While St. Louis didn’t see the huge value gains compared to markets in Florida, California, and Arizona we aren’t seeing the losses either. Appreciation is still alive, interest rates have dipped to under 6.5% and if national statistics hold true then about 7 fewer families of 100 will move in 2006 than in 2005. That’s not too bad considering for nearly 2 years we have been waiting for the “bubble to burst” here in St. Louis. We now have economists predicting that the worst is over.
Last year in order to buy a house you often paid list price or above due to high demand and low supply. This year the sellers have to compete in the market for buyers. This drives “days on market” up and can cost the seller especially if they have already purchased another home and now have 2 payments.
Builders are feeling the crunch as many are carrying overhead in the form of vacant homes and land. Add to that increased fuel, labor, and materials costs, and now stable market sales prices and their profit margin is shrinking and they are selling fewer homes.
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