The year that was supposed to see lower home prices, did not drop in price, at least not in St Louis. We did see less transactions, 12% less number of homes sold in 2023 than 2022, and ’22 had 16% less home sales than ’21, a big drop in units the last 2 years. But prices kept chugging upward, even when most predictions were for home prices to decrease. A year ago, I was optimistic and expected prices to only break even for 2023 given the higher mortgage rates, threat of recession and price increases the past few years. But as the number of buyers has dropped substantially, so has the number of sellers, keeping the demand higher than supply. In fact, prices rose an average of 3% to $331,650 in the St Louis MO metro in 2023 per our Multiple Listing Service (MLS), and 6 of the 7 submarkets I track realized a 4.5 to 9.5% appreciation rate, as I detail below. The story line for 2023 was the feeling that bad things would happen, but never did. And ultimately, housing can be somewhat like the stock market in that we fear a big drop, which happens from time to time, but goes up in the long term.

The average Days on Market (DOM) ticked up to 28, although the real number on DOM is the median, which is still only 8. Half of my listings sold the first weekend, and 87% of them in less than 2 weeks. The average sale price is still 1% OVER the list price, although it was 2.3% over list in 2022, so overbidding is still the norm, but not as much. And the 4th stat that I track and compare in STL submarkets is Months of Inventory (MOI), which rose a bit to 1.29, still a very low number, which is the rate of sales to supply. If you read my regular email articles, you see that I now use an Under Contract to Available ratio, which I have found to be a much better indicator of current demand vs. supply, as MOI goes back 12 months, and my UC-to-A stat is less than 2 months old, the time it takes to close a sale. Our MLS uses the MOI method, so to show the entire area I need to use that figure, which is still a good barometer.

The spring market started late in 2023, got really hot in April for a month or two, where most of the price increases happened, and slacked off in late summer thru the fall and winter. The majority of homes coming on the market all year, even into December, still sold in the first 10 days and commonly attracted competing offers. 75% of my own listings had competing offers, and 62% of my listings had offers with escalation clauses in them (they would go higher if someone else did). So the buyers that were in the market were all in, still bidding aggressively and pushing prices up. In the fall, there was a noticeable letdown, with less competition and more homes selling at list price or even under. That makes 2 years running that the fall brought a significant slowdown, and the best time for buyers, especially low down payment buyers who cannot waive appraisals and find it extremely difficult to compete with more offers and cash buyers in the spring market. I will suggest again for 2024: Buyers with low down payment (3-5%) should target the second half of the year. Sellers can sell anytime, it really has been a 12 month seller’s market the last 5 years.

For 2024, talk of economic recession has dimmed but may yet happen. Lower mortgage rates are expected. And while the election year is open to surprises, I feel that home prices will continue to rise a moderate amount in STL, and if the time is right for you to move, let’s get you moved, and not worry too much about the environment. Onto the 2023 St Louis stats:

60% of my sales were in West County, 20% in St Charles and the rest in Ladue and South regions. My clients were IT professionals, engineers, small business owners, an accountant, insurance rep, teacher, HVAC tech, attorney, police officer, social services and retired. Two relocated, 1 in from PA and 1 out to SC. I have had 5 clients move to the Carolinas the last few years, the top destination recently. 3 were investment properties. 4 were first time buyers. 80% were repeat clients or referrals from them. My agent Amy Nahorski had her best year so far, and is looking forward to growing her sales again this year.

South County almost swept the board this year taking honors on 3 of 4 categories I track! They had a very strong 9.5% price gain to $299,500, the middle price of the 7 submarkets. More new construction is happening in SoCo, and that may have contributed to the big price jump. Affton, Fenton and Lindbergh (Sunset Hills-Crestwood-Sappington) areas have been in high demand for several years, with Lemay-Mehlville-Oakville contributing nicely. SoCo also had the highest average sale price over list of 102.8%, the lowest MOI with 1.10, and the lowest DOM of 23.

The Central Corridor had the 2nd highest price increase of 6.3% to $565,805, the highest average price in the metro. They had among the lowest increases in DOM and MOI, indicating a continuing strong demand for the “spine” of STL – along 64/40 from the city limits to 270 – Clayton, Brentwood, Ladue, Maplewood, U City, Webster, Kirkwood, Creve Coeur and Frontenac. This area is a mainstay for high priced homes, great location and top rated schools, public and private. They were tied for 2nd highest DOM (typical for the upper end) and in the middle for sale price over list. The upper end has been selling quite well the last few years, we need more to meet the demand. The higher mortgage rates seemed to stop the lower price buyers in 2023 more than the higher prices, as indicated further down.

West County came in 3rd on price appreciation with 6.0% to $491,359, the 2nd highest price in the metro. All submarkets last year took longer to sell on average (DOM) and increased supply vs demand (MOI), but West Co increased the least in both categories of all 7 markets! And that is hard to do with the 2nd highest price level, indicating very high demand for this submarket. DOM of 24, MOI of 1.13, and sale price over list of 102.1% were barely behind leader South Co in all 3 of these stats.

St Charles County and Jefferson County tied on price increase at 5.1%, St Charles up to $372,000 (3rd highest) and JeffCo to $267,700 (3rd lowest). St Chas stumbled the most of all 7 markets on MOI and DOM last year, climbing 79% to 1.65 MOI (still showing a strong seller’s market), dropping from 2nd lowest in 2022 to now 3rd highest; and DOM jumping up 47% to 25. They also dropped 2nd most in sale price over list to 1.6% over. Including 2023, St Charles still has the top price appreciation rates of the 7 submarkets over the last 4 years at 42% (without compounding) and the last 8 years at 75%, so I see nothing wrong long term with St Chuck. JeffCo is in the middle for those years, a steady performer, although 2nd highest sale price over list in 2023 of 2.0% and 2nd highest MOI of 2.06. Those stats don’t really go together, price over list should drop more with higher than average MOI.

One phenomenon occurring that may affect the MOI and DOM, is the use of “Active Contingent” status in our MLS. Some agents routinely place their Under Contract listings in “AC” vs regular Pending, to keep it in a more “available” status, even though it is really under firm contract. That artificially increases DOM and possibly MOI, as the MLS continues adding days as if they are still on the market (and annoys buyers who think they can buy those homes but they can’t). That is one reason median DOM can be 8 and average 28, as most agents like myself place our listings under contract immediately in Pending, which stops the clock. Now onto our final 2 submarkets.

St Louis City prices went up 2.7% on average to $244,600 (2nd lowest in metro) and had the highest DOM at 36 and highest MOI at 2.12. They still sold over list price, but barely, by .4%, the 2nd lowest of the 7. The odd thing was that when I was writing offers for buyers in the city last year, we were running into competition just like in St Louis and St Chas Counties - multiple offers and well over list. Why did prices only go up 2.7%? It occurred to me that I began seeing more listings in North City this year. So I ran stats in North City vs. central and South City, and found that average price in Central and South went up 4.6%, and prices went up 6.0% in North City. Huh? How could the total city average price then only increase 2.7%? Because the number of sales in Central and South dropped from 3800 to 3100 with ave price of $266,800, and North jumped from 320 to 380 sales with ave price of $77,300. That, my friends, is how averages can be misleading. Because the number of lower priced homes went up and the number of higher priced homes went down.

That leaves us with North County, the outlier this year. In the past few years, North Co had been cruising along with high appreciation rates and strong to middle ranking on other stats. In 2023 however, they not only fell flat but went backwards, with average prices dropping 3.8% to $146,211, still by far the lowest ave price of the 7 submarkets. That was a shock to see, even though a year ago I pointed out some weakening in North Co stats. Overall their stats are not that bad, 3rd lowest in MOI and almost in the middle of DOM. One stat that really stands out is the average sale price was 1.7% below list, the only market of the 7 where sale price did not average over list price. Bearing in mind that North Co returned 74% price increase over the last 8 years, a close 2nd to St Charles, and 35% the last 4 years, in the middle ranks - why so bad last year? Could be that more first time buyers were put off by the higher mortgage rates. Could be that some of those municipalities are limiting rentals, long term (1 year+) and short term (Airbnb's), that may cause more investors to sell. Either way, North County remains an attractive area with low home prices, where a large selection of single family homes under $200k are available, and that is hard to find around the rest of the metro.

There you have it! We ended up in STL with another positive year in residential real estate, nice for homeowners with growing equity, not so nice for buyers trying to get in one. But as I always say, once you do get into a home, you are now an owner with growing equity and all the benefits of homeownership. I would still caution buyers to keep at least a 3 year expected span of ownership before selling, if not a 5 year span, to offset the costs of buying and selling, and ride out most potential downturns in the market. 2008 – 2011 was not that long ago, and being forced to sell when prices are down can really hurt. Best Wishes!