Cottrell Report – Total Market
Overview for Week Ending 2/6/09
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Saint Louis ,
MO Real Estate Market
Update & MLS Statistics Overview
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Current WK
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4 Weeks
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1 Yr
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Trend
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Active Listings
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3,954
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3,881
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4,680
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+
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Pending Ratio
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9.6%
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9.4%
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12.9%
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=
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Pendings Previous 30 Days
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262
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199
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n/a
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+
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Pendings below 300K (%)
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77.8%
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82%
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n/a
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+
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Price Reductions
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11.2%
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9.4%
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18.2%
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-
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Days on Market*
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84.1
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90.5
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69.8
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+
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List/Selling Price(%)**
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95.1%
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95.3%
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96.9%
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-
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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 MLS Data Deemed Reliable but not Guaranteed
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© 2008 Cottrell Realty Group/Incubation Realty Group LLC
ALL RIGHTS RESERVED
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Download TMO2009_020309
Download Crg_list_to_sell_analysis
“The Saint Louis MO
real estate market remained unseasonably slow this past month. Many
listings – including new or reduced priced listings – had NO or few showings…The
icy and cold weather combined with waiting for a stimulus package and
foreclosure rescue plan from President Obama and Congress certainly did not
help.”
Now - For some good news!
Some well priced houses and condos
are receiving offers and selling (provided
seller’s are motivated and realistic
in their pricing expectations) – we have negotiated 2 contracts in the
past 7 days and are working several other offers
currently on additional
listings.
Supply side – Listing Inventory Continues to be a record low
levels – market has corrected with significantly lower available listings – In the current market, available
listing inventory is 15.5% lower than the same period last year.
For reference, 2008 available
listing inventory levels were
approximately 15-17% 
below 2006/2007 levels.
This has resulted in a market contraction of more than 25% (compared to
the peak of the market in 2005/2006 in sales represented by the number of
transactions.
This trend appears to be
continuing with 17% fewer listings being activated during January 2009 when
compared with January 2008. The last
time new listings were at this low a level was January 2002.
In addition, sellers are much more
realistic now – those that do NOT have to sell are not selling or attempting to
market their homes or condos in St. Louis.
As we’ve previously discussed, a fairly significant population of
sellers exist in the Saint Louis Metro market who are in current loan products
that no longer exist. As such, they are
unable to sell and then re-purchase again.
As such, many of them who would normally be coming on the market to sell
during the spring selling season are not coming on – hence the significantly
lower listing inventory.
Note: 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.
We sold a record number of 91+ homes
in 2008 - despite the challenging market conditions. Ask me for details
on our aggressive, proven marketing plan and how it can get yours sold too!
Pending Ratio stable again week over week!
The
pending ratio remained near
the mid 9% range which is considerably lower than the same time last year when
the ratio was %. 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.
.
As was mentioned above, the supply
side of the St. Louis Metro Real Estate market has contracted
significantly. In addition, the trend
which began in October/November 2008 on the buy side of the market (as measured
by pendings has continued). Activity below $300K price points (as measured by
the % of contracts – # of pending contracts in the most recent past 30 days)
continues to dominate sales. This is
directly the result of plentiful financing using FHA loan programs for buyers
at historically low rates. FHA loan
limits beginning Jan 2009 for the St. Louis Metro were adjusted to
$271,250.
Now as buyers purchase homes up to
the loan limits allowed by FHA, this frees up equity for sellers of these home,
a portion of which will purchase a new home in a higher price range – commonly referred
to as a ‘move up buyer.’
The easiest way to see this
happening in the market is to closely watch the % of transactions below
300K and as the active buyers using FHA financing continue to generate
additional move up buyers with closings, the % will decline (with a larger # of
pending contracts initially in the $300-350K range and then $350-400K price
range).
This is exactly what we are seeing
in the Saint Louis Metro since early January. 
The wild card in all of this analysis is the rumored availability of a
stimulus package from Congress which will increase the amount of a home buyer
tax credit to $15,000 with availability to all buyers (not just first time home
buyers). In addition, the tax credit
will supposedly be a true credit without the restrictions on repayment and
qualifications which burdened the tax credit program introduced by Congress in
mid-2008.
This will truly be a watershed
week provided Congress gets a realistic stimulus plan in place which gains
approval and is signed into law by President Obama.
“A
huge number of Saint Louis MO home sellers reduced their prices in the past 7
days – more than 453 price reductions -represents a reduction by almost 1 in
every 12 listings! …”
Price Reductions continue at record levels
Despite having lower levels of
inventory, the buyer pool has also decreased to a level where there are more
active listings available in many submarkets in St. Louis MO than buyers who
will purchase in a reasonable timeframe. Relative pending ratios for these
submarkets and price ranges 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.
IMPORTANT NOTE: Seller’s in
some Saint Louis areas may get one and only one shot at selling
their house or condo in 2009. A seller of a condo in Clayton MO
or a house in Ballwin MO who receives an offer – however poorly presented or 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. We recently looked at 20 listings we
terminated or we let expire with sellers due to a lack of consensus on the
correct price for getting the home sold.
Remarkably, the majority of these listings either NEVER sold -were
removed from the market altogether or were re-marketed by other agents and
ultimately sold at levels even below what we suggested as the market
deteriorated. In one case in Webster
Groves, the sellers have carried two rehabbed homes at ridiculously high prices
and now are trying to rent – 18 months later.
This seller commented to me this past week – “God, I really wish we had
taken your advice and counsel – we’ve lost a fortune with holding out.”
“With the stock
market meltdown last fall, smart investors and home buyers are realizing that
at no time has the St. Louis MO 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. Beware – 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!
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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