Chief economist for NAR says we will know soon if the housing stimulus worked or not.

“If the pause in housing activity only last another month . . . then I think we’re on our way to a decent recovery,” Lawrence Yun, chief economist of the National Association of Realtors told St. Louis Realtors on Monday. “But if the pause lasts beyond August, then we’re looking at trouble.”

Yun also sited jobs creation as a major indicator for an economic turnaround.   “If we see 1/2 million jobs created in the second half of this year – that is a good sign that the economy is turning around,” Yun said.  “Unfortunately, it may take over four years for us to recover from all the job losses we have sustained so far.”

“A possible ‘Double-Dip’ in the housing market is a concern, but it would be mild considering the huge drop in home values we have already seen,” Yun said. “The bigger fear is whether consumer psychology is damaged enough to create an ‘over-correction’ in prices.”

Yun also warned that Realtors must get used to dealing with short sales and foreclosures because they are not going away.  “Distressed home sales will continue to be over 1/3rd of the St. Louis housing market,” he said.

In regards to the housing stimulus, Yun says the National Association of Realtors estimates that nearly an additional one  million buyers entered the housing market to take advantage of the tax credit for homebuyers.  “These are buyers we estimate would not have bought homes if the incentive wasn’t available,” he clarified.

Yun also spoke about the possibility of a ‘housing shortage’ within the next 2-3 years.  “Household formation is poised to rebound,” he says. The recession has forced college graduates to move back in with their parents and for some to “double-up” with roommates.  “If housing starts continue to drop as the economy improves, there will be a lot of people looking to buy houses.”

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Real Estate absorption rate for St. Louis is defined as the number of months required to sell the current, St. Louis real estate inventory.  In a tough real estate market, this number is an important one to keep in mind.  The chart below shows the absorption rate for a selection of zip codes and for St. Louis county.  

Particularly shocking is the number of home sales last month in the Des Peres/ Town and Country/ 63131 area.  I’ve covered this area for a long time and am surprised to see only 4 sales in the zip code last month.  I’m sure next month’s numbers will paint a different picture.  We look at absorption rates as trends.  Nevertheless, 4 sales is pretty shocking.  

We look at absorption rate to help us gauge our expectations for our homes that are on the market.  If you put your 63021 home on the market today, you will be competing with 287 homes.  We can reasonably anticipate that only 31 of them will sell next month.  So what do we need to do to get your home to be picked?

First, we need to price your home in light of the competition.  We need to be priced lower than the competing properties of the same size, finish, and condition.  This will enable us to stand out in the sea of houses on the market.  I can advise you on how to price your St. Louis home competitively.

Second, we need to look better looking than the competition.  Buyers are judging a beauty pageant.  If you don’t stand out as the top of the heap in terms of condition and quality, you’d better be a real steal.  Nobody seems to be interested in painting, removing wallpaper and carpet, gutting kitchens, etc. these days.  The fact is, there is enough inventory out there that they don’t have to.

$179,900.  1030 Lacoeur Drive is a beautifully renovated townhouse conveniently located off Big Bend near Kirkwood Road in Kirkwood, MO.  This 1218 square foot, all brick unit boasts a beautiful, all-new kitchen with ceramic tile, absolute black granite counters, custom maple cabinets, new appliances, and brushed nickel fixtures.  

The floor plan is open, the carpet is new, baseboard moldings have been replaced to current standards.  The first floor has a convenient powder room with granite top and new fixtures/lighting/floor.

Upstairs, new, neutral carpet flows through three bright, cheerful bedrooms.  The Master bedroom suite has a double closet and gorgeous bathroom with granite tops (undermount sink!), brushed nickel finishes, ceramic tile on floor and shower surround.  

In addition to the master suite, two secondary bedrooms share the hall bath — also renovated with granite tops, maple vanity, etc.  

The laundry space is in the basement.  The basement walls have been drywalled — all you need is carpet to complete this space and add about 500 square feet of living area.  

For more information, visit Nolting Real Estate — helping home sellers and buyers in the St. Louis area since 1984.  Or call Russ at 314-267-2636.