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How do you position yourself correctly to take advantage of current St. Louis real estate market trends?

sliderlogoDisclaimer – Real estate is difficult because personal considerations tend to trump financial ones.  For example, if its time to downsize because you are sick and tired of cutting that huge yard, then its time to downsize no matter what the market conditions dictate.

This article is meant to help you understand the underlying economics of the marketplace only.  Taking out all personal considerations, what would I advise people to do to take advantage of today’s 2014 St. Louis real estate market trends?

 

 

When to Downsize Your House – If you are able to stay in your home, don’t move.  Hold onto your investment.

When to Upsize Your House – Don’t wait a year or two or when is convenient.  Upsize as soon as you can.

Let me explain – the market appreciates and depreciates in percentages.  So, a 3% market appreciation gain on a 600,000 home results in an 18,000 appreciation of your home’s value.

A 3% gain on a 100,000 home is a $3,000 appreciation.

Market prices are currently still down from their records levels in 2006.  Current St. Louis real estate market trends are showing that we have recently entered into a seller’s market.

St. Louis Real Estate Market Trends Data:

4 to 7 months of inventory is considered a healthy and balanced market.

7+ months of inventory is a Buyers Market (in which you begin to see house values depreciate)

3 months or less is considered a Seller’s Market (in which appreciation occurs).

 

On 5/5/14 I pulled market data from the Multiple Listings Service, a good source for 2014 St. Louis real estate market trends, and this is what I found on the macro level:

Location: North Central South West (St Charles County included)
Months of Inventory (Absorption Rate): 2.84 2.64 2.35 2.3

 

Depending on where you live, there may be pockets still of healthy and balanced markets, but as a whole the 2014 St. Louis real estate market trends point to a sellers market.

The second major consideration you need to understand the importance of is interest rates.

As I write this interest rates are around 4.4%.

The National Association of Realtors is predicting that interest rates will rise to 5.4% by the end of 2014.

With each percentage point that goes up, the cost and expense of the loan rises dramatically.

Unfortunately most people don’t understand the importance of this and the expense, but here are how the numbers work at a $384,000 price point:st_louis_market_trends

So, if a person is thinking about upsizing, but just decide that they will wait another year to move.  Over the course of a 30 year loan, the expense of waiting JUST ONE YEAR to move will be about $83,891 for the same exact house!

Not only are prices showing signs of appreciating which would mean the buyer wouldn’t get as good of a deal, but the cost of that same house goes up dramatically as the cost of the loan rises.

Summation – if you are considering upsizing in the next three years, in order to exploit market conditions you really need to buy now.  If you are thinking of downsizing, you may want to consider holding on to your house for a few more years to take advantage of the trending seller’s market and probable market appreciation that will occur. Going with the current 2014 St. Louis real estate market trends can lead to big financial differences.

By | 2017-12-05T08:24:34+00:00 July 7th, 2014|Categories: St Louis Real Estate Market Updates|