Gary's 2022 St Louis Home Sales Review

Posted by Gary Hoeferkamp, January 24, 2023

Still reverberating from 2020, last year started off with another home-buying frenzy. The winter of 2021-22 never cooled off, only took a slight breather as a prelude to spring '22, which began in early February swarming with buyers. I have never written so many losing offers, virtually all of them well over list price with restricted terms. We were up against numerous contract offer situations of (not exaggerating) 20, 30, and a record for me, 42 competing offers. Prior to 2022, the most I was personally up against was 18 offers. One of my buyers was adamant about getting a particular underpriced home in Webster, beating out 22 other offers while retaining inspection rights, and BTW is worth more today than what she paid.

My sellers had an awesome spring, all of them selling over value, the highest one going 13% over list. For the year, over half of my listings sold over list price, 2/3 of them had competing offers, and 3/4 sold the first weekend. More importantly, I helped over half of my sellers set record prices for their subdivision!

April felt like the peak month, as many buyers were frustrated and/or nauseous by then. May and June plateaued, then July and August began a slow decline in sales activity, which turned into a clear dropoff in the fall and winter. Average prices, meanwhile, spiked up about 7% in the 1st half of the year, and ticked down a couple percent in the 2nd half, leaving the full year of 2022 with a price gain of 5%. The number of home sales decreased 17% for the year from 2021, which is quite stark, as the last 2 years have seen unit increases of 6-7%, with prices gaining 7 to 12%. For perspective, the long term annual average gain of St Louis home prices is 4%, modest compared to other U.S. metros, but that helps explain why St Louis is not expected to drop as far, if at all, than most other metros this year.

Goldman Sachs just published an outlook with St Louis dropping about 1% in home values in 2023 - we are on the graph between New York and Chicago, Miami to escape the home price correction in 2023 while ‘overheated’ housing markets like Austin get hammered, says Goldman Sachs (yahoo.com) with most other metros dropping 5-10%. It is refreshing to see some effort put into dissecting the wide variety of metro home prices. I feel STL will go up 1-2% this spring, and drop back 1-2% this fall, ending the year about even. The most favorable national predictions I have seen for 2023 are for home prices to increase 3-4%, and the most dire predict a decrease of 10% or more. With inventory staying very low (see below, although ticking up the last few months), sellers not anxious to sell, and a strong economy (STL 2.9% unemployment, very low), the lower demand is being met with low supply, keeping prices fairly steady so far. Either way, 2023 will be a good time for buyers with much less competition, and the long term outlook for housing and employment staying very positive. Buyers just have to deal with historically-normal mortgage rates that are higher than the last 13 years.

The metro home price average for 2022 from our MLS was $322,625 (up 5% from 2021), with average days-on-market of 23 (down from 27 in 2021), a median D-O-M of only 6, and average sale price of 2.3% over list price, an increase from 2021. The torrid spring greatly outweighed the tepid fall, leaving STL with record strong numbers once again. For the year, I personally sold 25 homes - 14 in West County, 4 in Kirkwood/Webster, and 7 between St Charles and South County, totaling $8,585,000 and an average of $343,400. I also hired my first agent, Amy Nahorski, who has a very good business of her own.

St Charles (ave sale price $354,000) took a clean lead in 2022 for price gain at 10.7%, well above the area average, and kept its D-O-M the area's lowest at 17. Its 3.4% ave price-over-list was a close 2nd to South County with 3.6% over list, and its months-of-inventory (MOI) at .92 was also a hair behind SoCo at .87. Speaking of South County, they were 3rd in price gain at 6.9%, with Jefferson County 2nd at 7.6%, and North County on both their heels at 6.8%. STL City followed at an above-area-average 6.0%, with West County slightly under average at 4.8% and the Central Corridor bringing up the rear at 3.8%. The upper end was quite hot in the spring, but tailed off in the fall, as the CCorr average of $532,400 and West Co's $463,750 made them more sluggish by year end, likely a mortgage rate effect, plus limited higher priced inventory.

The lower prices of SoCo at $273,450, Jeff Co at $254,700, the City at $238,200, and North Co at $151,900 made them attractive targets with rising mortgage rates, pushing them all to above average price gains. For areas in the Counties, a location close to a hwy (but not too close) generally had more appeal, and in the city or a walkable/ bikable area like Kirkwood/Webster, a location close (but not too close) to the action can be preferred. Streetscape means alot - how the neighborhood looks and feels, how "IG" it is, can mean higher return.

Oddly, North Co and the City, both with higher price gains, had the lowest sale-price-over-list at .6% and 1.4%, and near the highest DOM with 25 and 31, both respectively. Incidentally, all submarkets sold over list price on average. North County is the only one to drop in price paid over list - all other areas received a higher amount over list in 2022 than in 2021. And North Co was also the only market to not drop in D-O-M, they stayed the same 25 since 2021 - all other markets had lower DOM in 2022 (selling faster) than 2021. That indicates North County is weakening more than the other areas, and could also indicate more opportunity for buyers before that market strengthens again. STL City, meanwhile, had the highest MOI at 1.58, although both that and their DOM dropped from 2021 indicating steady demand.

West Co lowered its D-O-M the most from 2021, from 30 to 23, and had the 3rd highest price over list at 2.9%, very close to the area's 2 best. In addition, their MOI was 3rd lowest, also very close to 1st and 2nd best. In both categories, St Chas and So Co bested them, but those 2 also ranked in the top 3 of price increases. So why did West Co have the 2nd lowest price increase with such strong supporting stats? I believe it gets back to price - the lower end in West County was going bonkers with more available homes, while the upper end selling better than ever, just did not have enough inventory to satisfy demand, and kept the number of high end sales down, limiting the overall average price increase. Ditto for the Central Corridor, which, while having very respectable stats, were middle of the road for the area, and shows a brighter picture than the lowest price increase would indicate.

That's a wrap! Here's to the best for the St Louis area and its residents in 2023. Seller tip for the year - don't expect the extreme offers of the last 3 years. We are now a "normal seller's market" vs. a frenzied one, and while we may never be the same as pre-pandemic, the buyers are back to having some say in the negotiations. Long term prediction - market volatility will increase in home sales. With growing buyers and sellers of investment homes for short and long term rentals, the reliability of homes as a lucrative asset, and the mobility/ virtuality of worker-to-business; I feel the purchase and sale of homes will become more rapid, and en masse, causing greater swings in demand and pricing.

I am looking to add a full time, licensed agent. Perfect for someone wanting a small office culture with easy broker access and many learning/ sharing opportunities!

I have 2 listings coming in February, a 1.5 sty on 4.5 acres in Wildwood and a main level condo in Manchester, watch for notices as they hit the market!