St. Louis is a major city in Missouri known for the Gateway Arch, which was built in the 60s to honor explores of the early 1900s and celebrate the country's expansion. Today, the city is a lively metropolis that's home to almost 300,000 people and a number of attractions.

It has fantastic opportunities for investors since over 50 percent of St. Louis homes are occupied by tenants. However, the shortage of available properties makes the city's market more favorable for sellers rather than buyers.

In this article, we'll take a closer look at the St. Louis housing market to help you make informed decisions concerning the buying or selling of real estate.

St. Louis Housing Market Trends to Note

To help you determine the health and performance of the city's housing market, we've drawn up a list of important statistics taken from Redfin and Zillow. These figures can be used to give real estate investors a good grasp of the current state of the market and provide insight into how it may progress in the future.

  • Selling trend. Properties in St. Louis typically receive two offers and sell within 21 days, on average.
  • Median sales prices. In St. Louis, the average selling price of a property last month was $225,000, an increase of 11.1 percent from the previous year. The typical sale price per square foot is an average of $150, a hike of 2.7 percent year-over-year.
  • Median sales price vs. national average. St. Louis home prices are 45 percent lower than the national average, making it an affordable place to invest in real estate.
  • Zillow home value index. Home values in the city were estimated to be $163,503, which is 6.1 percent higher than the previous year, indicating a seller's market.
  • Sale price vs. list price. Most houses in St. Louis sell for their list price and tend to go pending in 23 days, on average.
  • Hot homes. In-demand properties, on the other hand, sell for 6 percent above the asking price and often go pending within 5 days of being on the market.

Although the city's housing market has seen a few changes over the years, it remains balanced, making St. Louis a great place to buy or sell properties.

Factors That Affect the St. Louis Real Estate Market

Now that you have a good understanding of the housing market trends in St. Louis, it's important to talk about the factors that impact these trends.

1. Demand and Supply

Like most markets, demand and supply play an essential role in determining the price of houses. Buyer demand in the St. Louis real estate market is changing, as seen by the decline in new property listings for single-family homes and condominium or townhouse properties.

However, the supply of single-family homes has grown while that of townhouses and condominiums has declined. Despite a downturn in consumer demand, average selling prices for both kinds of homes have continued to increase.

2. Mortgage Interest Rates

The truth is that most real estate investors purchase homes using a mortgage. It makes sense, then, that the interest rate will influence the market. Since the "real estate market" is essentially a network of buyers and sellers in the St. Louis region, a factor influencing a potential buyer's willingness to make a purchase will affect the market overall.

Interest rates and the median price have an inverse relationship. This means that when mortgage interest rates are high, the demand for housing drops, which can raise real estate prices.

Sales activity is continuing to decline due to consumers' renewed reluctance to purchase, thanks to rising mortgage rates. Mortgage interest rates have decreased marginally because of the Fed's attempts to control inflation, which have led to several interest rate increases.

Even if the number of pending sales has improved recently, the general activity of homebuyers in the St. Louis housing market is still constrained by financial constraints due to high mortgage rates.

3. The Economy

This is arguably one of the most important factors that drives the market. The availability of jobs thanks to a healthy economy will draw homebuyers to the area, while poor economic development may drive residents to other places.

Fortunately, St. Louis has seen an increase in job opportunities, up 0.7 percent from last year, and is expected to grow to 23.9 percent in the next 10 years, according to Best Places.

Moreover, the city of St. Louis, Missouri, has a vibrant culture and history. The city has a thriving economy with a number of industries, such as manufacturing and healthcare, which offer much promise for those hoping to get a good return.

St. Louis is undoubtedly a desirable choice for both newbies and experienced property investors since it offers a variety of investment opportunities, from economical homes in need of work to elite homes.

4. Population

Another factor to consider is the population. Because of a rising job market, the city's population is growing steadily, which creates more demand for housing. This increased demand has led to a rise in rental prices, which means that investors can undoubtedly expect their real estate investment to be lucrative.

Housing Market Predictions

The real estate market patterns in St. Louis point to a change toward a more stable market where buyers will have a greater number of options. This means that sellers will need to work on their sales tactics.

An atmosphere that is more hospitable to homebuyers has been produced by the rise in inventory and the slowing rate of price growth for homes. However, the housing market remains in favor of sellers, as indicated by St. Louis REALTORS statistics shows a 9.1 percent decline in townhouse and condominium inventory levels.

Although the market has undoubtedly been favorable over the past few years, how will it look in the future? We look at expert predictions to help you understand how the St. Louis real estate market is expected to perform in the coming months and years.

As indicated by the statistics mentioned in the market trends section, the increase in home values indicates that home values have been stable throughout the past year. With fewer listings being added, recent market patterns point to a period of stabilization.

While the supply of single-family residences has grown, the supply of townhouses and condominiums has dropped, which has caused a modest increase in average selling prices.

This stabilization period may result in a more advantageous market for buyers, giving them greater negotiation leverage and maybe even lower prices on homes. However, their capacity to profit from this trend may be constrained by financial constraints and the possibility of higher mortgage interest rates.

Sellers may need to work on improving the condition of their properties before putting them on the market and setting reasonable expectations when selling their homes.

The Bottom Line

If you are interested in buying or selling a home in St. Louis, it's important to do your research. That's because a real estate transaction is a major decision and should never be taken lightly. Armed with this information about the St. Louis housing market, you're ready to make an informed decision.

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Frequently Asked Questions

1. What are the best neighborhoods in St. Louis?

Here are some of the best places to live in this vibrant city:

  • Central West End
  • Forest Park Southeast
  • Botanical Heights

2. Will the housing market crash?

While we can never predict the future with complete certainty, judging by past trends, there is no indication that a market crash is imminent. However, only time will tell.

3. Should I sell my home in St. Louis?

Yes. Market conditions indicate that it is a good time to sell your home. With a low supply of properties, you could get a reasonable price for your home.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!