In the time of COVID, the residential real estate market has seen a truly unprecedented level of demand. Everyone wants a home where they can work, educate, and recover some of their sense of security that was lost in the last twelve tumultuous months. This combined with historically low home inventory has made the market very difficult for first time home-buyers and those with a lower budget. In St. Louis, this incredibly strong seller’s market is starting to be felt acutely, according to reports by the St. Louis Business Journal.
Continuing both a national and local trend that has been Nationally down to 2.5 months from 3.9 months last year. In St. Louis it is 1.6 months down from 2.9 months in October last year.
What that means is that if houses continue to sell at the current rate, all the homes currently sold on the market will be sold in 1.6 months. That is extremely low, as fewer homeowners chose to sell and get more selective about their asking prices. It also means that buyers, or would be buyers, often have to fight tooth and nail to close on a home. A lot of homes in St. Louis are selling significantly above the listing price. It is nothing if not a seller’s market.
It should be mentioned that this is certainly not all bad. New home starts are up in St. Louis and, just as elsewhere in the country, the active and strong residential real estate market has helped buoy an otherwise languishing economy. That being said, there is certainly a darker side to the current market.
For one thing, it has been rather tough on realtors, having to navigate huge numbers of offers for each home on the market. They are pouring in at a very high rate as well. Furthermore, a major draw of St. Louis historically has been its relative affordability. That is becoming less and less the case as the average selling price of a home has increased to $292,702 in October, 2020, from $250,296 a year earlier. It’s still a lot more affordable than the coasts and below the national average, but that nevertheless represents a significant drop in affordability.
The St. Louis market is still a very strong one, but some realtors are concerned. One thing that is particularly troubling is the extremely competitive market for homes priced in the middle of the market, typical starter homes. According to data from Zillow, around 40% of homes priced between $182,500 to $244,967. There is a looming threat of some people being simply unable to afford a starter home.