As the summer home-selling season winds down, the St. Louis market’s rebound over the past few months should continue this fall and lead, finally, to recovery.
That’s the view of real estate experts, who say low prices and low mortgage rates — sales drivers long seen as the way to pull the housing market out of its swan dive — appear to be taking effect.
“We have been so busy,” said Bob Bax, a broker-manager with Prudential Alliance Realtors, in Ladue, who tells of ringing phones and packed open houses. “I don’t see any drop off in the fall.”
In July, existing home sales rose 25 percent from a year earlier in the Missouri portion of the metro area.
Similarly strong sales are happening in Metro East. Figures released Friday by the Realtor Association of Southwestern Illinois showed a 26 percent July sales increase in St. Clair County, for example.
So is the elusive bottom of the housing market now in the rear view mirror?
“Yes,” Bax said. “There’s no evidence there’s going to be a correction. Every month there’s been an uptick for the year. I think were going to have a good fall, especially if we see some new inventory.”
In the area’s key central corridor — the pricey area between the Central West End and Wildwood — homes currently on the market sell, on average, in less than four months, according to a new report by Keller Williams Realty. That’s the least amount of time since 2005, the report said.
The corridor’s median home price of $213,000 is flat from a year ago and “still pretty pathetic” but will likely begin to edge up, said Russ Nolting, a broker-manager at Keller Williams Realty in Kirkwood.
The firm’s 16 percent year-over-year jump in the number of houses sold in the corridor will push up prices, especially if the supply remains relatively tight, he said.
The market got a boost last week when the Federal Housing Finance Agency reported that house prices in the St. Louis area rose 3.28 percent in the second quarter. That was the biggest three-month jump since the agency began keeping this record in 1991.
The second quarter also marked the first time since early 2010 that St. Louis prices were up on a year-over-year basis. The increase amounted to 4.4 percent between the second quarter of 2011 and the second quarter of 2012.
Nolting added that many homeowners, “awakened to the reality of today’s market,” realize their houses no longer fetch the bubble-fueled prices of a few years ago, when almost any buyer could get a mortgage.
“People are staying put,” he said. “Back in ‘03, if the bathroom was pink, people would just sell the house.”
Hesitation by some owners to put homes on the market, along with the slump in new-home construction, continues to inhibits inventory growth.
The change in attitude isn’t just by homeowners. Banks also are more willing to accept short-sales rather than launch lengthy and costly foreclosure proceedings, a decision that is helping spur local real-estate activity.
“There are lots of short sales, and people are surviving the short-sale crisis, instead of just giving up,” Nolting said.
In a short sale, the lender agrees to accept less than the buyer owes on a mortgage, to allow for the sale of a home that has lost substantial value.
Better sales numbers for existing homes have yet to do much for home construction. But that might soon change, even though home building dipped 6 percent last month, compared with July 2011.
The Commerce Department reported last week that sales of new homes in the United States rose 3.6 percent in July to match a two-year high reached in May and a seasonally adjusted annual rate of 372,000.
The report is “the latest in a series of data points suggesting a durable housing recovery is underway,” Dan Greenhaus, chief economic strategist at BTIG LLC, a brokerage firm, said in a note to clients.
In the past 12 months, sales nationwide have jumped 25 percent. Still, the increase is from a historically low level. New-home sales remain well below the annual pace of 700,000 that economists consider healthy.
St. Louis builders are on pace to complete about 3,500 homes this year, according to the Home Builders Association of St. Louis & Eastern Missouri. That’s puny in comparison with the 10,000 to 14,000 built during the overheated boom before the housing bust in 2007, but closer to a rational market.
Bax said that much of the construction underway now consists of small developments in a few inner suburbs. But rising sales numbers of existing homes have caught the attention of mainline builders.
Ken Kruse, president of Payne Family Homes, said Friday his company anticipates building more than 150 homes in 2013, compared with 125 this year and fewer than 100 last year. Prices for existing homes are down, but the low-interest mortgages and lower prices on new homes make it a wash for buyers, he said.
“You’re not really losing anything,” Kruse said. “You’re trading the equity.”
Much of Payne’s work next year will be at three home developments in St. Charles County, he said.
“I feel like things have certainly stabilized,” Kruse said. “I do expect the selling season of 2013 to be the start of a recovery.”