Where’s the Morgan Ford neighborhood?

MorganfordOne thing I’ve truly enjoyed seeing since we’ve moved to Tower Grove South is the resurgence of commerce on Morganford in our neighborhood.  Until today, it was our little secret.  As the less popular destination, I’ve always tried to support the restaurants since South Grand seems to get so much traffic already. 

I rarely give credit to the St. Louis Post Dispatch, but they did have a nice pictoral _ _and video on the improvements on Morganford.  Now I might see my friends from Des Peres and Chesterfield lurking around 3 Monkeys to check out the new hip place in town.

Spring Sales Data: Some Hot, Some Not

Spring 2009 is recent history, and real estate business in St. Louis City experienced a welcome increase. Tower Grove, Holly Hills, Lindenwood Park and South Hampton seemed to experience some of the best activity in the areas I was working as buyer’s seemed to favor a more conservative location compared to past hot spots Lafayette Square, Benton Park and Downtown.

Leading the spring surge was the long absent first time home buyer segment. Scared away from buying for some time, this group was largely more pragmatic than thier counterparts from past years. Receiving the $8000 tax credit was a big factor in buying, as well as the great selection and lower interest rates. One thing facing today’s first time buyer’s is the need for a downpayment, which for most people in 2003-2007 was unnecessary. Today’s buyer’s can still get 96.5% FHA loans as long as they qualify, but in some cases, FHA loans aren’t an option.

Tower Grove & Holly Hills (63116 zip code)

St Louis spring sales Tower Grove and Holly Hills
St Louis spring sales Tower Grove and Holly Hills

South Hampton, North Hampton, Lindenwood Park (63109, 63139 zip codes)

market analysis lindenwood park and south hampton spring 09
Lindenwood Park, South Hampton and North Hampton Spring Sales Data

Comparatively, the condo market in the downtown area appears statistically close to the above groups of neighborhoods except in one key catagory:  homes sold. 

Downtown, Lafayette Square, Soulard, Compton Heights Condos

Downtown, Soulard, Lafayette Square Sales  Spring 09
Downtown, Soulard, Lafayette Square Sales Spring 09

This data, compared to the 2006 Spring when the market was just beginning to slow down shows about a 50% decrease in sales and a 100% increase in days on market. 

One positive thing that is evident when looking at practically any facet of the St Louis real estate market, is that things aren’ t as good as they have been, but they aren’t that far off.  The rush of first time buyer’s is expected to continue through the late fall since the $8000 Federal First Time Buyer credit is not presently scheduled to continue into next year.

The Urban Shift: One More Source

Growing Up in the St. Louis suburbs, suburban sprawl seemed to be an active force. The #1 fastest growing county in the Country was St. Charles, and both the City of St. Louis and much of the inner ring suburbs were rough. Despite the trend, I wondered how that trend could be self-sustaining. When would enough be enough. Would it ever end?

Sources are pointing to the end in a general way. This portion of the TIME article dealing with current changes seems premature in predicting the demise of suburbia for some reason. In St. Louis metro, suburbia is so vast in comparison to the city itself. Even if the population numbers of inner ring municipalities of Clayton, Webster Groves, Shrewsbury and Maplewood were considered, the suburbs still account for a huge percentage of the local areas population.

As a realtor, I work with people looking in the city as well as the suburbs. For some the ‘burbs fit. Working with more people for whom it doesn’t makes me wonder if the population will ever reach a balance again between the city and the county. urban-balance Another thought, considering the speculation that exists saying that urbanization is a general trend, to what extent does the massive urban renaissance in St. Louis add to the trend locally?

Working with so many students of this current shift back into cities, there are as many opinions that exist as people to give them. One thing that is certain, the City has come a long way in a short time. Watching it happen is fantastic. Having a job that basically shows off how far St. Louis City has come in the past decade is a true blessing.

It Takes A Village

One of the worst memories I have from my move into the city was from a conversation with a colleague.   A fellow realtor, we were in the middle of a deal and had a good rapport with one another.  Occasionally we would converse about personal information like family.  I mentioned that we were moving into the city one day and her response floored me.  “What are you going to do with your kids?!?!”

Her question was reasonable in itself, but her tone was anxious and concerned.  It was if she was asking if we were going to put our kids in foster care so we could live in the city.

Of course, I knew what she was getting at.  St. Louis Public Schools have been a media scapegoat for years, and for good reason.  I guess I personally just hold my fellow realtors to a higher standard when it comes to being informed about the city.  Clearly she was not.

I thought about her today at the St. Louis Association of Realtors Urban Affairs Committee meeting today.  We met at Soda Fountain Square and the topic was education.  Mayor Slay , Robbyn Wahby and Sharon Gerken were the speakers.

The Mayor’s position on giving parents good options to choose from in choosing a school is well documented.  There was talk on Charter Schools, Magnet Schools, After school programs, and private schools.  We heard about partnerships between different entities and making a quality education available.   I learned about the Knowledge is Power Program and how they, along with Washington University would be opening their own charter school geared mainly toward disadvantaged youths.   In one hour, I was flooded with information that assured me that children in the city do have opportunities to get a quality education and that our leaders are working hard in solving that problem.

As a parent of 3 boys, I know quality education is available.  St. Margaret of Scottland School has been a very warm and impressive place for my kindergardener.

The bottom line: Good Schools Happen in St. Louis City!

Suburbia R.I.P.

suburbia rest in peace
suburbia rest in peace
Interesting reading. Looking at the deleterious effects of suburbanization of the countryside, it would be nice if that activity was curbed. It doesn’t seem possible that the suburbs themselves would vanish in much of St. Louis County, or even that it would be a good thing if they did.

Interestingly, my very urban neighborhood of Tower Grove Heights

tower grove heights auction
tower grove heights auction
was a fairly early attempt at suburbanization. The ad for the auction seemed excited about the “transformation” into residential areas. By the time the neighborhood was 50 years old, most residents were fleeing for the county. Maybe, as the article suggests, there will be a similar flight from the county back into the city for the reasons of energy efficiency. My take: Not likely.

Commerce and industry (aka JOBS) have also slowly moved into areas surrounding the city. We also have another urban “hub” in Clayton, so my guess would be that the abandonment described in this article may be limited to the fringes of the metro area, Franklin County, St. Charles County, Jefferson County, and the Metro East.

Come on Down To the Ballpark!

St. Louis Ballpark Lofts
Last month we were able to list the Ballpark Lofts! A Blue Urban project, these lofts were long thought to be sold out within 1 day. An NFL style draft was a great concept, but did, combined with the recession, didn’t work out past the theory. As downtown specialists, never heard until recently that there were some units that didn’t close that had come back on the market.

So today, the buildings completed. The units are spectacular, many having views of the stadium, Stan Musials statue and the Gateway Arch. Spring training starts next week, and in a short time the area surrounding Busch Stadium will take on a new life as it does every year.

We’re holding the lofts open today for the first time and we have a special buyer’s incentive! Any unit reserved today will receive a custom paint package at closing!

The open house will be from 12pm to 3! We hope to see you there!

Prelude to a Case Study: What’s Depreciation?

Computing appreciation takes a hard look at historic sales
Computing appreciation takes a hard look at historic sales

My good ole American Heritage Dictionary (2nd College Edition) defines depreciation as “a decrease or loss in value because of wear, age, or other cause.” That’s what the dictionary says. Lately, media portrayal of real estate depreciation has been the rage.

Recently I received a message from someone asking how much homes have depreciated in their neighborhood (also mine) in the past few years. Look at the news…..10%, 20%, the stories are endless. But are they correct?

My thought is “no.”

An important factor in the definition is that depreciation can only accurately be determined on one subject property. By definition, a “decrease or loss in value” (or an increase) can’t definitively be calculated by averaging current sales and subtracting. It has to be explored by looking at one property and determining the difference in its value based upon what it sells for, then averaging that number by the months or years between sales. While appraisers generally use the “comparative sales approach” to estimating the value of a property, we have to keep in mind that it still is an estimate.

The problem with TV, Print, and internet media news is that they are taking an average of what homes sold for in the past then averaging home sales currently and calculating depreciation based on the two averages. Question: What if all the trashy houses sell in 2009 and the nice ones sell in 2005. What if there is a balance between distressed (foreclosure) sales in 2005 but an increase in foreclosure sales in 2009? Does the market value drop for a home in great condition even though the only sales are homes in poor condition?

The truth is that foreclosures aren’t something new. In trying to establish a value, appraisers really aren’t supposed to compare homes in good condition being sold at market in non-distressed situations with foreclosures. Also, if a home sells for 15% below market value, but needs that same amount of repairs and updates, appraisers consider that too. The problem today is that there are some situations where finding a non-distressed sale that is similar to the subject property is difficult.

It was great to get a question from a home owner because it gives me the opportunity to try provide a realistic case study that people can see. Hearing the news is something just about everyone does, but the style of reporting, producing sound bytes, over-generalizing etc. really would gloss over most of the facts in just about any industry.

Coming up……Case Study of Tower Grove South home appreciation.

St. Louis City Sales Data 2007 & 2008

Last week, I put down a fair amount of information on the downtown real estate market and provided the sales information about the area. I also talked a bit about how the year of 2008 felt for a real estate professional (2008 Real Estate Sales Downtown ).

The post is something I’ve tried to do for a few years. Putting the year in perspective.

Of course, that was just downtown.

Hearing a news broadcast yesterday, I heard some remark about housing values and felt that the report was misinformation; exagerating the markets downturn.

Today I pulled up the city wide sales statistics. Looking at single family residential, condominiums and multi-family homes, the report is included below, but the most notable data follows:

Year—-Total Sales Number/$ Value—-Average Price—Days on Market

2007——–5000 / $701,227,559———$140,246—————88

2008——–4532 / $515,009,046———$113,638—————99

city%20sales%202007%202008.pdf

The Frenzy on Foreclosures

We’re hearing lots of talk about foreclosures.  Stories of ugly-house2predatory lending, struggling banks, their effects on home prices.  It seems that everyone is a looser when it comes to foreclosures.   Then, late at night, some slick info-mercial on real estate comes on and talks of making millions in real estate through distressed property sales (aka foreclosures and tax sales).

St. Louis has its share of foreclosures.  It seems that there are more in the county now, but there has always been a fair amount right here.  So naturally, those in the market to buy get excited.  They may not buy into the info-mercials plot to make millions, but maybe they can just find one great deal for their own residence.   What a deal!

When it comes to foreclosures, there are just a few things important to know about the process that seem to get glossed over or missed completely.  Buying foreclosures does come with some drawbacks too.

The public perception today is that banks are in trouble.  That is also a fact, but to derive logically that because banks are in trouble, they will be more accomodating in selling off their owned assets (REO) portfolio is a FALACY.  Today banks are as slow and seemingly disinterested in working to sell properties as they ever have been.  Negotiation processes haven’t changed, and problems dealing with buying foreclosures have actually increased in the past few years.

Another fallacy which can sometimes work out well for a buyer is that banks sell properties below market. 

Banks sell <a href="distressed property“>distressed properties.  People get behind, they are unable to perform repairs and do regular maintenance that a financially responsible homeowner would do.   Additionally, most of the time, some additional destruction takes place.  My quasi-psychological speculation is that people resent the bank and the house so they destroy or otherwise dismantle the place, lowering the value significantly.  When buyer’s see the place after the foreclosure, its sometimes overwhelming how much stuff needs to be done to even make the place livable.  Painting a few walls may not be much, but re-painting an entire house can take a full week or more of full time painting.

Repairs, Warranties, and Disclosures.  Generally in a home purchase, the buyer hires a home inspector to come out and inspect all systems.  This can be done while the home is under contract.   If inspections aren’t satisfactory, the buyer can back out with a refund of earnest money.  With foreclosures, there usually isn’t an “inspection period”, and if the buyer chooses to perform inspections, they could and often do loose the house to another buyer.  So they’ve just spent $250-400 for an inspection on a house they can’t buy.  No warranties come with foreclosures and there also isn’t any information available from the seller regarding when updates were made or problems experienced.  These “Seller Disclosure Statements” are sometimes very useful in finding out about the condition of the home and how well it was cared for.  Lastly, most non-foreclosure sales can be contingent on certain stated items being repaired.  This list of items to be repaired comes after the price negotiation.  Foreclosure sales virtually NEVER fix anything.  Sales are done “as is”. 

As a professional, many deals are done and buyer’s sometimes just don’t add up all the hassles and costs that are required with a foreclosure that wouldn’t be if the home was purchased from an owner occupant.  Deals can be had, but many times it seems that if a home buyer or real estate investor had realistic costs prior to the negotiation, they would be getting just as good of a deal by NOT buying a foreclosure.

These are just a few circumstances, no where near a complete picture of the problems that could happen in buying REO properties.  The bottom line in buying foreclosures:  BUYER BEWARE!