Happening in STL

Housing Bubble: How Has Saint Louis Faired?

STL-Zips

“Home price recovery skips some St. Louis area neighborhoods”

From the St. Louis Post Dispatch…

The recovery in housing prices has been rocky and uneven in the St. Louis area, a fact reflected in new data from the Federal Housing Finance Agency.

As of last year — according to the latest figures available by ZIP code — prices in much of the region were still below the peak year of 2007, and prices in much of north St. Louis County were still lagging by more than 30 percent.

By contrast, some of the region’s more affluent communities — Clayton, Ladue, Frontenac and Town and Country, are in ZIP code areas that have seen prices reach record highs. And a once-declining group of city of St. Louis neighborhoods is enjoying a housing revival.

1024px-Shiller_IE2_Fig_2-1

I think we can all remember the housing bubble that affected over half of U.S. states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2012.[2] On December 30, 2008, the Case-Shiller home price index reported its largest price drop in its history.[3] The credit crisis resulting from the bursting of the housing bubble is—according to general consensus—the primary cause of the 2007–2009 recession in the United States.[4]

Areas hard-hit by foreclosures after the price bubble burst in 2007 haven’t seen much recovery.

What Does The Money Say?

When I started to think about it more I wanted to do a little research of my own. To do this I picked 10 St. Louis Zip codes (click for interactive zip code map)… some in the central area where I do most of my business, as well as Zip Code’s in Northern St. Louis (where the foreclosures hit the hardest). I then ran reports in the MLS that showed aggregated dollar amounts of homes/condos/villas sold as well as new constructions. I got this data from 2007-2008 and from the last 365 days. See the results below…

Price Comparison

The chart above shows the total sales volume by time period. As we can see, Bellefontaine, Ferguson, Florissant, Central West End and Brentwood have all experienced losses (though much less for CWE/Brentwood). Whereas Hazelwood, Chesterfield, Ladue, Richmond Heights and Clayton have all seen growth. Though Hazelwood and Florissant are both in North County they have not seen the same changes.

Now I will say… when I saw Central West End was still 3% lower than it was in 2007 (I mean come on… have you seen the developments??? Cranes everywhere…) I dug deeper. I added to the analysis a midway data point. I extracted the transactions from 2011 and found something shocking.

CWE zoom

From 2011-today, the Central West End has actually seen a period of growth of +47%.

Though not what it was in 2007, the context is important to include to understand the progress that is being made in the central area. NextSTL has quite a collection of these developments that you can view here. Soon we will do an article where we compile developments (recently completed, in progress or planned for the next 2 years) that are taking place in the St. Louis area.

This pattern is mirrored in other cities across the nation, it’s not just us. According to Alan Mallach, a senior fellow at the Brookings Institution who is studying St. Louis neighborhoods, the price rebound has been strongest in the richer areas — and in urban neighborhoods that are drawing millennials. If you look at all the data we’ve seen about St. Louis being one of the hottest real estate markets it makes sense. We are seeing most improvements in areas that are seeing a surge of development and population shifts. The central area (CWE, CORTEX) is seeing a boom of development and startup companies. Areas like Clayton are teeming with life, the developments never end.

What’s next?

Keep an eye out for an in-depth article we will publish soon about all of the development we are seeing in St. Louis and whats next. In the mean time, check out this article on STL Today about some specific areas that have been hit and what has been done to speed up recovery. You can also take a look at the House Price Index on the Federal Housing Finance Agency’s website.