Cottrell Report – Total Market Overview for Week Ending 10/24/08
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Saint Louis
MO
Real Estate Market Update & Overview
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Current WK |
4 Weeks Prior |
1 Year Ago |
Trend |
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Active Listings |
5,174 |
5,403 |
6,049 |
+ |
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Pending Ratio |
10.9% |
12.3% |
11.7% |
+ |
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Price Reductions |
11.2% |
9.4% |
18.2% |
- |
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Days on Market* |
86.4 |
87.1 |
69.8 |
+ |
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List/Selling Price(%)** |
95.6% |
95.3% |
96.9% |
= |
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Cottrell Index (08/07) |
109 |
99 |
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Cottrell Index (07/07) |
111 |
86 |
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Cottrell Index (06/07) |
108 |
95 |
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*Weighted Average Days on Market for Listings Sold |
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**Average List/Sell% for all listings sold in past 6 months |
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Source: MARIS Data Deemed Reliable but not Guaranteed |
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Cottrell Index based on year over year analysis of ratio of new listings/listings sold |
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© 2008 Cottrell Realty Group/Incubation Realty Group LLC ALL RIGHTS RESERVED |
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For a copy of this week's Total Market Overview Report - please send and email with TMO Please in the subject to tmo@cottrellrealty.com
Download crg_list_to_sell_analysis.pdf
“The Saint Louis MO real estate market remained unseasonably slow this past week. Many listings – including new or reduced priced listings – had NO showings…”
Now - For some good news!
Some well priced houses are receiving offers and selling (provided seller’s are motivated and realistic in their pricing expectations) – we have negotiated 3 contracts in the past 7 days and are working several other offers currently on additional listings.
If you have a listing that has been rejected by the market – few or zero showings or showings and no offers – call us today at 314-779-3600 for a free NO OBLIGATION listing evaluation.
Pending Ratio Declines stable again week over week!
The pending ratio declined markedly to 10.9% from last weeks 13.3%. This ratio very close to the lowest level of 2007 and we expect the pending ratio to decline further based on seasonal reductions of buyers in the fall and winter in
Saint Louis
MO.
.
Listing Inventory – You are either priced correctly or not in Saint Louis
As we’ve discussed, over the past 30 to 60 days, available inventory (although considerably lower than the same week in 2007 @ 6,049) has increased dramatically to a level of more than 9 months based on the six month rolling sales number. We’re continuing to see unseasonably slow showing activity – some listings whether new or just reduced in price (some by significant amounts) with very limited to zero showings. This is a source of consternation for Saint Louis home sellers.
We believe this is a continued sign of weakness from the fallout from the lack of consumer confidence resulting from the Wall Street and spreading global financial meltdown. Normally strong areas such as Ballwin, Webster Groves, Kirkwood MO, Clayton MO, Ladue and University City MO continue to be unseasonably low and off from where they were a few weeks ago.
Unfortunately, the fact that some sellers are not realistic necessitates aggressive and direct discussions on our part. We believe in telling the truth – and when seller’s lack the willingness to price correctly – we’d rather terminate the listing and have them understand that they will not in our professional opinion – ever sell at the price they desire (their listing has been ‘rejected’ by the market). Sometimes, this is a tough pill for sellers to swallow, however, we feel with our broad analysis of the market and pricing expertise, we have a strong handle on what works to get a home sold in this market – we’ve closed more than 80 homes this year.
Unfortunately, sellers and buyers alike run into the mediocre real estate agent who is either on their way out – or already out of the business – and they hear the mantra of ‘the market is terrible’ or ‘nothing is selling’ or there are ‘no buyers.’ Our advice is simple – when you run into one of these agents who spouts this nonsense – don’t walk – run away and contact a professional agent who has a demonstrable track record of getting homes sold. Look for a market expert who will tell you the truth.
For sellers – this may not be the price that you want… and you may decide not to sell now and compete with more aggressively priced homes – owned by sellers who have to sell – not ‘want to sell if I can get some target price.
“A huge number of Saint Louis MO home sellers reduced their prices in the past 7 days – more than 500 price reductions -represents a reduction by almost 1 in every 12 listings! …”
Price Reductions continue at record levels
There are more active listings available in many submarkets in
St. Louis
, than buyers who will purchase in a reasonable timeframe. Relative pending ratios for these submarkets are well below 10%. In these specific areas, even significant price reductions have been met with limited to no new showings. These areas are definitely targets for sellers to consider Lease/Purchases – something we’ve 
developed as a successful aggressive strategy to re-position a listing to compete with a large number of available properties. Seller’s in some Saint Louis areas may get one and only one shot at selling their house or condo. A seller of a condo in Clayton MO or a house in
Fenton
who receives an offer – however structured – should carefully weigh whether this is the only and best offer they will receive. We’ve worked with many a disappointed seller – who disregarded the advice from their seasoned agent that ‘this is likely the best offer – and likely the only offer given current market conditions that you will see.” Smart sellers are getting aggressive and respond without judgment or ego to offers – regardless of how low the initial offering price is.
“With the stock market meltdown, many smart investors and home buyers are realizing that at no time has the
St. Louis
real estate market ever subjected their invested capital to the extreme risk that the stock market does. When was the last time you saw a house price decline by 7% in a day in
Saint Louis
? - NEVER“
Significant Opportunity for
Saint Louis
for homebuyers!
The shift in the real estate market in
Saint Louis
provides a significant opportunity for home buyers. With the stock market meltdown, many smart investors and home buyers are realizing that at no time has the
St. Louis
real estate market ever subjected their invested capital to the extreme risk that the stock market does. When was the last time you saw a house price decline by 7% in a day in
Saint Louis
? NEVER
We have received a record number of calls from buyers and investors looking to move capital into real estate using self directed IRAs. Be ware – your friendly investment advisor at Edward Jones, AG Edwards, etc will tell you that you can NOT do this. This is not accurate. Smart buyers are already converting their IRAs and investment accounts to self-directed accounts and looking to move in to a more stable investment asset of real estate in
St. Louis.
Call us today at 314-779-3690 for more details and a referral to a company that can assist with self-directed IRAs.
As we discussed previously, as a home buyer looking in St. Louis MO, you need a market expert buyer agent who can assist with the selection of homes that represent the best value and when you find the best home in Saint Louis MO, provide the critical analysis for potential purchases (is the home priced in such a manner where it represents a significant value, has it had price a price reduction(s) – when, by how much? What do the comparable sales indicate? These are all key things that a professional buyer specialist can provide – Just make sure your agent is a market expert!
"Based on the trend we discussed last week the current window of opportunity for home buyers in
Saint Louis
…could close between late fall and spring."
Weighted Average Days on Market remains above 80!
Again, this measure which applies a weighting by relative activity per price range and is the aggregate measure of six whole months sales activity had been rising steadily since late fall.
We will continue to watch this measure carefully along with the overall list to sell ratio for pricing which has remained below 96% since December 2007. It is important to note that the list to sales ratio is considerably lower than the 97.4% seen two years ago in
St. Louis
Both indicators show activity as well as aggressive offers being accepted from the relatively smaller pool of buyers who are active in the marketplace. For reference, the national list/sell ratio is below 90% and in some cases – markets with significant foreclosure and bank owned inventory – way below this number.
Readers should note that both the List to Sale Ratio and the Weighted Average Days on Market are lagging indicators of market condition – they contain a rolling 6 months of data – and as such will not be the first indicator of market correction. The pending ratio (see above) is the leading indicator and as such will show the first and strongest sign of a shift in the market. Unfortunately, the local and national press focus on other indicators that are either plainly inaccurate or lag (imagine days on market declining for 30 weeks – when pending ratio reversed trend for more than 6 of those weeks) the market in terms of shifts.
Based on this fact, the press and most real estate agents and brokers normally watching the days on market would believe that the market is improving (days on market have been declining). However, the number of buyers under contract (pending ratio) has declined significantly (by over 24%) in the past month. We’ll be watching this carefully for any continued degradation in the pending ratio.
Note: Complete definitions of all terms for the Cottrell Report are found here.
Kevin Cottrell /Cottrell Realty Group in Saint Louis MO
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