What to know about the current St. Louis Housing Market
Anyone keeping tabs on the news recently knows that housing prices, inflation, and interest rates are all on the rise. Whether you’re a real estate professional or someone looking to buy or sell, these are all important variables to pay attention to. This is especially the case as changes are happening more and more frequently; trends that used to emerge over the time period of a year are now emerging quarterly or even monthly.
Here’s what you need to know.
We’re seeing far fewer refinances.
When interest rates were lower, refinances were immensely popular. With the current trend of interest rates steadily climbing higher and higher, refinances are on the back burner (to put it mildly). This trend may change if interest rates drop again.
The market is still bobbing along.
The real estate market has been red hot the past few years and is only now slowing down a touch. Inflation, higher interest rates, and higher property prices have had a combined effect on slowing down demand for entry-level and mid-range houses, as buyers have less purchasing power than they previously did. Areas with lower average price points are becoming softer as those buyers are more “payment-based” and far more sensitive to the interest rate increases.
Commercial remains in high demand.
The commercial sector is still increasing year-to-year, and while interest rates will eventually slow it down, new development and construction will keep this market moving for a while. In order to catch up, increased construction and new buildings attempt to meet growing demands.
Interest rates are actually normal.
Today’s homebuyers might be put off by interest rates of 6.2% to 6.5%, but historically, these numbers are actually solid. The last decade averaged interest rates around 3%-4%, but since the 1970s, we’ve seen 6%-9% be the standard. We may see an increase in buyer interest as buyers start to accept these numbers as the “new normal.”
Flips and investment purchases remain popular.
St. Louis remains a popular market for house flipping and rental investment properties, but the market has been red-hot for so long that it’s becoming increasingly more difficult for investors to find good properties to suit their needs. Those types of properties exist, but they might take longer to find or cost the investor more overall.
Buyer demographics have changed.
There are more young adults and families moving into the homebuying market than ever before, and they’re looking for entry level housing at price points that are currently hard to find. These are the buyers most affected by day-to-day inflationary pressures–and who will find it hardest to enter the market. In contrast, those in upper income brackets with cash and other assets at hand are still able to buy in the current market.
We may see a housing shortage.
Although we’re seeing enormous amounts of construction, most of what is being built now is developers catching up on their backlog. While new apartments, condominiums and houses are going up at seemingly alarming rates, demand is equally as high, and we may see a shortage in 6-8 years.
Multi-family apartments are in high demand.
New build multi-family apartment constructions combined with increased conversions of warehouses and offices into multi-family residences are off the charts. Even with the new stock, rental demand and rates have remained high. Young professionals seek out rentals because they either don’t qualify for mortgages, take longer to save for down payments, or don’t want to be tied down. The ongoing demand for multi-family may slow down once we’ve caught up with the construction backlog, but it’s not here yet.
Title companies are still vital for protecting buyers and sellers.
In a hot market, it’s tempting to waive your due diligence, but title research and property surveys are vital for knowing what you’re buying– and that ownership will remain uncontested. At True Title, we provide title insurance protection and a variety of professional settlement services for lenders and buyers of all types of properties. Whether you’re a realtor, a lender, or a buyer looking to close on a property, get in touch today.