CLAYTON, MO (KMOX) — Experts agree record-low interest rates have had potential home buyers curious for some time now. Rapidly rising home values have had those buyers feeling a sense of urgency.
But those buyers are running into a major problem: there are not many homes for sale in the region. And that hasn't recovered since the pandemic started.
The reason? Bob Bax, co-owner of Berkshire Hathaway Home Services Real Estate Alliance, says some homeowners feel more comfortable staying in their homes than entering the frenzied homebuying market. The average length of homeownership has increased from 7 to 8 years historically to 11 years. Bax says many homeowners are taking advantage of refinancing at lower rates to rebuild equity in their homes and rebuild their cash reserves.
"In the entire metro, we were about 10,000 to 12,000 homes on the market (before the pandemic)," says Bax. "Right now, we're at about 4,000 homes on the market."
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Berkshire Hathaway's metrics include St. Louis City, St. Louis County, St. Charles County, and Jefferson County. Of those roughly 4,000 homes, just 550 are on the market in St. Charles County.
"St. Charles County is fairly well-developed now," Bax pointed out. "So the newer construction is more in the Warren County area."
But new construction in Warren County is slow to catch up to demand, fueled in part by the lumber shortage. In June 2020, there were 91 homes for sale in Warren County. One year later, there were just 21.
Besides being close enough to St. Charles County and west St. Louis County for many to bear, Warren County is also getting the eye of second home buyers.
"Some of the areas as close as Innsbrook and Lake of the Ozarks have seen a big boom in second homes."
Another hot spot? Jefferson County. Bax says the Interstate 55 expansion further south has made it more attractive for home buyers, especially for those who now have the ability to work from home. Also, Jefferson County remains affordable compared to much of the market.
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So is all of this leading to another housing bubble that will pop, like during the Great Recession? Bax says no.
"I think we will transition to a more smooth market where more inventory will be available."
Bax also feels Millennials will continue to be interested in owning their home, as opposed to renting. Especially since the market has already relaxed just enough for FHA buyers to have a fighting chance. Bax says FHA buyers have been more successful in the last four weeks than any time since the pandemic started.
Bax also says a relaxing buyer's market will mean inspections won't have to be skipped to secure a purchase.
"Welcome to home ownership! Always something that will be happening, especially in older homes...and this revolution of waiving inspections is a very risky strategy."
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