Grim housing numbers don't depress local real estate professionals
From the St. Louis Post-Dispatch (Jan 25, 2008)
St. Louis didn't escape the effects of one of the worst years in national home sales. But local real estate professionals are optimistic about a turnaround.
Every local county and the city of St. Louis saw existing home sales decline in 2007 — although none matched the severity of the national drop. And median house prices fell in many area counties in 2007, with St. Louis County as a notable exception with a 2.6 percent increase to $160,000.
Nationally, sales of single-family houses plunged by the largest amount in 25 years, 13 percent, according to the National Association of Realtors.
Locally, Madison and Jefferson counties took the biggest hits, falling 11.9 percent and 11.7 percent, respectively.
Nationally, the median price for a single-family house dropped 1.8 percent to $217,000, making it the first time in four decades that the median price dropped for the entire year. Lawrence Yun, the national Realtors' chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression.
In the St. Louis area, Monroe County saw the largest price decline, down 5.1 percent to $185,000 from $195,000 in 2006.
Despite the numbers, local real estate professionals said things are not as bad they appear.
"The market was soft, it wasn't bad," said Don Rogers, past president of the St. Charles County Association of Realtors and a Realtor with ReMax/Discover. "What I mean is, we didn't hold true to 2006. But if you go back to 2002, which was the last normal year we had, to see how we stacked up, all indicators are great."
Even though houses in St. Charles County stayed on the market longer — 80 days in 2007 compared to 48 in 2002 — sales rose to 5,248 from 4,149.
And although median house prices barely budged over the last year in St. Charles County, Rogers noted that the average house price increased by nearly $55,000 over the last five years.
Local real estate professionals cheered the Federal Reserve's three-quarters of a percent cut Tuesday in two key interest rates.
"The drop in the interest rates can do nothing but help the market. Things were slowing down but the interest rates are looking a heck of a lot more favorable now," said Mike Travaglini, vice president and branch manager of the south St. Louis County office of Coldwell Banker/Gundaker. "We now have low interest rates and stable prices, something that very seldom happens."
Low interest rates partly fueled the boom in the national housing market and the subsequent run-up in prices. But the St. Louis region did not see a price boom similar to markets like Florida, California and Nevada, said John Williams, president of the St. Louis Association of Realtors. Existing house sales should benefit because the region has not overbuilt, Williams said.
"I hear markets like Miami and Fort Lauderdale in Florida have years worth of condo inventories," Williams said. "That just sounds so crazy to me. Those markets will take much longer to come out of the slowdown. We don't have that."
The inventory of unsold homes nationally dropped by 7.4 percent in 2007, raising hopes that backlogs that had hit record levels were starting to be reduced, a key factor necessary to prompt a rebound in the market.
While Yun said he expected sales to start to rebound this spring, other analysts said housing is likely to remain in the doldrums throughout most of 2008, reflecting in part a credit crunch, which has caused lenders to tighten their standards, making it harder for prospective buyers to qualify for loans.
The housing bust has sent shock waves through the economy as defaults have risen, resulting in multibillion-dollar losses for big financial firms with investments in subprime mortgages that have gone sour.
Rogers, as well as Williams, held out hope that the St. Louis market would recover sooner than the national one.
Last year, fear over the impending closure of Highway 40 (Interstate 64) slowed sales in parts of the region, Williams said. Because the highway closure has not had a major effect, those areas are starting to recover, he said.
Stephanie Tonnies, chief executive of the Belleville-based Realtor Association of Southwestern Illinois, said potential buyers have little reason to wait.
"You can't time the market. If you sit on the fence, by the time you decide to buy, you probably missed the low point," Tonnies said.
The Associated Press contributed to this report.
rtstclair@post-dispatch.com
314-340-8206
St. Louis didn't escape the effects of one of the worst years in national home sales. But local real estate professionals are optimistic about a turnaround.
Every local county and the city of St. Louis saw existing home sales decline in 2007 — although none matched the severity of the national drop. And median house prices fell in many area counties in 2007, with St. Louis County as a notable exception with a 2.6 percent increase to $160,000.
Nationally, sales of single-family houses plunged by the largest amount in 25 years, 13 percent, according to the National Association of Realtors.
Locally, Madison and Jefferson counties took the biggest hits, falling 11.9 percent and 11.7 percent, respectively.
Nationally, the median price for a single-family house dropped 1.8 percent to $217,000, making it the first time in four decades that the median price dropped for the entire year. Lawrence Yun, the national Realtors' chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression.
In the St. Louis area, Monroe County saw the largest price decline, down 5.1 percent to $185,000 from $195,000 in 2006.
Despite the numbers, local real estate professionals said things are not as bad they appear.
"The market was soft, it wasn't bad," said Don Rogers, past president of the St. Charles County Association of Realtors and a Realtor with ReMax/Discover. "What I mean is, we didn't hold true to 2006. But if you go back to 2002, which was the last normal year we had, to see how we stacked up, all indicators are great."
Even though houses in St. Charles County stayed on the market longer — 80 days in 2007 compared to 48 in 2002 — sales rose to 5,248 from 4,149.
And although median house prices barely budged over the last year in St. Charles County, Rogers noted that the average house price increased by nearly $55,000 over the last five years.
Local real estate professionals cheered the Federal Reserve's three-quarters of a percent cut Tuesday in two key interest rates.
"The drop in the interest rates can do nothing but help the market. Things were slowing down but the interest rates are looking a heck of a lot more favorable now," said Mike Travaglini, vice president and branch manager of the south St. Louis County office of Coldwell Banker/Gundaker. "We now have low interest rates and stable prices, something that very seldom happens."
Low interest rates partly fueled the boom in the national housing market and the subsequent run-up in prices. But the St. Louis region did not see a price boom similar to markets like Florida, California and Nevada, said John Williams, president of the St. Louis Association of Realtors. Existing house sales should benefit because the region has not overbuilt, Williams said.
"I hear markets like Miami and Fort Lauderdale in Florida have years worth of condo inventories," Williams said. "That just sounds so crazy to me. Those markets will take much longer to come out of the slowdown. We don't have that."
The inventory of unsold homes nationally dropped by 7.4 percent in 2007, raising hopes that backlogs that had hit record levels were starting to be reduced, a key factor necessary to prompt a rebound in the market.
While Yun said he expected sales to start to rebound this spring, other analysts said housing is likely to remain in the doldrums throughout most of 2008, reflecting in part a credit crunch, which has caused lenders to tighten their standards, making it harder for prospective buyers to qualify for loans.
The housing bust has sent shock waves through the economy as defaults have risen, resulting in multibillion-dollar losses for big financial firms with investments in subprime mortgages that have gone sour.
Rogers, as well as Williams, held out hope that the St. Louis market would recover sooner than the national one.
Last year, fear over the impending closure of Highway 40 (Interstate 64) slowed sales in parts of the region, Williams said. Because the highway closure has not had a major effect, those areas are starting to recover, he said.
Stephanie Tonnies, chief executive of the Belleville-based Realtor Association of Southwestern Illinois, said potential buyers have little reason to wait.
"You can't time the market. If you sit on the fence, by the time you decide to buy, you probably missed the low point," Tonnies said.
The Associated Press contributed to this report.
rtstclair@post-dispatch.com
314-340-8206
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