March 2009 State of Real Estate Report For The St. Louis, MO Area

The market seems to have found a new bottom.  Whether we will stay here or not remains to be seen.  Plenty of bloggers and reporters are indicating we have another 12-20% down nationwide to go according to their data.  However, many of the reasons they have indicated as to why the market would be still declining doesn’t seem to qualify in St. Louis.

One of the biggest drags nationwide is the necessity to still clear out remaining inventory of new homes.  For example, one report claims that there is 10+ years of inventory of new condos left in Miami, FL.  While there is a large inventory of condos in St. Louis, it is no where near this 10 year level.

March is the time when Buyers start entering the market to make moving decisions over the busy season ( April-August).  So it remains to be seen if more buyers enter the market this year than last.   Although the media says it is difficult to obtain a loan, the truth is that loans can easily be found for almost anyone that hasn’t missed a mortgage payment in the past 12 months.

There is also the $8500 first-time homebuyer credit that is new for 2009.  However it is our opinion this will do little to spur buyers into the market.  Had this been a credit at closing instead of a tax credit on a return filed a year later, this might have had a significanlty greater impact.  The truth is that the buyers that would end up choosing not to buy a home this year are pushed out of the market not because of tax savings next year, but because they need the funds for downpayments, closing costs, etc.  A tax credit simply will not spur on buyers to make the decision.  Sure it will be nice for them to receive that credit next year, but again it will not get them to sign on the line.

The State of Missouri did offer for a short period of time through their MHDC program a $6750 credit that was given at closing, however the funds for that program were quickly used up.  Should this program get additional funding, we feel this will assist even more in aiding the market.

However, when it comes down to it, the St. Louis area can be explained in sections:

West County – Good market conditions.  While it is true that prices have come down, it’s minimal.  Buyers are still in the market and are approved and ready to buy.  There are few foreclosures but they are very minimal.

St. Charles – Similar to West County, prices are down in St. Charles county, however there are buyers.  The one item that continues to plague St. Charles county is an elevated unemployment rate.  This is due to the numerous small businesses that call St. Charles home.  As the economy has been hit hard, small businesses have scaled back their employment.  There are few foreclosures.

South County – While South County saw a significant decline in home sales last year and a rise in inventories, the market is seeing a nice boost early in this year’s buying season.  Average inventory days are down, prices are rebounding, and buyers are still coming back.

North County – Of all the areas of St. Louis, North County has been affected the worst.  There is a high rate of foreclosure and worst of all demand by primary home purchasers has plummeted due to multiple factors.  However, there is a high rate of investors buying in this area at the present time.  With plenty of homes being purchased for $50k that can then be rented for $800 or more, there is a lot of potential for a fast recovery here.