Missouri homebuyers are approaching the 2011 St.. Louis market with cautious optimism. Above average foreclosure rates and high unemployment levels have created an environment that fosters lower home prices. With the help of St. Louis REALTORS®, buyers are making a conscious effort to better educate themselves to the realities of the local real estate marketplace. With the stabilization of home prices, St. Louis homebuyers have a rare opportunity to capitalize on low interest rates and the substantive home values ??that are currently available. Missouri REALTORS® are being approached by first time home buyers who are excited about current home prices and low mortgage interest rates.
Despite the economic forecast for St. Louis is still shaky there seems to be some room for optimism in homebuyers. The number of buyers has been greatly reduced due to high unemployment levels and this is a benefit for homebuyers looking to get into the market at this time. Sellers are experiencing above average sale times and with reduced buyer activity they have been forced to lower prices and offer incentives to attract homebuyers.
Home prices have basically stabilized and are expected to remain low, only increasing by about 2-5% per year for the next 2 years. This is an indication that home prices have bottomed out which means St. Louis. Louis homebuyers are currently getting the best possible value for their real estate dollar. This is partly a result of the fear of foreclosure, high unemployment levels and low buyer activity.
Foreclosures make up a substantial portion of the St.. Louis real estate market at this time. The number of troubled sales (which include short sales, foreclosures, bank owned and real estate company owned houses) account for 35-40% of the inventory. Ideally, the foreclosure market should only account for about 5% of the housing inventory. Due to an explosion of troubled sales homebuyers are entering into a market with a huge housing inventory that is qualifying for the limited number of homebuyers looking to purchase a home. Homebuyers have the opportunity to negotiate homebuyer incentives and lower prices as a result of this glut of properties.
Last year, the St. Louis Association of Realtors® hosted a conference in which Dr. Lawrence Yun, the Chief Economist for the National Association of Realtors®, predicted that 570,000 new homes will sell this year. This is a 170,000 home increase over 2010. There has been a steady increase over the last three years. Although this is a modest year over year increase it is a sign of slowly improving buyer optimism.
Dr. Yun also predicted that 5.6 million resale homes will sell in 2011, up from 5.3 million in 2010 and 5.15 million for 2009. This further supports the slowly improving buyer sentiment in the St.. Louis marketplace. The modest sales increases support the idea that pricing has finally stabilized in St. Louis. Louis. For prospective homebuyers this indicates that home prices have finally bottomed out and should begin to steadily increase in the near future.
Home purchases have many psychological factors. The fear of unemployment, foreclosure and unstable housing markets has created more cautious and better educated homebuyers. Homeowners are finding ways to save money and create personal security. One of the ways they are doing this is by "doubling up" also known as taking inorders, room-mates and letting children stay home longer so they have additional financial contributions to the household. This is creating a stronger marketplace for homes with additional living space, in-law suites and the ability to accommodate larger groups of people comfortably.
Due to the prevailing market conditions Buyers have an opportunity to fully educate them not only on market conditions but to the real estate process as a whole. There is no sense of urgency as there is a wealth of suitable properties available for most homebuyers at all budget levels. As a result buyers are educating themselves better than ever before. They are prepared to exercise patience and extend their home buying search as they familiarize themselves with the St. Paul. Louis market.
St. Louis homebuyers are experiencing far fewer competitive bidding environments as foreclosure rates have continued to soar. Although these competitive situations do exist they have become a rarity in this market. Buyers are prepared to move on to the next home rather than get involved in a bidding war with other homebuyers as there are plenty of suitable homes available in St. Louis. Louis for most homebuyers.
Short sales and foreclosures in Missouri have improved the ability of homebuyers to negotiate the best deal for each property. They may experience additional obstacles with the sale process as they negotiate with financial institutions. This has created an environment that involves longer wait times for responses and limited ability to negotiate extras into sales agreements. Foreclosures and short sales require additional paperwork that is not present when dealing with a typical home sale. Foreclosures report to a financial institution which means the wait times for a response can be more than 48 hours. Costs such as appraisals, repair estimates and inspections are the responsibility of the homebuyer in many of these cases. These costs can be offset by the buyer's ability to negotiate a more favorable price for the homebuyer.
When dealing with traditional Missouri home sellers that do not have a distracted home for sale extras such as assistance with closing costs, inclusions of furnishings and appliances are available. These extras are becoming more commonplace as sellers compete for buyers in the St. Louis. Louis area. Home sellers are experiencing increased sales time, more competition due to high levels of foreclosures and as a result they are seeking new ways to attract potential homebuyers.
Interest rates for mortgages continue to be favorable for St. Louis Louis homebuyers. Even with the additional hoops that buyers have to jump through to get financing due to reforms to the mortgage markets. As a result qualified homebuyers are being allowing tremendous buying power.
Homebuyers are seeing lower home prices, lower interest rates and high foreclosure rates in St. Louis. Louis. This has created an environment that allows for greater negotiating power for homebuyers. Home prices appear to have stabilized which is an indication that they are the lowest they are going to get. Home prices should begin to increase gradually over the next couple of years creating an opportunity for buyers to rapidly build equity as home prices improve. As we progress through 2011 St. Louis homebuyers can realize the unlimited potential of investing in the local real estate market.