[ad_1]
St. Louis’ housing market is active, but sellers are facing a growing reality: less money for their homes
In St. Louis, 10% of all listings are at risk of selling for less than homeowners bought them for. This is an increase from the 8% share last year and the sixth highest among the top 50 metros. Nationally, 6% of sellers are at risk of losing money on a sale.
However, the share varies widely depending on when someone bought their home, with those buying more recently tending to be more at risk.
- 16% of sellers who bought post-pandemic are at risk of losing money on the sale, compared to 16% nationwide.
- 14% of sellers who bought during the pandemic are at risk of losing money on the sale. Nationally, this share is 9%.
- 7% of sellers who bought pre-pandemic are at risk of losing money on the sale, well above the 2% in danger across the country.
St. Louis reflects the broader Midwest trend: strong demand for affordable homes, seller-friendly conditions, and rising prices. However, the Gateway City bucks regional trends, with sellers far more likely to sell at a loss than fellow affordability bulwarks Detroit (6.4%) and Cleveland (2.6%).
That’s not to say St. Louis home sellers will actually sell at a loss. Typically, sellers facing a financial loss will wait until they find a buyer willing to pay the asking price, take their home off the market, or rent it out. Plus, the vast majority of sellers still make money on their home sale: Nationwide, 94% of homes sell for more than they were purchased for, compared to just 37% in 2012.
How has St. Louis’ housing market changed since the pandemic?
During the pandemic, the St. Louis housing market was hot but relatively muted. Many homebuyers were instead rushing to the Sun Belt to take advantage of good weather and low mortgage rates, snapping up available homes. As a result, prices soared in that region, and people began looking elsewhere for affordable homes – mainly, the Rust Belt.
Now, across the Midwest and Northeast, prices are rising and inventory is falling as buyers compete for a limited supply. Still, many sellers are left selling at a loss.
Falling prices would create a larger gap
If prices fall in line with Redfin forecasts by the end of the year, more sellers would be susceptible to losing money on their home. Even the least-affected metros – New Brunswick, NJ, and Providence, RI – would see notable increases.
- If prices drop by the predicted 1%, 11% of St. Louis listings would be at risk.
- If prices drop by 3%, 12% would be at risk.
- If prices drop 5%, 14% would be at risk.
Those who bought prior to the pandemic face the lowest risks of selling at a loss, but they’re also less likely to move in the first place thanks to their lower mortgage rates.
How buyers and sellers can navigate the St. Louis market
St. Louis’ housing market has shifted significantly since the pandemic, creating more pressure for buyers and opportunities for sellers.
- Buyers: With elevated housing costs and fewer homes on the market, buyers in the market will likely face competition. They should hire a great agent, come prepared to negotiate, and move quickly when the right home comes along.
- Sellers: Sellers have more power in St. Louis than in many parts of the country, thanks to strong buyer demand. Those who price fairly generally don’t have the negotiating power they had during the pandemic, so they may need to offer incentives to attract braving today’s market.
Complete metro-level data
Methodology
Based on a Redfin report, which analyzed active listings on the MLS in May for the 50 largest U.S. metros. All housing data is from Redfin.
The report identifies the share of sellers at risk of selling at a loss, not the share of sellers who will actually sell their home at a loss, and does not take closing costs into account. We defined the pandemic as July 2020-July 2022, when home prices rose the most. Please see the original report’s methodology for complete details
[ad_2]
Source link