February 29th, 2008

St. Louis Real Estate Market Watch by Art Wagner @ Keller Williams Realty Southwest, Sunset Hills, Mo.
February 29th, 2008
The Anatomy of St. Louis Real Estate

The St. Louis Home for Sale Team provides a weekly St. Louis County and Bi-weekly St. Charles County Market and Jefferson County Market Watch Report to review and plug into your home buying or selling scenario. Your questions and comments are welcome!

The St. Louis Real Estate Market this week continues to show better buyer activity as evidenced by the pending ratio pushing up over 15% for the first time since August 2007. In some of the price ranges between $125,000 and $299,000 pending ratios are as high as 18.7%. Homes that are on the market now are selling, and those that are priced at market value are selling quickly.

HOWEVER, don’t get buyer activilty and increased home sales confused with pricing. Home prices still continue to decline, and by all indications and predictions by the “experts”, we will continue to experience home price declines into the third quarter of this year. Some predictions even say we’ll go into 2009 before things start to improve significantly.

For sellers and buyers that need to be in the marketplace now, this is a great time before spring. The market is what it is and we have to deal with it.

For a 180 degree look at the housing and mortgage situation, check out Lou Barnes’ article at http://www.inman.com/ entitled, “Starved credit wrecked housing, not vice versa”.

One of our readers, who has been following the real estate market and doing their due diligence sent us this comment this past week:

“Your write-ups are so routinely biased to the bullish side of the equation. You choose to focus on the year over year and ignore the 4^th quarter number. Clearly, Saint Louis is just beginning to break down as the 4^th Quarter in Saint Louis is among some of the worsst cities. I have been watching listings routinely slash prices over the last month. This should not be taken lightly. Of course, when your trying to sell houses…obviously your information will be biased. I wish everyone knew that real estate agents are basically a worthless source of information. I know you can’t help yourself…buyers just need to be informed how real the conflict of interest is with regards to agents.”

Our response was fairly lengthy, so we won’t print it here, but in a nutshell we said that they were correct that the 4^th quarter home pricing statistics for St. Louis were indeed one of the worst of the cities surveyed. Out of the top 34 markets surveyed, St. Louis / Illinois area ranked no. 32 out of 34 with a 6.52% decline in home prices in the 4^th quarter of 2007. We went on to say that we are striving to portray the St. Louis market as it really is, and not as the media and national averages tend to portray us. Unfortunately, now after the 4^th quarter last year, we really do mirror the national averages.

Our goal at the St. Louis Real Estate Voice is to educate buyers and sellers, whether they be “first timers” or “old hats” at the game of real estate. If we seem a bit “bullish” so be it! If we can offer some positives in this market that tends to dwell on all the negatives, we will. The goal here is honest, accurate information to help anyone who is in the real estate market.

We love to see the comments, so bring it on!!

For some great information regarding the real estate market and a really cool home-value calculator, check out the report just released by the Office of Federal Housing Enterprise Oversight (OFHEO) at http://www.ofheo.gov/.

Thinking of buying or selling a home? Contact Us for additional information tailored to your specific needs.

St. Louis Real Estate St. Louis County Market Watch February 29th, 2008

St. Louis Real Estate Jefferson CountyMarket Watch February 22, 2008

St. Louis Real Estate St. Charles County Market Watch February 29th, 2008

St. Louis Real Estate Benchmark Report January 2008

The report begins by breaking the market into 17 distinct price ranges. Then we show current listings and current pending listings which creates a pending ratio, which is helpful on a week to week basis to see if activity is increasing or decreasing in a price category.

The report also shows the last 6 months of results and compares the data to the same 6 months of the previous year.

The Market Analysis includes data on:

Number of Active Listings (Current)
Pending Sales (Going to closing)
Pending Ratio (Active vs.Pending)
Sold (Last 6 months)
Expired (Last 6 months)1
Average List Price
Average Sale Price
Average List to Sales Price %
Days on Market (DOM)
Months worth of Inventory (Based on current pending rate)
Buyers Market: > 7 months of listing inventory

Transitional Market: 5 - 7 months of listing inventory (sometimes called a “balanced” market)

Seller Market: < 5 months of listing inventory

Average % Sale Price/List Price (0-30), (31-60), (61-90), (91-120), (120+)DOM

Notice that you’re paying a penalty for over pricing. . .hey. .it’s a fact!!

The Benchmark Report is produced monthly for:

Single Family Residence
Ranch Style
1300 - 2000 sq.ft.
3 Bedrooms
1.5 Bathrooms

Art Wagner can be reached at art@stlouisrealestatevoice.com

This entry was posted on Friday, February 29th, 2008 at 11:26 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Comments

Comment from Bryan Schaefer
Time March 13, 2008 at 7:21 pm

Having just found this site, I find it interesting the amount of optimism that St. Louisian’s still have in our local market.

To portray exactly what I’m talking about, I’ll highlight just one area, Bella Villa. The reason why I choose this zip code is because few luxury homes were built here, I know the area well, and the stability of its socioeconomic situation.

The current data is as follows:
352 sales in the last year, with an average size of 2.5bd and 1150 sqft, selling at an average of $118,531 for $104 a sqft.

Now, year on year statistics are important, but multi-year data is required to really determine trends. 2005 had estimated values for the area at 112,400, but 2000 had valuation at $79,400. This is important to look at, but is meaningless without other data. The biggest tell-tale sign that we have a good bit to go in price correction is looking at wages.

2000 average wages for the zipcode was $36,827. This made houses in the area roughly 2.15 times yearly income for the average person getting the average home. Fast forward to 2005 and income changes to $39,500 and prices to wages changes to 2.85 times yearly income. This is a big change in valuation.

Now, fast forward yet again to 2008. Prices are still above 2005 valuation, though they are trending downward finally. But with the homes of the area selling at roughly 3x’s average area income compared to the 2.15 they used to go for, there is plenty of “breaking room” left. Already we see it happening as the 12 month average price is $118,531 but the 3 month average is $108,661. The modest uptick in incomes tells us that this isn’t an area were lots of higher income earners are starting to move to to cause an uptick in pricing, that this was partially speculation as well as correction from 2.15 affordability upwards to the statistical norm of 2.5.

With higher energy and food prices, people have less money available to spend. Credit markets being sapped also will play a much greater role this year in pricing. So from 2000 to 2008 prices for this area are still 30% higher while incomes haven’t grown even at the rate of inflation, another signifier of correctability. Barring a large uptick in incomes, I expect a significant drop for this area, and for St. Louis in general as most areas have very similar situations.

Now, a caveat. Some areas will weather this very well. Benton Park area I expect to not change much due to the interest of doctor’s and lawyers moving into that area. Other areas, like Bella Villa, St. Ann, and Florrisant I think will actually do much worse, going down below 2000 affordability levels before returning to “normal”. I’m most interested in seeing what happens to the abundance of luxury homes that were built recently.

Keep up the good work though, this is the only site I’ve found so far that does a good analysis of the St. Louis area.