Saturday, March 30, 2013

Mixed Messages on Washington

Fantastic 2 bed/ 2 bath Printer's Loft Coming Soon!
A Tale of Two Markets
I spent the past few days showing some cool spaces to 3 different out of town buyers.  Nothing abnormal.  

Something we used to see quite a bit when walking from building to building showing lofts was "run in's" with other Downtown Realtors.  This is the sign of 'hot listings';  it feels like a party, everyone starts showing up at the same time by chance.  It happens all over, but today it was happening downtown.  Clients getting frustrated by excessive showings, seeing agents rushing around with file folders and clients in tow, and working past midnight trying to catch up on paperwork;  these are the signs of a busy market.  While the weather today wasn't fantastic, the market seems to be on fire.  

So when I sat down tonight to review the 1st Quarter St Louis loft sales, my expectation was massive growth in the downtown market overall in the form of loft sales.  While the number of sales wasn't bad, they were surprisingly normal.

In 2008 when the US economy hit a wall and our local real estate market followed suit, our problem with downtown sales was very simple:  Lack of buyers.  There were hundreds of lofts for sale and very few buyers.  That problem has become progressively better as the years have passed.  

Today the issue keeping the loft market stable may vary, but the most interesting problem has been lack of inventory.  

Looking at the numbers, there's 64 Lofts on the
Fantastic 2 bed/ 2 bath coming soon!
market, so one may say, that's roughly 8 months of inventory.  Traditional real estate statistics would say that's still a buyer's market with plenty of available homes.....but wait!  Condominiums have an interesting quirk.  Out of the available 64 condos, approximately one third of the available units would not qualify for any conventional or FHA loan.  Not being able to get a mortgage on a home is sort of a big deal.  Cash buyers are out there, but I ask my cash buyers one question, "when re-selling, do you want to be limited to only cash buyers?"  Most of them buy a unit where financing is not a problem.  

Five percent of the units are luxury penthouses, which, are in a sub-market of their own - not something the 'average' buyer would be able to purchase.    

So just over half the lofts downtown wouldn't be an option for the 'typical' buyer, and of the remaining 30 available homes, 10 of them are 1 bedrooms.  So the 'typical' St Louis loft buyer, as of today, has roughly 4.15 months of inventory to choose from.  The penthouse buyer fares better, but the 1 bedroom loft buyer fares worse, with only 3 months of inventory available.  

So breaking the numbers down, its no wonder that buyer's have been struggling to find a place to call home downtown.  And it's no wonder that the sales have been 'level' at 20.  I've seen how home buyer's get when the see exactly what they like.  It's different than when they get tired of looking and settle.  Vastly different.  While it still happens, most home buyer's give themselves enough time to not have to settle for a home they don't LOVE.  

Before we move on to the individual sales downtown, one more point should be made.  In looking at the sales market, it would be incomplete to look at sales without looking at what's 'in the pipeline'.  Lofts 'under contract' presently number 21 -- 9 of these have been sold within the past 10 days, 7 of which sold since this Thursday.  Sales are picking up for sure!!!

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