Current Market Trends from St. Louis Post Dispatch…
Across the St. Louis area, home prices rose about 30 percent from 2000 through 2005, after adjusting for inflation, according to data released today by the U.S. Census Bureau. Other government research shows that trend continued during the first six months of this year.
Low interest rates helped fuel the price hikes, despite a drop in inflation-adjusted median household income during the same period. In other words, median income rose but slower than the rate of inflation. But economists and real estate people say home sales locally and nationwide are starting to slow, forcing sellers to lower their profit expectations and patiently wait for the right buyer.
Locally, the largest increases in home values occurred in the city of St. Louis, where rehabbed properties and tax abatements helped the median home price jump 43.5 percent to $103,300 over the five-year period.
As is typical, home prices in the St. Louis area rose slightly less over the five-year period than the national average, 30 percent versus 32.2 percent. The smallest increases in the area occurred in St. Clair County, where the median home price climbed 18.9 percent between 2000 and 2005.
The heightened interest in home buying a couple of years ago created a market where some properties sold for more than they were worth and now the market is adjusting. But three years ago, interest rates were lower and, on average, households were earning more, both of which helped would-be buyers afford more expensive homes. When interest rates are 2 percentage points lower, a buyer can purchase a home that's 25 percent more expensive without seeing a monthly mortgage payment increase.
Still, Americans were spending more of their income on housing in 2005 than five years earlier, 21 percent versus 19 percent, the Census data found. Part of the blame falls on a decline in median household income, which dropped 6.4 percent in the St. Louis area between 2000 and 2005, the data showed. That figure, which was adjusted for inflation, was slightly higher than the national average.
Low interest rates helped fuel the price hikes, despite a drop in inflation-adjusted median household income during the same period. In other words, median income rose but slower than the rate of inflation. But economists and real estate people say home sales locally and nationwide are starting to slow, forcing sellers to lower their profit expectations and patiently wait for the right buyer.
Locally, the largest increases in home values occurred in the city of St. Louis, where rehabbed properties and tax abatements helped the median home price jump 43.5 percent to $103,300 over the five-year period.
As is typical, home prices in the St. Louis area rose slightly less over the five-year period than the national average, 30 percent versus 32.2 percent. The smallest increases in the area occurred in St. Clair County, where the median home price climbed 18.9 percent between 2000 and 2005.
The heightened interest in home buying a couple of years ago created a market where some properties sold for more than they were worth and now the market is adjusting. But three years ago, interest rates were lower and, on average, households were earning more, both of which helped would-be buyers afford more expensive homes. When interest rates are 2 percentage points lower, a buyer can purchase a home that's 25 percent more expensive without seeing a monthly mortgage payment increase.
Still, Americans were spending more of their income on housing in 2005 than five years earlier, 21 percent versus 19 percent, the Census data found. Part of the blame falls on a decline in median household income, which dropped 6.4 percent in the St. Louis area between 2000 and 2005, the data showed. That figure, which was adjusted for inflation, was slightly higher than the national average.
posted by Russell T. Nolting at
2:13 PM
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