Are you thinking about buying a home or possibly selling one and are curious about what exactly is really going on in the St. Louis real estate market?

If you turn on the television, it's hard to judge.  According to the national media, it's still all doom and gloom (though houses under contract did go up this past month unexpectedly).  The local media is mixed.  One story will be optimistic and upbeat, then the next will make it sound like everybody is getting foreclosed upon!

So, what's real? 

It's hard to say.  While there are a lot of homes that have been foreclosed upon here in St. Louis, I don't believe those media accounts that count St. Louis as one of the more depressed housing markets.  From what I can tell, the market still has a pulse, though not a very strong one.

Thinking About Selling?

If you're looking to sell, you're going to have to be very realistic on where you price your home at.  With those foreclosures out there, prices do currently have a downward pressure on them because the banks are reducing them until they do sell.

While not all buyers are willing to take on the risks of buying a foreclosed property, a fair number of them are.  This means that these buyers aren't available for a retail purchase.

The number of buyers out there is also being curtailed by the tightening of credit standards.  Where it had gotten to the point where just about anyone who could fog up a mirror could buy a home, this isn't the case anymore.

Even buyers with good credit and money to put down are having a more difficult time getting a mortgage.  So, as a seller you're going to have to make your home more attractive to the buyers that ARE able to complete a purchase.  All other things being equal, this means that you're going to have to price your home aggressively in order to compete for these buyers.

From what I can tell, the market has adjusted about 10% lower than what it was at the peak of the market a couple of years ago.  The other day I went on a listing call where the owners had bought the home 2.5 years ago for $176,000.  When I did the comparables (homes that were similar to theirs that had sold recently) I suggested that we start marketing the home at $164,900.

Not quite a 10% drop, but considering the improvements that these folks had made in the home, it was in that range. 

Thinking About Buying?

What a great idea!  As long as you plan on staying in the home at least 5 - 7 years, now could be a very good time to buy!  As I mentioned above, as a buyer, you're in high demand!

But Bob, Why would I want to buy a home in a market if the prices may continue to go down?

Excellent question!  The reason, as I see it, is that while real estate values are indeed going down at the moment or at best are stagnant, I don't see it staying this way.

The reason that I don't see it staying this way is because of the demographics involved in the housing markets.  You might have noticed the news story that was aired a while back that pointed out that the US population had just topped 300,000,000 people. 

Well, the second part to that story that didn't get as widely reported was that the US population is expected to continue rising.  As a matter of fact, it's expected to top 400,000,000 people by the year 2050!

In addition, with the aging of the US population, the size of households are expected to continue getting smaller.  Combining these two facts leads me to think that housing values should be on the rise.

The reason that housing values aren't rising at the moment has more to do with the credit crises than it does the housing market.

The nice thing about it being caused by the credit market meltdown, is that one way or the other, this storm shall pass.  It might not be tomorrow or the next day, but eventually either the credit markets are going to get fixed or the credit markets are going to work through the foreclosure mess.  Either way, EVENTUALLY, real estate values should regain their footing and homes should start to appreciate again.

If nothing else, the fact that new home construction has slowed means that as homes are removed from the market (for one reason or the other) that the supply of homes available for this increasing population will adjust downward thereby providing a floor to real estate values.

How long will this process take?  Nobody knows for sure, but even if it takes awhile, as long as you use the home for it's intended purpose (i.e. having a roof over your head) you should come out ahead in the long haul!

The Importance Of Getting Pre-Approved!

If you're considering buying a home, please be sure to meet with a loan officer in order to get "Pre-Approved".  Getting pre-approved does several things for you;

1) It assures the seller that you're serious and able to complete the transaction

2) It reassures you that you're able to pull the transaction off too!  Even if you have good credit, other underwriting guild lines have been increased to a point where it's not a bad idea to make sure that you do indeed qualify to purchase.

3) It removes a lot of the stress that comes with a home purchase because any issues that may arise are able to be dealt with ahead of time...without the pressure of having a home under contract!

4) It allows you to act quickly!  As the old real estate adage goes, "You Can't Steal Something Slowly!" Many times a seller is more concerned with getting out from under two payments than they are with making money on the transaction.  By being "pre-approved" you'll be able to offer the seller a quicker closing than if you had to start the process from scratch.  Also, especially if you are buying a foreclosure, most sellers require a pre-approval before they will even consider your offer.

ValueList Is A One-Stop-Shop!

Not to get too commercial here, but one of the advantages that my company, ValueList Real Estate Services, Inc. has is that we do both mortgages and real estate.  This allows you the convenience of being able to deal with one person who can then walk you through the entire process.

Also, sense we are participating in more than one aspect of the real estate transaction, many times we can offer you a very competitive rate on your mortgage.  And while it's not a requirement of the transaction by any means that you work with ValueList for your mortgage, many of our previous clients have been very happy not only with the rate/point combination that they received, they have been happy with the seamless way in which the transaction was carried out!

So, if you're interested in finding out more about buying a home, call for a free, no-obligation consultation.  No pressure will be applied, I promise!  So, feel free to call us or to drop us a line through the "email me" link above.

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc.

Bob Mitchell is president of ValueList Real Estate Services,  St. Louis' largest discount/full-service real estate and mortgage company.  If you would like to find out more about Bob, ValueList or our flat-fee listing program, please feel free to visit our web site at valuelistre.com