St. Louis Housing Market Slump Symbolic of National Discourse
The national market for existing homes remains mired in a slump, and the St. Louis housing market hasn’t bucked the trend. Indeed, compared with sales a year ago, the local region fared worse than the nation.
Nationally, 6 million homes were sold in May, 10.3 percent lower than a year earlier, according to numbers released Monday by the National Association of Realtors. In the St. Louis area, 3,751 homes were sold, a 12.7 percent decline over May 2006.
Activity in the Missouri mortgage market and sales have been picking up, some say, but most local real estate professionals agree that a turnaround in the local market is not likely until early next year.
Sales of existing homes are at the lowest level in four years nationwide, the national Realtors reported, and the number of homes for sale are at the highest level in 15 years.
At the current sales pace, it would take nine months to sell the homes listed for sale in the St. Louis region. That’s a higher-than-average inventory level.
Colleen Ramonez of Glen Carbon hopes she won’t have to wait that long. Despite new carpet, light fixtures and a remodeled bathroom, her two-story brick home has been on the market since mid-January, when her husband was transferred to Maryland.
They priced their house below median price for similar homes in her neighborhood, and a few months ago reduced it by $5,000. Still, no offers. Her real estate agent blames the housing market, said Ramonez, an administrative assistant at an architecture firm.
The housing market must clear several hurdles, experts say, including the fallout in the bad credit home loan market, say real estate experts.
“Lenders have tightened their lending standards because of the problems with the subprime market, and that is part of the problem,” said Stephanie Tonnies, chief executive of the Realtor Association of Southwestern Illinois. “And many sellers are still thinking of the gains they saw in the market in previous years and are not willing to adjust their asking prices.”
That combined with low consumer confidence is affecting the market, said Doug Devitre, a Ladue-based broker for Prudential Alliance Realtor.
“All the attention on the negatives in the national market is hurting the local economies,” Devitre said. “I think we will continue to see sluggish sales until the fourth quarter, and then we will see a turnaround.”
May was a particularly bad month regionally. Comparing May 2006 with May 2007, sales declined 33 percent in the Metro East area and 8 percent on the Missouri side of the St. Louis area.
Al Suguitan, president and chief executive of the Greater Gateway Association of Realtors in Glen Carbon, finds the Metro East number higher than he believes it to be, but he agrees that the market is off from the last couple of years.
“I feel uncomfortable with those numbers. I believe that for the first five months of the year, we are off about 8 percent,” Suguitan said. “It surprises me that it is so high.”
The national Realtors expect existing home sales will fall by 4.6 percent this year, down from a previous forecast of a 2.9 percent drop. They expect the median price of a home to fall by 1.3 percent this year, which would be the first annual price decline on record.
Mortgage rates also have begun to rise, although they remain well below their historic averages. According to mortgage giant Freddie Mac, the average loan rate for 30-year mortgages was 6.26 percent in May, up from 6.18 percent in April.
SOURCE: The St. Louis Post-Dispatch