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St. Louis: Real Estate and Market Trends

Published on Friday - January 30, 2015

The St. Louis housing market is no different than many others across the county, in the sense that it too was the beneficiary of historically high appreciation. Over the course of three years, homes in the St. Louis area gained enough value to pull them out of a period of post-recession price weakness. Even though appreciation has begun to tapper, the St. Louis housing market boasts a current median home price of $149,900. The rest of the country, however, has a median home price of $212,267. That price is a result of a 25.8% appreciation rate in the last three years. It is important to note, that despite increases, St. Louis remains a balanced market. At the moment, conditions neither favor buyers nor sellers.

St. Louis Real Estate Market Statistics

Data about the St. Louis real estate market

Again, the St. Louis housing market was the beneficiary of palpable appreciation rates. Over a three-year period, homes in the area have appreciated more than 16 percent. While the state of appreciation has slowed down, homes still appreciated by nearly 5% in the last year. \Accordingly, homeowners that were once void of equity now have a little more breathing room, which could have significant implications for the future of this market. Perhaps even more encouragingly, the rate of homeowners with negative equity dropped more than 20% in one quarter at the end of last year. That said; the following highlights how much equity has been gained relative to the year of the home’s purchase:

  • Homes purchased in the St. Louis housing market one year ago have appreciated, on average, by $9,416. The national average was $12,731 over the same period.
  • Homes purchased in the St. Louis housing market three years ago have appreciated, on average, by $26,716. The national average was $51,204 over the same period.
  • Homes purchased in the St. Louis housing market five years ago have appreciated, on average, by $26,255. The national average was $48,225 over the same period.
  • Homes purchased in the St. Louis housing market seven years ago have appreciated, on average, by $6,937. The national average was $1,750 over the same period.
  • Homes purchased in the St. Louis housing market nine years ago have appreciated, on average, by $27,273. The national average increased $5,043 over the same period.

For the most part, the St. Louis housing market has taken advantage of the rebound. However, holding it back from becoming a prominent housing market is its job sector. The youth of St. Louis, in particular, are in for a bumpy ride. By the end of 2014, there were only positions for 24% of young applicants. A distinct lack of jobs for younger populations can dramatically impact low-income communities.

Unfortunately, deficiencies in the job sector do not end with the younger populations. The St. Louis job sector has an unemployment rate of 7 percent. While that number represents a 0.6% drop since the last year, it is still about a whole point higher than the national average. Even the job growth rate of St. Louis is lagging behind the national average, 1.3% and 1.7% respectively.

Fortunately, the outlook for the St. Louis housing market is bright, as Clear Capital sees enough in the city to add it to its list of Top 50 Performing Major Metro Markets. Sitting at number 12, St. Louis is expected to have a prosperous 2015. According to its standing on the list, St. Louis is expected to become the beneficiary of a 2.2% increase in home prices. That is better than prominent markets like Nashville, Jacksonville and Raleigh.

View from under the St. Louis arch

The St. Louis real estate market has one other thing going for it: affordability. Taking into consideration both the average household income and the cost of homes in the area, St. Louis continues to be one of the most affordable markets in the country. In fact, St. Louis’ housing affordability has dropped below historical levels. Whereas homeowners in the area were accustomed to spending 9.6% of their income on their monthly mortgage, that ratio has now dropped to 7.5%. Compared to other markets around the country, St. Louis is more than twice as affordable than the average home in the United States.

According to recent data provided by Zillow, nearly 5% of all St. Louis homeowners are considered to be behind on their mortgage. The percentage of delinquent owners throughout the city of St. Louis is; however, lower than the national average of 6.4 percent. So while the city still has its troubles, delinquent mortgages are not necessarily among the top priorities. Underwater mortgages, on the other hand, are something else to keep an eye on. The percentage of owners that owe more on their home is worth has reached nearly 40 percent.

Trulia has run the numbers and compiled a list of the most popular neighborhoods in the St. Louis housing market. The following zip codes appear to be drawing the most attention:

  • 63129
  • 63021
  • 63122
  • 63123
  • 63033

Of the markets to keep an eye on, Central West End and Tower Grove South are perhaps the most popular, with listing prices of $512,437 and $165,480 respectively. However, some may argue that the zip code of 63147 is the most appealing to investors. Over the span of a week, this neighborhood increased its average listing price by more than 11 percent.

For all intents and purposes, the St. Louis housing market has maintained a relatively steady presence – all things considered. While the job market has yet to drive supply and demand, it is trending in the right direction. Perhaps even more importantly, the predicted rate of appreciation should boost the entire housing sector, at least enough to get it on track. That said, homes in the area are still very affordable and investors should be able to find the deals they are looking for. Underwater homes could be a priority for investors looking to invest in this area.

St. Louis Housing Market Summary:

  • Current Median Home Price: $149,900
  • 1-Year Appreciation Rate: 4.9%
  • Unemployment Rate: 7%
  • 1-Year Job Growth Rate: 1.3%
  • Population: 318,416
  • Median Household Income: $54,449

St. Louis Housing Market Q1 Update:

Values in the St. Louis housing market continue to grow relative to last year, and appreciation rates in the first quarter settled just under 12 percent. According to data released by the National Association of Realtors (NAR), median home prices for the area are now $134,800; which is considered to be very affordable. Zillow predicts they will rise 2.9 percent within the next year. In fact, the current combination of affordability and price appreciation is very enticing to the St. Louis real estate investing community.

The real draw for St. Louis investors, however, is the distressed property market. According to RealtyTrac, St. Louis has about 1,367 homes in some state of foreclosure. The percent of delinquent mortgages in St. Louis is 4.3 percent, which is lower than the national value of 6.3 percent. The percent of St. Louis Metro homeowners underwater on their mortgage is 22.8 percent.

The St. Louis housing market recently ranked in RealtyTrac’s “Top Buyer’s Markets” list. During the first quarter of this year, homes sold at 77 percent of their estimated value, enough to make it a popular destination for anyone looking to buy a home.

St. Louis County Map:

Map of St. Louis neighborhoods

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.

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