House prices rise; St. Louis shows 15 pct. bump - STLtoday.com
House prices rise; St. Louis shows 15 pct. bumpASSOCIATED PRESS
House prices rose in nearly 60 percent of U.S. cities in the first quarter of this year, as the housing market started to stabilize thanks to billions of dollars in federal spending.
The median sales price for previously occupied houses rose in 91 out of 152 metropolitan areas tracked in the January-March quarter versus a year ago, the National Association of Realtors said Tuesday.
In St. Louis, the median price surged 15.1 percent, to $116,100. It was one of the strongest gains of any large market in the country, though it's in comparison with an exceptionally rough quarter a year ago, when prices were driven down by a glut of foreclosure-related sales.
The national median price was $166,100, 0.7 percent below the first quarter of last year. Sales of foreclosures and other distressed properties made up 36 percent of sales.
The tax credits — $8,000 for new buyers and $6,500 for current owners — helped gin up house sales this spring as many buyers raced to purchase a house in time to qualify. In all, about 2.2 million households had used the first-time buyer credit as of late March at a cost of $16 billion, according to the IRS.
The trade group credited the government incentives for generating about one million additional sales, helping to bring down the inventory of unsold houses.
"Without that tax credit, if we had an additional million unsold homes on the market, the inventory would be so out of whack that we would be seeing prices continuing to decline and we might still be in recession," said NAR spokesman Walter Molony.
With the housing tax credits now over, many experts anticipate home sales will soften in the near term, and that could siphon some of the momentum in home price increases.
Prices also could be hurt as banks unload their backlog of foreclosed homes. And despite rising prices, nearly a quarter of all U.S. homeowners with a mortgage still owe more on their loans than their homes are worth, according to CoreLogic.
The NAR is projecting prices will increase "very modestly" in the second half of this year, assuming unemployment and the economy don't take a turn for the worse, Molony said
Commentary:
Certainly welcome positive local news for the Saint Louis real estate market. However, before anyone goes ringing the 'all clear' bell, we want to reiterate that one positive data point doesn't make a trend and median pricing tends to be somewhat irrelevant when compared to other indicators such as the following Saint Louis housing market statistics courtesy of Altos Research.
In this analysis, the past twelve months has seen a dramatic splike in inventory for the entire St Louis MSA (remember this covers both the IL and the MO sides of the overall MSA). Please click here to see the same housing market data for the Saint Louis County Real Estate Market.
The Market Action Index is about where it was a year ago and far from a really strong indicator yet. We would expect that stronger employment data (including a lower unemployment rate closer to the mid 5% pre-market adjustment rate from 2007) will be needed for the Saint Louis housing market to begin to show price appreciation.
This St Louis housing price improvement will begin with the lower price points (sub $175K ) and gradually improve up to about $300K initially. The next range ($300-$530K) will take a longer period of time as the buyer pool is thinner and will need additional demand from 'move up' or existing homeowners from lower price points to percolate up from the lower ranges.
The higher price ranges (above $530K) where jumbo loans are the norm, will take the longest period of time to recover.
