Photograph by Edmondo Dantes | sxc.hu
1) Buyer, Beware
The days of generous loans and high risk are over—at least for now. Instead, potential buyers should proceed with caution. “I usually tell homebuyers, ‘We’ll get pre-qualified, but you may only want to look within a price range of what’s comfortable, not necessarily what you qualify for,’” says Carole Baras, president of the St. Louis Association of Realtors. Though many homebuyers at one time took out too-large loans, Janet Horlacher, vice president of real-estate agency Janet McAfee, Inc., says, “In this environment, lenders won’t let you overextend.”
2) Looks Matter
For many young people—especially first-time homebuyers—looks are everything. “Younger people tend to buy what they see,” says Baras. “Many of them are looking for something they can just move into.” For sellers, that means a little work now can garner hundreds, or even thousands, later.
3) The Fear Factor
To hear all of the dire news, you might think it’s time to get out while you still can. Karen Vennard, president of the St. Charles County Association of Realtors, says not so fast. “Fear is never a good reason to sell,” she says, noting the exception of those in dire straits. “If you listen to some of the pundits, they compare it to stock, but home values actually appreciate compared to the stock market… I don’t think you should ever compare the two. Your home is a home for many reasons. It’s still your best investment.” Historically speaking, Vennard’s logic makes sense—but bear in mind that the recession’s outcome remains to be seen.
4) Signs of Hope
As the market levels out, so must expectations. Still, it’s not all bad news. Horlacher has seen signs of encouragement, especially in the central corridor. “Buyers are coming out of the woodwork,” she says, in U. City, Brentwood, and Clayton. She notes that the ultra-luxury market is especially picking up. The same might be said for some areas farther west. “We’re not down as low as people think we are,” notes Vennard. In St. Charles County, sales were down about 20 percent, and homes were on the market longer, but home values generally fell very little. Compare the median sale price of $180,000 in 2008 to more than a decade ago in 1998, says Vennard, when the median sale price was $113,500, and you see dramatic gains. Still, buyers should always proceed with caution.
5) On Foreclosures
By now, you’ve probably heard commercials coaxing you to find a steal on a foreclosed home. While it’s true that you can bid for rock-bottom prices, you can also get more than you bargain for. Many of the foreclosed properties are in neighborhoods where the homes need considerable repairs, warns Baras, and banks most likely won’t cover the costs. “Even though people tend to think you get a better deal, there’s always something tied to that deal,” she says. Horlacher, however, says there are foreclosures in more upscale areas, too. “We’re seeing foreclosures in all segments of the market,” she says. “If you’re a buyer out there, the realtor may know that [a home was] foreclosed, but the person looking might not know until they get further down the road.” It’s always a good idea to ask early on to prevent surprises later.
6) The Condo Cycle
“It seems to me, and I’ve been selling over 25 years, that we go into deeper declines for a larger percentage of condos on the market than general real estate,” says Baras. “It seems like condos in St. Louis go into cycles more than housing real estate, too.” Some developers transform condos into apartments, such as in downtown, while others hope for the best (see “A Condo Home Companion” in our print edition). In St. Charles County, many of these developments are clustered together as villas and row homes in places like The New Town at St. Charles—the ambitious, 726-acre development with canals, a lake, and a town center. Vennard attributes its success to location. Still, many developments are proving difficult for realtors to sell. “The days on market are a little longer,” says Horlacher, adding that there’s a long list of inventory for condos, villas, and planned-unit developments.
7) This Too Shall Pass
So maybe it’s their jobs to be optimistic, but these experts take a big-picture approach to the current housing market. “It’s a waiting game,” says Horlacher. “There comes a time when buyers recognize there are some great values out there, and it’s time to get off the fence.” She says that’s already starting to happen, especially in high-end neighborhoods. Elsewhere, Baras notes, “Sales are down, but pricing is good… We’re a good medium-range market; St. Louis has a lot to offer.” Vennard also looks at it with a glass-half-full approach. “There are two kinds of markets: a buyer’s and a seller’s. We just happen to be in a buyer’s market—it’s not a good or bad market.”
