When the year wraps up and we're celebrating another year gone by, many folk are drawn to the numbers of what's been done that year. While it may not be my first inclination, I'm interested to see how things stack up for the downtown lofts and condos sold.
This year was looking up.
When the stock market and housing market slid into the tank back in 2008, one thing was clear: it would take time to climb out of "this mess." Since then, we've seen a process. A backlog of lofts, and pent up demand to sell.
Much of this demand isn't as much because of the market itself, but because the conventional wisdom of buying homes for the 'long run' was abandoned by many home buyer's during the housing boom. It wasn't uncommon to hear buyers talk about living downtown for a few years, then finding some place bigger in Lafayette Square, Tower Grove or a suburban area like Kirkwood or Webster Groves.
Unfortunately, the drop in home values changed the plans of many downtown residents.
Preparing the numbers to look at the current downtown real estate market, I couldn't help but think that many readers wouldn't have the proper perspective about our market without first looking at a basic analysis of the inventory of downtown lofts.
In 2007, my partner and wife confronted a developer on Washington and 14th Street because of her concern about the over-development being unveiled that year. Over 2,200 loft condos were supposed to be built and added to the inventory in 2007-08. The graph below shows the numbers from the MLS of the total number of listings per year (based on expired listings, cancelled listings and sold listings) and the numbers sold.
In 2004-5, there was a housing shortage in Downtown. Even in a perfect market, some homes don't sell; price too high, bad smells, dirty, or ugly finishes will kill some sales. In 2005, 62% of the listings sold. What makes that even more exeptional, is that in this case, a majority of the lofts sold were newly built condos and were sold pre-construction, so they weren't even on the MLS. It was almost pure growth.
The percentage of lofts sold in Downtown dropped quickly from that point. The low point of 2008, only 18% of the inventory was sold. It was a tough year.
From that point on, the percentage of total inventory has risen steadily. In 2010 we saw a 20% increase in loft sales! Good news for the neighborhood and downtown residents.
I'm comfortable with that steady increase. For 2012 I anticipate a drop, only because the 2011 market was influenced greatly by the FDIC sell-off at the Dorsa Lofts.
With no condominiums being built downtown completely since 2007, and with a steady increase in both residency downtown and in condos sold, we should achieve a more balanced market soon.
What does that say to me? Now is a fantastic time to buy, before prices start to creep upwards.
So that is my non-economists analysis of the downtown residential inventory. Seeing that downtown is weathering the sluggish economy, I'm excited to see what happens when things really pick up.
If you're looking to get a better grip on the downtown loft market....stay tuned for the 2010 Loft Sales here at loftsinthelou.com