If you follow residential real estate either locally or nationally, you know that the markets are very unusual right now. One of the major contributing factors in all the weirdness is the historically low interest rates. Right now, said low rates are driving up the price of homes in St. Louis dramatically.
Writing in the St. Louis Post Dispatch, David Nicklaus analyses the current state of residential real estate in the area. Following national trends, the St. Louis housing market is experiencing historically low inventory and high demand, which in turn is driving up prices.
Last year, according to an index published by the Federal Housing Finance Agency, the average price of a single family home rose 10.8%. In the St. Louis metro area, the average price was up 8.9% according to the same index. Both nationally and locally, this is the greatest increase year over year recorded by the FHFA in the last three decades.
Historically low interest rates have fueled this white-hot housing market, although ironically more affordable mortgages have created a market that is so competitive that homes are frequently selling way above listing price. Buyers also have a strong sense that the market is hot, leading to people closing on homes very rapidly. According to Zillow data from December of 2019, the average home in the St. Louis area was on the market for 25 days. In December 2020, Zillow reported that this had gone down to an average of 9 days.
This aggressive market, Nicklaus concludes, is hardest on young families who need the extra space. Part of the demand for homes is that the Millennial generation is coming into its prime home-buying years. But due to the crazy circumstances of 2020, that look to be continuing into 2021, many families are facing a housing market that is prohibitively expensive to break into.