Real estate is an ever-changing landscape. During 2021 and 2022, the majority of real estate markets saw unprecedented growth. The St. Louis area was no exception to this rule. This was due to many underlying factors, including 30-year low-interest rates, supply chain interruptions, a nationwide housing inventory shortage, and an even greater surge of Millennial buyers entering the homebuying stage. Combining all of these elements, St. Louis experienced a competitive, red-hot real estate market, where buyers were caught up in bidding wars and sellers were receiving well above asking prices for their listings.
During the summer of 2022, St. Louis’ real estate market began to slow down, which would ultimately stabilize the market. So what can buyers and sellers expect moving forward in 2023? With an ever-changing real estate market, here are the best questions to ask your expert St. Louis real estate agent before buying and selling in 2023.
How will the real estate market change in 2023?
The decision to buy a new home or sell your current home should not be made lightly. Even in the best market conditions possible, there are so many things to take into consideration before making such an important decision. Yet, when you speak with your real estate agent, one of the most important questions you want to ask is how the market will change in 2023.
This is a completely valid question every prospective buyer or seller should ask their agent since a real estate climate can create a major impact on your decision. Over the last couple of years, we have seen one of the most competitive real estate markets in recent history. This was partially due to record-low interest rates, which dipped down to 2.65% in January 2021. This, combined with other factors, meant demand for real estate was sky-high. Yet, as interest rates increase and the real estate market stabilizes, what will this mean for the local market in 2023?
As of October 2022, the St. Louis real estate market is still in a seller’s market, where the demand for real estate is higher than the current housing inventory. Real estate prices in 2022 have increased by 3.4% compared to 2021. With this in mind, it is likely the St. Louis real estate market will remain stable.
Should I be worried about increased interest rates?
As the last two years have shown us, interest rates play an integral role in real estate market activity. Contrasting 2021’s record-low interest rates, the Fall of 2022 has seen a steady increase in interest rates, with rates reaching up to 6.8%, which is the highest they have been since 2008. With this in mind, many homeowners are likely wondering what this will mean for buyers and sellers. Will increased interest rates disrupt the local real estate market? Should you be worried about interest rates increasing?
While increased interest rates might seem like a red flag for many homeowners, increased interest rates are not enough to completely disrupt the local real estate market. In fact, since record-low interest rates were one of the biggest reasons we were in a competitive real estate market, increased interest rates will likely stabilize the market. Since Ladue, MO real estate is retaining its current value, it is likely we will see a slight slowdown in favor of buyers, but overall, there will be a more level playing field between buyers and sellers, where there will be an increase in inventory but a steady supply of homebuyers.
What else can affect the real estate market?
When trying to predict real estate market patterns, there are many factors to take into consideration. While interest rates play an important role in buying patterns, other issues come into play when determining whether or not a real estate market will remain competitive or grow stagnant. Two major factors include employment rates and demographics.
Over the past couple of years, work patterns have changed. As more people work remotely, more and more people have the option to work wherever they want, independent from where their job is. As a result, more and more people are moving away from more expensive real estate markets to more affordable ones. While this change is more concentrated in the Sun Belt states, the Midwest is seeing an increase in buyers moving to the area, as well. One of the biggest advantages of living in St. Louis County is affordable. The median sales price for a St. Louis home is $269,000, which is much lower than the national median sales price of $384,800. Buyers who are searching for more affordable real estate options are more likely to turn to cheaper real estate markets, such as St. Louis since it is one of the most affordable major cities in the United States.
Along with remote work, St. Louis has seen a steady increase in economic growth. While St. Louis has an unemployment rate of 6.3%, which is just above the national average. The area has seen a 0.7% job growth increase in the last year and is expected to keep growing, which should have a positive impact on the local real estate market.
Another factor that sways the local real estate market is demographics. As seen over the past two years, Millennials are buying houses at a much greater rate than ever before. As of 2022, Millennials comprised over 43% of total homebuyers, and that number is expected to keep growing in the coming years. As more and more Millennial buyers search for affordable real estate options, many of them will likely relocate to St. Louis, where they can afford a bigger home for a more affordable price.
Is 2023 a good year to invest in St. Louis real estate?
Taking all of this into consideration, one of the most important questions you may have is this: Is 2023 a good year to invest in real estate? The short answer is yes, 2023 is an excellent year to invest in real estate. Unlike 2021 and 2022, where the real estate market was overly competitive for buyers, the 2023 real estate market will have a stabilizing effect, which will increase market inventory, giving buyers more options to choose from. On the flip side, St. Louis homes are maintaining their value, which means sellers will not be forced to drastically lower their asking prices in order to accommodate the local market. Overall, this is a win-win for buyers and sellers.
Real estate investment can always be risky, even in the best of times. Yet, by asking your agent the right questions, you can be prepared for 2023, no matter what’s ahead.
Are you ready to make a change for 2023? Whether you are searching for Ladue real estate or luxury condos in Clayton, MO, now is the time to turn your real estate dreams into a reality. Trust L. Merrick Agency to help you find your dream home. Contact us to get started on your house hunt.
