What is going to happen to the Saint Louis real estate marketvv
Lately I have been talking to many Saint Louis real estate professionals and lenders. I respect these people and their opinions, and the general consensus is that we have entered into a stable market. Many are also hopeful for the future. I am as well.
I tend to agree with them on the future and that current Saint Louis real estate market has been stable over the past 6 to 8 months.
However, don’t make mistake this current stability for a housing recovery.
The housing market (I’m writing this on January 27, 2010) in the immediate future still looks bleak. Our best case scenario is that the market remains stable and doesn’t drop any further over the next couple of years. But, without government aid, it is more likely the St. Louis housing market will drop farther.
I know we are looking for a silver lining, that we want things to return back towards a boom so that we can be more comfortable with our economic future. This hope…unfortunate…is not realistic for the immediate future…
Lets get what I’m saying straight..I’m not saying that the overall outlook for our economy and housing market is bleak in the future. What I AM saying is that we have yet to have our rough landing. As a result, the next couple years may be pretty tough for most families.
The housing market is currently in a situation similar to a Chinese knot tie.
For every 1 qualified buyer in the market, there are about 9 homes for sale. In 2008, 20% of homes sold were in foreclosure, and another 11% were sold via a short sale! (stat found @ CNN Money.)
To make matters worse, it is now harder than ever for a buyer to get qualified for a loan.
This recipe of a huge inventory of homes on the market, combined with new lending requirements that make it much harder to get approved for a loan, does not add up to a near future real estate boom.
Add in to the mix that unemployment still remains incredibly high, and you have for yourself a full fledged real estate recession. The current stability is merely an artificial result of the government aid and intervention that the real estate market has been receiving.
Once this is taken away, things will begin falling downward again.
Ok. I get the point. Things are bleak for the Saint Louis Real Estate market. How can I tell when the market is going to turnaround?
Supply and demand is the key indicator for recessions and booms. In real estate the supply is houses, and the demand is the amount of buyers in the marketplace. Click on this link for the most recent unemployment rate data that I could find. The chart shows data from the U.S. Bureau of Labor Statistics
So…its really that simple…the current vicious cycle will continue until the unemployment rate drops.
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