Homes that have barely been on the market are receiving multiple bids above asking price. Would-be buyers are struggling to compete with others willing to pay cash, waive certain contingencies or buy sight-unseen.
In March, Zach and Colleen Carter, a recently married couple, went to an open house in Ballwin. By the end of the day, the listing agent had 11 offers. The Carters’ offer was one of the highest, but it still fell short. “We were exceeding our budget by at least 10 grand,” Zach Carter said. “And we lost by $3,000. It makes you uncomfortable.”
In March, the inventory of home listings in the St. Louis area hit the lowest point it’s been in years. Real estate agents typically say a market in equilibrium has a six-month inventory of homes available for sale. In many area counties, the inventory is below three months. According to data from the real estate website Trulia, the average number of homes listed each month in the St. Louis area dropped by 37.5 percent from the first quarter of 2012 to the first quarter of this year.
That mirrors a trend seen in many metro areas across the country. In the nation’s 100 largest metro areas, there are, on average, 32.5 percent fewer homes available than in 2012, falling to a point where the inventory of homes for sale nationwide is close to a 20-year low, according to Trulia data, which was distributed by The Associated Press.
Real estate agents point to a variety of factors driving pent-up demand that isn’t matched by what’s offered in the market: Interest rates remain low, lending has loosened a bit, and the financial situations of many households have improved since the recession, enticing more buyers into the market. Fewer homeowners are underwater on their mortgages, so more people can sell without having to cut a check to the bank. Far fewer new homes were built during the recession, so there’s less new home inventory available in recent years.
Another factor several area agents say is at play is a reluctance to list a home for sale out of fear that it would sell before the homeowner could find another home. They’re not worried about selling their home, They’re worried about being homeless.
Inventory levels vary throughout the region but are low in nearly all counties, including in the Metro East. In St. Clair and Madison counties, the average time it took to sell a home so far this year dropped significantly from a year ago. The area saw a record number of home sales last year.
While St. Louis’ market remains more affordable than in many other metro areas, low inventory and strong demand are putting upward pressure on prices, though several agents said appraisals have kept them from spiking. According to Multiple Listing Service data provided by Norman, the median single home sale price for the overall St. Louis region during the past 12 months was up by 4.7 percent from the prior year.
“Just because inventory is so low, that’s not a blank check,” Norman said. “The consumers that are out there today are pretty educated consumers. Everybody’s kind of learned their lesson from the Wild West days.”
Several area real estate agents said that while they expect listings to tick up in the coming year, strong demand will likely keep inventory low.
For many house hunters, navigating the market has been frustrating and stressful. In some cases, they have to be more aggressive than they had initially planned.
Rose Moller-Jacobs and her fiancé, Anthony Harper, have been looking to buy a duplex in south St. Louis since December. They’ve made offers on five or six homes, she said, but have been outbid each time. “Nothing stays on the market if it’s a good deal for more than three or four days,” she said. “It’s a lot faster pace than I think we were prepared for.”
On the other side of the transaction, low inventory has been great news for sellers.