2021 Mid Year Housing Report

I am delighted to furnish our 2021 Mid-Year Housing Report.  We are pleasantly surprised at the continued vigor of closings and sales prices in our St. Louis region.  The market shows no signs of slowing down.  Multiple offers and escalated prices have continued into mid-summer.  We are struggling to keep enough inventory to satisfy intense buyer demand.

Many people have asked me if I foresee a near term bubble or price correction like in 208-2012.  Here's why I think a housing crash is unlikely.

The housing market fundamentals of today are different than in 2008.  Remember in 2008, MLSs were overwrought with distressed properties, inventory was high and days on market was long.  I remember the luxury market had 3 to 4 years of inventory.  Today, we have 2 months of inventory.  (We consider equilibrium to be 6 months of inventory.)

We don't have subprime and 100% loans to the extent we saw leading up to 2008.  In 2008, buyers budgets were overstretched; mortgages exceeded the value of the home.  In those days, we were navigating short sales, in which our clients required loan forgiveness in order to sell their homes.  Today, more homes are purchased with cash.  For new mortgages, the loan-to-value ratio and debt-to-income ratio must meet more conservative federal guidelines.  Sellers have more equity in their homes.

Supply is vastly different today.  In the housing heyday, builders overbuilt.  National Association of Realtors calculated that America had a 2.1 million surplus of housing units by 2006.  When the market crashed, builders liquidated land, sub-contractors shuttered their doors and new construction nearly halted.  Today, it's estimated that we have a 4.8 million shortfall.  Even with home building on a rebound, inventory remains low.  For this reason, home prices are in no danger of falling sharply.  

We are working diligently to find the perfect home for anyone ready to make the move.  Please don't hesitate to reach out.  Be well and stay safe,

Janet