St. Louis Real Estate Market Projection 2011

Article Written By: Chuckharris01

Some argue that the real estate market in St. Louis may not bottom out in 2011, while others predict that it will take another year or two before the real estate markets stabilize. The reason for the debate is that there are number of factors, both localized and nationally, that are used to evaluate market conditions and establish forecasts. Things like the volume of home sales, mortgage lending statistics, new home construction figures, regional economic growth and development, commercial building starts, employment levels, historical trends and consumer confidence are all taken into account.

In a recent article by the St. Louis Business Journal St. Louis home prices were compared to previous area statistics. The figures paint a bleak picture indeed. Overall home sales (including distressed sales) dropped by nearly 8% in November of 2010. Even when the figures were analyzed to exclude the distressed transactions (which include foreclosures, short sales, bank and real estate owned properties) the year-over-year home prices were down 3%. Nationwide figures are not much better. Overall sales figures (which include distressed sales) fell 5% while figures which exclude the distressed sales still fell 2 percent.

The St. Louis real estate market first appeared to be stronger in the spring and summer of 2010. The majority of this was due to the $8,000 tax credit for first-time home buyers which according to Tim Logan of SLToday.com had an outsized influence in a modestly-priced markets like ours.” Dr. Yun takes it a step further and claims that 1 million of the buyers would not have purchased a house without the tax credit while 3.4 million buyers would have bought a house regardless. He credits the program for reducing the inventory of houses for sale by 1 million and helped bring about the early stages of stabilization.

Since psychology is one of the driving forces behind the real estate market today the unemployment rates and population figures are a valid determining factor in market projections. Using these and other figures Dr. Yun predicts the short term inventory conditions will look very unfavourable. The reason being that there are basically the same number of jobs today in the U.S. that there were 10 years ago, but we now have 30 million more people than then.

New housing starts have not increased with the population. This means that although the population has increased the demand for housing has not. This is due to the fact that many people cannot comfortably afford to go it alone. More and more frequently people and families are doubling up either by taking in room-mates, living with parents longer and helping them to pay their mortgages; senior parents are choosing to live with grown children.

There is a significant decrease in the number of people who are moving inter-state” and with the unfavourable employment figures inter-stators are reluctant to relocate to areas which are experiencing the brunt of the financial turmoil. Even within the state there is a modest decrease in the number of people who are moving.

Economists continue to debate as to when the St. Louis real estate market will stabilize and with so many local and national factors to consider, it is a very daunting task indeed. The Clear Capital One-Year Metro market Forecast claims that the wild spikes that the market experienced in 2010 will likely be replaced with more gradual price trends for 2011. The current St. Louis real estate market is being driven by psychological factors and the high ratio of short sales and foreclosures and the rather dismal unemployment statistics are not instilling residents with a great deal of consumer confidence.

As 2011 progresses above average foreclosure rates and low interest rates should promote buyer activity in the St. Louis area. You can expect a St. Louis real estate agent to have some very attractive offers for a buyer. This will help offset some of the prevailing doom and gloom sentiment created by an uncertain economic forecast, above average unemployment and high foreclosure rates. A full St. Louis real estate market recovery is heavily tied to the national economic outlook and will not experience a full recovery to economic confidence is developed on a national level.

About the Author

Chuck Harris is the founder of Agents Ranking. Know more about St. Louis Realtors at agentsranking.com

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