Here’s a quick update on our real estate market as of February 2022.
The St. Louis real estate market certainly has been interesting to watch over the last couple of years, but even just looking at the last month, the amount of inventory we currently have is unprecedented. In the metro area, inventory has dropped by 10% to 20% depending on the county. For buyers out there who have been struggling to find properties—you’re struggling because there simply aren’t many options.
“The constrictions on supply and our excessive demand should keep prices fairly stable.”
But the number of active listings only shows part of the story. To get the full picture, we also have to look at the number of houses that sold in January 2022 versus the number sold in January 2021. In St. Louis County, for example, 5% fewer homes sold year over year. In St. Charles County, 30% fewer homes sold.
Interest rates are also important to track. We’ve seen rates move from the low threes to closer to 4%. That has a huge impact on a buyer’s ability to buy. For every 1% increase in interest rates, a buyer’s purchasing power is reduced by around 12%. Suppose you were looking for a $2,000 monthly payment for just principal and interest. At a 3% rate, you could afford a $475,000 loan, but at a 4% rate, you could only afford a $420,000 loan.
In a normal market, this would put downward pressure on home prices, but we’re not in a normal market. The constrictions on supply and our excessive demand should keep prices fairly stable. At most, they’ll cause buyers to shift their focus to lower price points.
If you have any questions about what’s going on in today’s market or real estate in general, don’t hesitate to give us a call. We’d love to help you.
