2018 STL Home Sales Review

Here is a rundown on how 2018 was for the St Louis housing market:

We began the year hot with low inventory and rising prices, leveling off thru summer, than losing some steam in the fall. STL Metro has been on a steady upward price climb since 2012, and kept the pace up with a 4.9% appreciation rate for 2018 and an average price of $245,800 (homes and condos). Last January, I accurately predicted “an increase of 5%, maybe 6%” due to the strengthening economy and low unemployment. The number of sales, however, dipped by 1.2%, likely caused by the tight supply. Average and median days-on-market dropped again, now at 42 and 14 days respectively. Months of Inventory (ratio of homes on market to rate of sales) indicating supply, also dropped, now at 2.4 months.

Zeroing in on the 7 submarkets, North County led the pack with a 9.0% price gain! This time, their greatly improving supporting stats backed up their gain, likely due to being the lowest average price in the region at $103,650, and buyers taking advantage of the affordability factor. West County surged back in 2018 with a 5.6% price gain, after a lackluster 2017. They are still working off some high days on market and home supply, but easily hold onto the 2nd highest price average with $356,343. The South County region, as I also predicted last year, came on strong with a 5.2% price gain with their $203,300 average, and among the best indicators. St Charles lost some headway and clocked in at a 4.2% rise ($246,125 ave) after 2 successive years of 5.5%. Although their supporting stats are still the best in 2 other categories, the percent change was smaller there too. The Central Corridor (mid STL County) slipped to a 3.8% gain, but still have the highest prices in the Lou at $415,872 average. Their stats are mid-range but impressive at those prices, which tend to take longer to sell. STL City (3.5% up) and Jefferson County (3.6% up) rounded out the region with respectable price increases and very similar prices, $183,200 and $181,800. Jeff Co holds onto the distinction of the highest inventory and coming off their price the 2nd least, only .6% (St Charles .4%). The city holds large disparities, with some neighborhoods being pricey and in demand, while others only blocks away may languish, creating more opportunities but with risk.

What does 2019 hold in store for St Louis? We ended 2018 with a shaky stock market, the federal government at odds, volatile interest rates (lower right now!), and very low unemployment but ticking up. I feel confident about our region’s outlook as we continue to import tech and entrepreneurial jobs, rebuild many areas of the city and county while cracking down on crime, and not taking ourselves too seriously. If we grow, great! If we don’t, that’s OK too, as evidenced year after year by our strong support for charitable causes, cultural institutions, sports, education, and the arts. I predict this year will see a 3% increase in home prices, as the cycle is wearing thin. Sellers can take advantage of the significant runup in prices the last 7 years, and buyers can take advantage of still-historically low mortgage rates, and home prices among the lowest of any major metro area in the country.

Try a New Home!

With the difficulty that many buyers are running into these days finding suitable housing before it sells to someone else, here is an alternative: New Construction!

The pace of building new homes is about half of what they were in our 2005 heyday, but steadily climbing. Many builders either went out of business or switched to home improvements and renovations to stay afloat during the 2008-11 period. Today, there are good, quality companies ready to build the right home for you. I have represented 32 buyers of new homes over the years, and am very familiar with the process and how to protect you and your interests such as who holds your deposit and how much; what builder to choose and where to build; how much to put into the home without going overboard. Many choices of builders, styles, prices and locations are available. You can start from scratch and choose everything, purchase a “market-ready” home and move right in, or somewhere in between where you choose the final finishes.

I believe one of the main reasons home building has not yet come back to previous levels, is that more often, people wish to stay closer in to the city hub, their workspace, or good schools.. For every one that prefers open spaces and is able to move further out, there are two that are staying near or moving closer in. And closer in there is limited ability to build new. Thus the “tear-down” phenomenon, even reaching West County now, where folks purchase a less desirable home, have it torn down, then contract with a builder for the new one. This can be an exciting process, and you end up with brand new in a mature, close-in location. This has been common for years inside 270, but even parts of West County are considered close-in now! Be aware that some subdivisions and municipalities are more stringent on how the size and architecture fit in with the existing homes, and it can be more expensive.

Secondly, the price. New homes tend to cost more than existing homes. You should, however, save money in repair, improvement and utility bills the first 5 to 10 years that can offset that difference, if not come out ahead, even after the finishing details. And there is nothing quite like the feel and smell of a new home.

Contact me to explore this avenue if it sparks an interest. It can take some time to find you the right home and lot, plus the building process, especially the tear down scenario, so plan ahead and get me involved early. I can represent you in all aspects of new home construction.

Wallpaper update

Every few years I re-visit wallpaper – ah yes, good ole wallpaper. And every few years I say “Don’t do it”. Even though I maintain that as a recommendation, I am starting to see a crack in acceptability IF, and I mean IF, it is a new style. If it is an older style, keep scraping it off. I strongly caution you that most people in our region still do not like any wallpaper in the house at all, that includes me. But there are some out there that have not scrubbed off old shards of paper or realize how difficult stripping paper can be, plus of course the designers are always selling something new.

It seems that wallpaper is becoming somewhat popular in certain areas around the country. That alone would not faze me, as I have seen this trend continuously try to re-gain favor without success for 25 years. However, I have had a local designer this month say she is certain it is making its way to STL. I also have a young buyer who likes the look of certain wallpaper styles, this is what really caught my attention. The designer cautioned to stay with a small portion, such as a bathroom or 1 accent wall if you experiment. The buyer, too, felt that a small area would suit her better. Just remember that paper styles become dated faster than most other features of a home, if it had any significant appeal to begin with, as there are unlimited variations. Additionally, I may be suggesting that you remove it if you enlist me to sell your home.

When I visit newly renovated homes, builder display homes, and see photos on Houzz, they still are overwhelmingly painted wall surfaces only. I cannot stress this enough, that paint is still the way to go. I am only grudgingly admitting that there is a crack in the armor of the “No wallpaper” mantra that I have repeated for 25 years. Please ask me for an update in the future if you are considering doing this beyond a small portion, and I will post again on this in 2-3 years.

Happy stripping!

Appliance Colors

Kitchen appliance colors and styles change like everything else. When one goes kaput, you need to decide quickly what to replace it with. When you are renovating, you have a little more time and can match as desired. What will it be?

Silver stainless steel has been the number one choice for a good 10 years now, black 10 to 20 years ago, and white 20 to 35. The 70s colors speak for themselves! High end kitchen appliances have almost always had silver stainless or wood paneled fronts to match the cabinetry, or even brightly colored finishes. The last 3-5 years, however, has seen 2 noticeable trends: Ice (pure) white and black stainless (dark charcoal); with another – slate (lighter charcoal) – the latest challenger.

My experience in seeing many homes is that silver stainless is still the king; white never caught on (lots of white cabinets right now), plain black is fading unless it is high end and fits your scheme, and black stainless and slate are fighting to be the next long term trend. I believe silver stainless will retain a classic, high end look and stay around for years to come, and it goes with so many things. Matching cabinet panels come and go, right now more in than out *if your cabinets are more in than out*!

After checking with an appliance store and a new home sales center, they agree that silver stainless is still their number one seller, and white is the least. In between, it seems that slate is edging out black stainless and plain black is below those two.

If you are replacing just one appliance, it is easiest and safest to replace it with a similar color and model, although you should consider replacing it with the direction your kitchen is going, even if it is an obvious mismatch in the meantime, and you are not selling the house anytime soon. I have seen some different colors, brands, even styles that still look good overall, especially in the premium lines where different manufacturers specialize in separate components: Wolf and Thermador ranges, Subzero refrigeration, Bosch and Fisher Paykel dishwashers, Miele oven and dishwasher. Also consider repairing if it’s newer or you need just one more year out it before gutting the kitchen, or even finding a reliable used model. If replacing all items at once, Samsung, GE, Whirlpool, etc are marketing the four main appliances as a package deal that is worth exploring, but don’t hold yourself to that, it can pay off to shop around in price and quality.

Keep in mind when it comes time to sell, buyers notice your appliances instantly on photos before ever setting foot in your home. Many times, even if they work great, outdated appliances that stay with the home are worth replacing for resale value. The washer and dryer do not matter nearly as much, as almost all sellers take those with them, although I admit a new $2000 W/D set does make a home show better than an old, outdated set, like a type of staging, but certainly not worth purchasing just for selling purposes. As always, contact me if you want a professional opinion on this, I can review with you on the phone, view photos, or visit your home.

Happy shopping!

Wirings Funds is now Risky Business

Scammers have caught up to the real estate transaction. Most of us are familiar with having our email hacked, or know others who have. This is how the home purchase wire fraud begins, by scammers trolling and hacking individual’s email accounts. Although not new, our company has been warning clients for several years now, it has become more frequent and aggressive. FBI data reports that $969 million was diverted or attempted to be diverted from real estate transactions in 2017, and wired to criminally controlled accounts. That is an increase of almost 6 times from 2016. Typically, a cybercriminal will access an email account of any party to the sale – buyer, seller, Realtor, title company, even attorneys – to collect details about a transaction, then use that information to send bogus instructions that seem reasonable to transfer funds to the wrong account. Once that happens, recovering it is nearly impossible.

A central issue, according to Theft Resource Center in San Diego, is that many people do a poor job of protecting themselves online with weak passwords for their email accounts. If one party to the transaction doesn’t practice “online hygiene”, everyone involved can be at risk. A 2017 Data Breach Investigation found about 80% of hacking last year took advantage of passwords that were stolen or easy to guess. Once the thief obtains a few transaction details, they compose a legitimate-looking email to the purchaser, ostensibly from the title company, to transfer closing funds to the fraudulent account. This can result in the loss of not only thousands, but hundreds of thousands of dollars, since people are inclined to follow instructions that appear legit from a title company they trust.

Making sure the devices you use have the latest patches and secure passwords is a good start to deter cybercriminals, and backing up your data on separate devices is critical. Regarding the sale process, all parties should verify by phone, using a known number – not one in a suspicious email, any instructions of where to send money. This is the most critical, as this fraudulent email typically arrives just days before closing when buyers are busy and often don’t take the time to consider whether an email is real or not. The receiver of the money, usually the title company, will send “wiring instructions” containing the name of the institution, an account number, a routing number and other brief information that you will relay to your bank. They are hesitant to send this by email now, and may send by fax or even text. You can avoid this issue by exchanging funds with a cashiers or certified check, if feasible. As your Realtor in a transaction, I will discuss this situation with you at least once, and even have a document that outlines this potentially hazardous issue. Even though this is generally a buyer beware item, it can affect a seller who is bringing money to closing, or having their sale proceeds sent to their bank electronically.

Practice Safe Wiring!

Home Repair Permits

Does the thought of getting permits for mundane jobs around the house make you groan?  That would make you perfectly normal.  Unfortunately, when you go to sell your home, you may be groaning even more.

Depending on where you live, your city or county planning & zoning or public works department controls building permits.  This differs from a code inspection and occupancy permit (which can be required by your city/county and fire dept) upon transfer, which is an overall safety inspection.  A building permit is issued for specific repair and improvement jobs done to your home during your ownership.  They can be very large or very small, and typically include structural, electrical, plumbing and heating/air conditioning work, but also for fencing, solar panels, termite damage, some drywall installations, exterior drainage, even tie walls and playsets above a certain height.  Most of us understand and comply with the permit process for major renovation projects on kitchens, decks and room additions.  Some are questionable like minor remodeling projects.  And then there are those that don’t make much sense – replacing the toilet seal or replacing a window with a smaller one.  Many folks think this is just another revenue producer for the government.  I believe that most of this is for our safety and protection, but can be conservation related (some plumbing regs) or for aesthetics (which way the fence faces).  The revenue certainly offsets the cost to the city/county, but I do not believe it makes them any money in the end after paying their staff and can even be a financial loss.  This process is mainly for the health and benefit of the resident population.

So permits – Did You or Didn’t You?  Upon selling your home, the Realtor will have you complete a seller’s disclosure.  This is very detailed and (the STL version) includes a section addressing repairs to structural elements and “all significant additions, modifications, renovations and alterations to the property during your ownership”; and asking if required permits were obtained.  Many of us assume the contractor applied for any required permits.  Unfortunately, that does not always happen.  Time and money are two important commodities in business, and contractors like to save both, besides not having a regulator nitpicking their work, and wanting to give a competitive bid.  Some ask if you want one, or even require YOU to apply for it.  Read your agreement with them.  There are also many jobs that don’t seem big enough to require one.  In fact, St Louis County, which does unincorporated areas and many municipalities that contract with them, posts a list of things that do NOT need a permit in addition to the list that does.  Seems like they are the same length!  See http://www.stlouisco.com/YourGovernment/PublicWorks/Permits/BuildingPermits.

** A common misconception is that you do not need a permit if you don’t “move the plumbing”, which is not always the case.
** Some appliance stores are charging for permits for dishwasher replacement.  St Louis County requires a master plumber for this job, and to submit a Certificate of Replacement in lieu of a permit, unless it is in a different location which does require a permit.
** St Louis County allows a homeowner to do their own plumbing work that requires a permit if they can pass a test.
** I have had two client cases where a city or fire department, being called by a seller applying for a code inspection after going under contract, realized that a recently finished basement or plumbing work was not permitted, and required some drywall to be removed to check things out.  This cost the owner $800 on one and $2500 on the other to redo and patch.  This is rare but can happen.

If you ask me, I would have to advise you to get the permits as needed.  If you decide not to, or have already completed work without, just answer the question honestly and say no, or I don’t know.  Be aware that the public can call a city or county and ask for the permit history on your home.  If it is a common area not to get permits, most buyers do not consider this an impediment to buying, especially if you produce the paid receipts and lien waivers from professional contractors.  And the longer ago it was, the less likely to be an issue.

Happy permitting!

House passes tax bill

How does the pending income tax legislation affect homeowners?  It is a bit premature perhaps to discuss as the Senate must still agree, but hey, why not.  I am viewing this as a real estate pro, not a tax pro, please consult a tax accountant to verify any information discussed below.

The current House version keeps the real estate property tax deduction but caps it at $10,000, which will not affect most people here in STL.  It also keeps the mortgage interest deduction but lowers the cap from $1,000,000 to $500,000, which again will not affect most homeowners in STL.  Bear in mind, these deductions only count if you have enough to itemize on Schedule A of your tax return to include mortgage interest and property tax on your principal residence, charitable donations, high medical expenses, and various other expenses, over and above the standard amount granted.  With the standard deduction almost doubling to $24,000 for married couples, it takes a lot more expenses to top that standard.  This, in effect, will make the valuable homeowner deductions meaningless for many more folks in years to come, assuming this configuration goes thru.  Your tax bill may be lower on the bottom line, or it may not, but are there enough incentives to purchase and own a home?  Are they even necessary?

I know our industry – Realtors, lenders, home builders, and others connected to residential homes – is fighting cuts to homeownership benefits.  Our National Association of Realtors is reporting a possible 10% drop in home values.  While I find that a bit dramatic, it certainly could stall the current expansion of purchasing activity, and even cause a slight drop in values in the short term on fear of the unknown.   Long term, however, I feel that the overall desire to own your own home will remain high and prevail over renting.  Even if rental activity did pick up, as it has the last few years, someone has to own the home to rent it out, keeping a certain level of demand for housing purchases.  It is even feasible that since no one is talking about changing tax cuts for investment property, that more investors buy up single family homes to rent them out, and drive demand higher.

Another facet of income taxes that face homeowners is the capital gains tax.  Currently, you owe no tax on the gain you make between buying a house and selling it at a higher price, up to a difference, or a “gain” of $250,000 as a single person and $500,000 as a married couple, and taking certain expenses into account, if you lived in it at least 2 of the previous 5 years.  This is a very important exclusion now in the tax code, and will affect many people at all price ranges if not retained.  There was talk of adjusting this to having lived in the home 5 of the last 8 years, disqualifying anyone who moves out in less than 5 years and subjecting them to a surprise tax, although I am not aware of the current status on this issue.

Another possible outcome is this:  High end homeowners stand to lose more of their deductions on the mortgage interest and property tax caps.  If they scale down in price, it puts more buying pressure on homes under $600,000 or so, and conceivably more folks will move from high cost metros to lower price ones, like St Louis.  Being one of the most affordable regions in the Top 25 around the country, our area could actually come out a winner in this tax overhaul!

Happy taxing!

NEW – Sold on Manchester Facebook Page

Today I rolled out a new Facebook page that is all about Manchester, MO in West St Louis County – all things fun, interesting, new, did-you-know, and sometimes just quirky.  It is a municipality of 18,000 residents centered at Hwy 141 and Manchester Rd between the cities of Des Peres, Ballwin, Town & Country and Valley Park.  There is a growing demand to live in and around Manchester due to its location, school district, relative affordability, and quality of living.  Whether you live in the city, want to, used to, or otherwise wish to stay informed about what is happening in and around Manchester, I ask for your support by Liking this page:

www.Facebook.com/SoldonManchester

and hope you find this a positive addition to your News Feed.

I have created this informative page as a “city booster”, not a formal affiliation, and plan to post several times a week about this fine city and immediate area of West County. I am a 20 year resident in the Countrylane Woods subdivision off Carman Road. My wife and I raised our two children here thru Parkway South schools.  I am a Realtor for Coldwell Banker Gundaker and have sold many homes in and around the city. I was a Board member on both the Manchester TIF Commission several years back, and Manchester Arts more recently.

Postings will be kept positive and non-political – Comments and Likes are encouraged.  I aim to be fun and informative, not so newsy.  Sold on Manchester is open to anyone who wishes to follow – it is not a group where you need to be approved.  For other city information, you can visit the official city website, and Facebook pages by the city, the Parks Dept, and the Police Dept.

I look forward to sharing this with you and many others, and hope you will encourage others to follow it as well!

One Stop Home Care

Homeowners are constantly asking for referrals on reliable contractors who (1) show up; (2) do the job right; (3) do not overcharge; and (4) stand behind their work.  There are many companies that fit this description.  Unfortunately there is a high turnover on this list – hence homeowners constantly asking for referrals.  There are lists to look over, friends and neighbors to ask, past experiences, Yellow Pages (yes, they still exist), Googling, and more.  Beyond finding and maintaining a book full of reliable contractors, I see owners continue to struggle with (a) managing all the companies that do the work, and (b) ending up with a cohesive look that a future buyer will adore.

When a new home is built, or a major renovation is started, a general contractor takes charge of the operation to maintain one contact with the owner, ensure a smooth process, contain costs, obtain permits, and complete it in a clean and timely manner.   Why not have a system like this in place for everyday jobs around the house?  And have an expert opinion on not only cost vs return on significant improvements, but color and material choices and how they affect resale value, while interacting with the contractors for you?  This process could include an inspection to uncover items that need attention to avoid bigger bills down the road.

If this interests you, contact me about a program that I am beginning to work on that can take the time and pressure off you as a homeowner who does not wish to shop and compare all these jobs, or are afraid of making choices on the finishes that will appeal the most to buyers and consequently affect your home’s value.  I see this as a missing piece in today’s home industry:  a central figure to coordinate repairs and improvements while maximizing your home’s appeal and market value.   I feel it would be a blessing to many homeowners who do not have the time or desire to deal with all of these crucial jobs that must be done to properly maintain and improve what may be their biggest asset.  I am also researching financial assistance on needed repairs for senior homeowners to help them stay in their own home longer.

Happy Home Caring!

Increase your Net Worth Faster

Home “equity” is simply your home’s value minus what you owe on it.  Many of us have a rough idea of what our home is worth and also what we owe on it.  Several years ago, 25% of home owners had a negative number, severely hampering their ability to move or refinance.  Fortunately today, few owners are in that position as average home values have risen steadily for 5 years.  I believe you should have a clear picture of these two numbers, and how to drive them further, as it can be a large percentage of your net worth.  It can harm you, and it can help you, in house matters and in other life pursuits.  Your home equity is an important figure – you should have more than a vague idea of what it is and how to increase it.   Even as you closely track your assets and investments, this may be a higher priority as you can take several steps to build it, and limit your risk of losing your home.

I am offering to assist you in focusing closely on (1) what your house is truly worth; (2) how to increase that value without overspending; (3) evaluating how and where to get maximum return on repairs and improvements; (4) comparing home loan options on purchase and refinance that work best for you; and (5) making that mortgage work for you.

I offer these services for free in the hopes of earning your business in the future, and referrals of those you know in the immediate term looking to sell or buy homes.  Consider me an unbiased third party on home improvements and loans, as I do not financially gain from the choices you make.  I would not steer you wrong in these matters knowing that you may come to me later to sell your home, and I have to answer to my recommendations.  Also, I can give you hard figures to track your home equity amount so you have a clear number to work with, which can benefit you in several ways; plus I can document your repairs and improvements for an easy record (now required by title companies for 12 month period prior to sale) of paid receipts, lien waivers and warranties when it is time to sell.

If you don’t own a home, let’s change that and start building your equity for 2018.  It can be exciting to watch how leveraging a down payment on a home purchase that is appreciating in today’s market can dramatically magnify your net worth!  Leveraging works in reverse too, I can show you how to be mindful of that.  If you are not completely sure of how this works, take the time to understand this basic principle of finance.  Another principle worth understanding is the magic of compounding – it is not just for interest on your savings, it works on your mortgage payoff too!

Happy equity building!