In the midst of fluctuating national trends, the St. Louis real estate market presents unique challenges and opportunities. John Schink, the Managing Broker of Deerwood Realty, offers his expert insights into these complexities.
Analyzing the St. Louis Market's Current State
The National Association of REALTORS®’ recent report indicates a troubling trend in the U.S. real estate market, with existing home sales at a 13-year low. This decline of 2% month-over-month and 15.4% year-over-year is a significant marker of the changing landscape. In St. Louis, these shifts are particularly impactful. “As you can expect, with mortgage rates hovering near the 8’s, buyer affordability is at a new low,” Schink explains. This rise in mortgage rates is a key factor influencing buyer decisions and market dynamics.
Delving into Inventory and Sales
St. Louis, while reflecting broader national trends, exhibits specific characteristics in its real estate inventory. “The inventory that we are seeing is usually either due to the two D’s – death and divorce, with a few CR’s scattered in (corporate relocation),” Schink notes. This pattern is evident in the 5.7% increase in new residential listings and the 8.2% increase in townhouse/condo homes.
Pricing Dynamics and Market Response
One of the critical issues in the St. Louis market is the disconnect between current pricing strategies and the evolving mortgage landscape. “The inventory coming online is staying online due to the 4% mortgage mindset,” Schink points out. This refers to sellers setting prices based on outdated mortgage rate expectations, leading to prolonged market stays for these properties.
The Challenge of Elevated Prices
Despite the fluctuating inventory levels, St. Louis is witnessing an increase in median sales prices, a trend aligned with national figures. The median sales price for residential homes has increased by 2.1%, while townhouse/condo homes have seen a more significant rise of 10.4%. This escalation in pricing is making it increasingly challenging for new buyers to enter the market, further complicated by the current mortgage rate scenario.
Market Strategies for Buyers and Sellers
Given these market conditions, Schink emphasizes the importance of strategic thinking for both buyers and sellers in St. Louis. Buyers need to be more judicious in their offers, considering the competitive nature of the market. Sellers, on the other hand, need to adapt their pricing strategies to align more closely with current mortgage rates and buyer expectations.
Long-term Implications for St. Louis Real Estate
Looking ahead, the St. Louis real estate market’s trajectory will likely be influenced by several factors: mortgage rate fluctuations, economic conditions, and evolving buyer and seller behaviors. Schink’s insights provide a crucial perspective for understanding these trends and making informed decisions in this dynamic market.