Last month, when real estate agent Brian Elsesser was working with a client seeking to buy a home in Ladue, Elsesser knew they’d have to be aggressive. “A lot of the houses that were $700,000, $800,000 two years ago are now going for $1 million,” he says. “And they’re all going over asking price and contingencies are getting dropped like crazy.”
Elsesser’s client was on board. They offered $1.2 million cash, $50,000 over the asking price. They still didn’t get it. “There were four offers,” Elsesser reports. “And we came in at No. 4.”
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And so it goes in St. Louis’ real estate market. Agents say tight inventory continues to make this a sellers’ market, even as other cities are starting to favor buyers. In St. Louis city and county, the median sale price in March climbed 10.7 percent from the prior year, which already reflected years of steady increases. A four- to six-month supply of homes is considered a balanced market; the city and county have just a two-month supply, according to a report from St. Louis REALTORS. That may be one reason that pending single-family home sales dropped 7.3 percent last month from the year prior.
In demand right now are the highly desirable parts of the region’s central corridor, such as Ladue and Kirkwood, as well as the low end of the luxury market (generally agreed to start around $700,000), says Meggin Martin, a real estate advisor with Compass. “Houses are getting insane amounts of offers,” she says. “That just hasn’t slowed down.”
As spring gets underway, typically the hot season for home sales, agents are worried that the area’s tight housing market is creating a vicious cycle where people who might otherwise be ready to move feel like they can’t, not until they first sign a contract for another house. Some people may also be spooked by a volatile economy—so they don’t put their homes on the market, either.
And then there are people who have low interest rates. While rates were inching down in February, even briefly dropping below 6 percent, they’ve now jumped back up and are likely to stay up for the rest of this year. That makes it a lot less appealing for current home owners to jump back into the market.
“A lot of the people that have those $700,000 range homes have those amazing interest rates,” Martin notes. “They don’t want to leave that interest rate.” That, too, has constrained supply.
Things aren’t any easier in the non-luxury market. More reasonably priced homes in desirable city neighborhoods, such as Shaw or Tower Grove Park, are flying off the market. “Good houses, good neighborhoods, they’re under contract that first weekend,” says Bridgette Fyvie, an agent with Garcia Properties. She notes that she lost out on a house this past week because the other buyer offered to skip the inspection—a common practice during the overheated times of the pandemic that many buyers had hoped was fading away.
The competition is real. “We’re coming out of January, February, March, which is a dry season where there are hardly any listings,” Fyvie says. “So all these buyers have been sitting and waiting for some good things to finally come on the market. Now we’re getting some stuff on the market, but you have all these buyers that have been on the sidelines, waiting, and now they’re all competing for the same houses.”
One exception, all three agents agree, are condos. Growing condo fees seem to be deterring many buyers; in March, the median condo had been on the market for 50 days in the city and county at the time of its sale (versus just 37 for single-family homes). Those prices, too, are stagnant, with no change in the median sales price from prior year, according to the St. Louis REALTORS. Condo inventory is now up 4.4 percent from prior year.
Martin also notes that she sees some signs of movement in the upper end of the market. In recent years, mansions would be listed privately and get snapped up before they even hit Zillow.
“In the past it would be that those would just sell privately, and now they’re starting to come to market, which is somewhat encouraging,” she says. Will more sellers come online—or get spooked over volatile economic conditions across the U.S. and sit this spring out? Agents really hope the answer is no. Buyers, after all, are waiting.
