Five years later, the real estate market is bouncing back. After overcoming the high foreclosure rates of the 2008 recession and its unstable aftermath, area experts and residents again are showing signs of confidence in the housing market.
According to the National Association of Realtors, St. Louis’ median home price is $165,900—up more than 6 percent from last year, mimicking the spike seen across the nation in recent months. And homebuyer website Trulia reports that 58 percent of homeowners are predicting home prices will take 10 years or less to get back to their pre-crash peak; and about 80 percent of current renters say they plan to purchase a house someday.
Financial analysts note other factors buoying the real estate market are more first-time homebuyers; rising rents as more young people enter the market; and increasing construction costs as fewer new homes being built—resulting in higher home prices.
But even with all this good news, is a house still the great investment it once was? Local financial advisers and mortgage bankers echo a positive outlook. “Homes can still be a good investment as historically, they appreciate over time; and mortgage interest and real estate taxes are deductible,” explains Mark Cooper of USA Mortgage. “Also, interest rates play a key role in this; and even though we are no longer at historic lows, rates are still very good.”
For those looking to invest in property, Cooper notes that good credit, a stable income, and at least a 20-percent down-payment are crucial. And if buyers need a home loan, he recommends reaching out to a mortgage banker for help. “We control the entire process--from application, to processing and underwriting, and, ultimately, closing.”
A strong financial adviser who understands both real estate and investments on the stock and bond sides also can guide buyers through the acquisition process. Cooper meets with prospective buyers face-to-face and focuses on understanding their goals. “Whether it’s to purchase a home, rehab it and sell it quickly or build a portfolio of rentals for a long-term retirement investment, I use my experience to refer these clients to the best realtors in St. Louis that specialize in investment properties.”
Jim Blair, principal at Moneta Group, agrees that clients looking to acquire real estate for long-term investment should consult a financial adviser. “It’s important for financial advisers to help individuals steer clear of making large, concentrated bets. One hundred percent of your real estate portfolio should not be comprised of one building. You should look for ways to diversify.”
While experts agree that homes remain good investments, they caution against jumping carelessly into home ownership. Real estate value can vary from community to community, and even street to street, Blair notes. “Every situation is unique and needs to be evaluated.” Individuals and families need to carefully consider their budget and have an emergency fund as a safety net. Only then can they rest assured in home sweet home.