The St. Louis Market Real Estate Market is Strong, for Good Reasons
If you haven’t purchased a home in the last couple of years, you might not have noticed it, but the St. Louis regional real estate market is booming.
Last year the number of home sales and average sale price continue to climb, and this year has started off just as strong. Average sale prices have gone up by 4% in St. Louis County in the first quarter of 2017, compared to the first quarter of 2016. The number of closed sales has increased, as well.
It is once again a seller’s market, and that’s true in the other markets (Kansas City, Chicago, and Denver) we work in.
Wondering why things are looking up? Here are a few reasons—and one suggestion on what we can do to make the St. Louis area market even stronger.
1. We have an overall pent-up demand in housing and continued low interest rates.
Over the past ten years, homebuilders have built about half the new homes needed to meet the demand created by new families. For a while some of that demand was absorbed by the post-crash excess supply in housing, but that excess supply ran out a long time ago.
What that means is that in 2017, and for the past few years, there are simply more buyers than sellers.
The strong housing market we’re experiencing now is driven by simple supply and demand, and it will take a while for supply to catch up. That’s good news for St. Louis area home sellers. And while the Fed has modestly raised interest rates, they remain historically low—though if we continue to see a strong economy, there will likely be further increases.
2. Depressed Rust Belt? No. The Midwest is a hot market.
What the St. Louis area lacks in hipness, it makes up for in affordability—and that matters to a growing wave of millennial, first-time home owners. According to migration data from U-Haul (and seriously, who would know more about migration than U-Haul) in 2016, Missouri was the 5th fastest growing state in the country.
People are moving to the middle of the country for a reason.
I think I first heard the term “millennial” about a decade ago. And while millennials are buying homes at a later age than previous generations did, they will eventually form families and purchase homes. When they do, cost of living will be an important consideration.
That’s one big reason why Midwestern metropolitan areas—including St. Louis—are some of the hottest markets in the country.
3. We perceive ourselves differently than the rest of the country does.
The outside world doesn’t perceive us as 80-plus different communities. For people looking to move here, we are one metropolitan area, with both a downtown and suburbs that have unique selling points.
Downtown has its startup scene and has become one of the fastest growing entrepreneurial hubs in the country, and communities like O’Fallon and St. Charles are routinely recognized as some of the best communities in the country to raise a family.
In this metropolitan area, we waste a lot of time focusing on our divisions and differences, when people migrating here view us as being not a whole lot different than other cities. We have a downtown with one set of costs and benefits surrounded by suburbs with their own set of costs and benefits.
The reality is that the communities in this region are not worlds apart, and a commute from O’Fallon to downtown St. Louis, while long by St. Louis standards, is still far easier than the commutes workers in other fast-growing markets face.
If our municipal governments worked together a little more cohesively, and we a did better job of viewing and branding our region as one metropolitan area, I believe our housing market would be even stronger.
But until that happens, we still have a lot to be excited about, because the housing market in St. Louis is strong again.
And it’s going to stay that way for a while.
President & CEO
Worth Clark Realty