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The ‘Real’ Refor 2010 iPresented at The L
February
t. ou s,Kevin Cottrell –
kevin@kelseycottrell.
Shawn Kelsey – shawn@kelseycottrell
http://www.stlouisre
l
Estate MarketSt. Louis
dge, Des Peres, MO
11, 2010
ssourhief Economist
com / 314-779-3600
anaging Broker.com / 314-434-2222
alestatetoday.com/
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Who is Correct aMetro Real E• “Housing Market Prepar
Following Removal of Sufounder of center for econo
• “Lifeline Needed for UndSuggested that "4.5 Million
more than their homes are
Magazine Website 2-3-10
• “Foreclosures Down 10%
RealtyTrac - 2-11-10
out the St. Louisstate Market?s for Renewed Plunge
ports .” – Dean Bakeric policy 1-27-10
rwater Home Owners” -home owners owe 75%
orth". NAR – Realtor
in January 2010” –
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Who is Correct aMetro Real E
• “4 Million Foreclosures iPossibility” – MoneyWatc
“ high largely because mor
their homes to avoid fore
8/09
• “It's still a buyer's marke
90 to 100 days for an offe
out the St. Louisstate Market?
2010? It’s A Real– 12-15-09
people are trying to sell
losure” – SLAR President –
…sellers to expect to wait
– SLAR President 1/10
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Months
Housing Inventory (left axis)
Buyers
19 Years of Natio
Source: NAR
Existing Home Sales – Single Family Homes
ar e
Million
Sellers
nal Market Shifts
right axis)
Market
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Historical Re
5
8
Existing: 4New:
0
3
1 9 7 0
1 9 7 3
1 9 7 6
1 9 7 9
1 9 8 2
1 9 8 5
1 9 8 8
Existing:
l Estate Sales
800
1000
1200
1400
98M transactions in 2008433K transactions in 2008
0
200
400
600
1 9 9 1
1 9 9 4
1 9 9 7
2 0 0 0
2 0 0 3
2 0 0 6
.16M transactions in 2009
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MortgagFixed Rate
1971-
Source: Freddie Mac
e Rates- 30 Year
2007
Rates have not beenbelow 5.37 in 45 years
5.0%
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Comparison of I
PriIncome and Price set t
1970-
Source: NAR
come to Home
ceIndex of 100 in 1970
2007
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Housing Affordabi1970-
Source: NAR
lity & Home Price2007
Affordability (right axis)
Median Home Price (left axis)
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Affordability is, a
the primary re• When interest rates go u
• When home prices rise,
• When affordabilit dro s
number of home sales dultimately drop.
• The more dramatic the ruthe steeper the decline in
d always will be,
l estate issue., affordability comes down.
ffordability drops.
oo low or too fast, the
crease and selling prices will
n-up in home appreciation,sales and prices.
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What has H
Affordability• Interest Rates have drop
• Affordability Index is overwas 8 in Las Vegas and
• FHA Financing Available
• Median Price in US – do
• Aside from unemployme – market should be stabil
• Unemployment Rate was
ppened with
in St Louis?ed to 5% - over 6% in 2005
80 in STL (Peak of Marketan Diego)
up to $291,250
n from $214K to $173,500
t and consumer confidenceizing
4.6% - 2005 now +/- 10%
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Housing Affordabi1970-
Source: NAR
lity & Home Price2010
Affordability (right axis)
2010 – Median $173.1
Median Home Price (left axis)
2010 – Index 167
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Who’s Buying H
• 73% of Contracts in past
• 90% of Contracts in past
• FHA Driven Market - $29
• High end – especially inMarkets hardest Hit
• Unemployment too hightempering market
mes in St Louis?
30 days – Below $300K
30 days – Below $400K
1,250 Loan Limit
t Charles and Ex-Urban
Lack of Confidence is
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Annual Sales in2004 2005
STL 14,640 14,345
-2.0%
STC 4,504 4,766
5.8%
CITY 3,748 3,990
6.5%
St Louis Metro2006 2007 2008 2009
13,470 12,171 10,634 10,761
-6.1% -9.6% -12.6% 1.2%
4,262 3,912 3,285 3,350
10.6% -8.2% -16.0% 2.0%
3,593 3,272 3,180 3,032
-9.9% -8.9% -2.8% -4.7%
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Active Inventory i
2007 2008
STL 5,994 5,794
-3.3%
n St Louis County
2009 2010
4,782 3,740
-17.5% -21.8%
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What’s up with
• Nationally – Up 1% in 20think all go to courthouse
• 869,812 vs 861,336 – FaREO
• STL Foreclosures down
• 2,226 REO – 0.51% of h
• Including Short Sales (PrSTL Sales
Foreclosures?
9 – Media Loves Filings andand sell
t: 99.49% of Filings not
4% in 2009 vs 2008
useholds – 21% of Filings
-Foreclosure) – 10-12% of
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What Happen
Housing• Median price decreased f
$135.1 in 2009
• According to OFHEO Dat-2.35% in Q3 2009
• PMI Market Index – Move2010 (% risk of price decli
• PMI Pricing Index (-1.6%
d with St Louis
Prices?om $156.5 in 2005 to
– STL Prices Declined by -
d from <1 in 2007 to 38.7 innes – poor trend)
Q3 2009)
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What’s Really Ha
to I apply this w/ • Overall list to sale in St Lo
sales in past six months (i
• Number of price reduction2.5 for ever listin – 300
• List to Sale gets worse – increases AND as propert
• Pricing of Property Up FroCondition) the primary dri
• More than 50% of listings
pening and How
uyers & Sellers?uis County – 94.9% for allcludes REO/Short Sales)
s in same period close to-600 ever 7 Da s
oth as price rangeis on market longer
nt (Not Marketing ander of whether it sells
expire vs sell
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Case Shiller Doe
Now
n’t Cover STL –
hat?
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Case Shiller Doe
Now
n’t Cover STL –
hat?
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Case Shiller Doe
Now
n’t Cover STL –
hat?
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Case Shiller Doe
Now
n’t Cover STL –
hat?
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Yeah…But All R
Right? Chester
al Estate is Local
ield vs. Ballwin
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Yeah…But
is Local Right?
ll Real Estate
Ballwin (con’t)
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Yeah…But
is Local Right? Fe
ll Real Estate
nton vs. Florissant
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Yeah…But
is Local Right
ll Real Estate
Fenton Con’t
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So, Have Prices F
Valley Park
llen Everywhere?
vs. Glendale
S L i A
i i i L k
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St. Louis - An
at the RMedian Sales Price - 1Appre
ptimistic Look
covery:970 to 2020 - at 6.4%iation
A M C i L k
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A More Conse
RecMedian Sales Price 1980 t
rvative Look at
very:2020 at 4.3% Appreciation
?
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What
• Market will not strengthenbusiness cycle recovers
• Now more than ever impsellers – regardless of ou
• Strong counsel to Buyersstrongly qualify – media c
• Know your #s – Saint Louavailable for Free @ ww
Next?
until job growth occurs and
rtant to tell the truth tocome
– set expectations andan ruin them
is Housing Market Stats are.stlouisrealestatetoday.com