By Bill Beggs Jr.
Since 2005, Regional Home Prices Slip 5.5%; Nationally, It’s 7.6%
John Williams, 2008 president of the St. Louis Association of Realtors, won’t try to force-feed you sunshine. But “comps” are the bread-and-butter of his business, and if certain real-estate markets
on the east and west coasts have been storm-battered over the last few months and years, our markets in Missouri and Southwestern Illinois region have been overcast, with scattered showers. Metaphorically speaking. So, let’s look at some of the numerical “comps.”
In our region for 2005, the median sales price for a single-family home was $141,000. By the second quarter of 2007, it had risen to $157,200. Between then and the first quarter of this year, it had plunged to $121,400. But by the close of the second quarter, the median price was $148,600. Lest any of the mathematically challenged view that as an outright increase of $7,600, for the period the median price dropped 5.5 percent.
For the same period, the median prices in Sacramento, Calif., were downright mean to sellers. The 2005 median sales price was $375,900. Between then and the close of the second quarter of 2008, it had not gone any higher, steadily eroding to $229,500. For the period, a 35.6-percent drop.
Williams can cite statistics with the best of them, but being a champion of home ownership and a St. Louis homeowner himself, he also is encouraged by anecdotal info. Recently, our region was cited in a (non-local) ranking as being the third-best place in the country to buy a home. Other quantitative-cum-qualitative factors lead to such good, or at least not bad, news.
“One thing that St. Louis didn’t get caught up in was building on spec,” says Williams, a disdain for the term evident in his voice. “We didn’t build according to an outlook that 50 percent of a subdivision would be bought and ‘flipped’.”
“Overheated” is a popular term for former boom markets that are, for now, busted, like Phoenix and Las Vegas. Williams compares it to obeying the speed limit. OK, many folks can’t drive 55. Others take it under advisement, flowing with traffic. But the go-go real estate speculators and subprime lenders eventually made it hazardous for anyone else on the road by cranking it past 65, then accelerating to 75… 85…
“They took a product with a long-term value and microwaved it into a short-term investment,” he points out. Home-equity lines of credit became commonplace; anyone could capitalize on their short-term gains, often with no tax consequences. But it got way out of whack when lenders started signing off on massive mortgages for borrowers of very modest means. Eventually, says Williams, so many playing smoke-and-mirrors with the centerpiece of the U.S. economy brought Wall Street to its knees.
“A home isn’t an investment, it’s a place to live,” exclaims Williams. “I bought a house because I wanted to raise my family.”
Or you could move to Salt Lake City, where median prices for the aforementioned time span improved by half a percentage point. Bismarck, N.D., improved by seven-tenths of a point. Springfield, Ill., rose by one percent then, a couple hundred clicks down Route 66 to Amarillo, where median prices actually improved by 7.2 percent.
But most anywhere else sun-lovers choose to live, from Fort Myers, Fla. (down 33.1 percent), to L.A. (down 29.5 percent), home values just evaporated.
In the fiscally responsible Midwest, things didn’t, and aren’t likely to, go so wrong so fast.
Williams’ long-term outlook? No doom, less gloom.
“I think our market will improve next year,” he predicts. “And it’s not a horrific market to begin with.”
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