The original St. Louis Real Estate Blog, est 2004 with Darin "Sid" Cameron, CRS.
Understand the St. Louis housing and real estate market better. Sid is a licensed real estate broker in Missouri.
The St Louis Agent Team of RE/MAX Properties West
 | For Agents | Forum | Bookmark Site
Subscribe to RSS Feeds - Click Here!
Bookmark and Share
Chat with an Agent!
Real estate questions?
Want to see a home?
 Click for Live Chat or
Call: (314) 598-4040
 Email this Article! Email this article d Discuss this article d Printer friendly page with resizable text
 Interest Rates Nudged Higher
By: Darin "Sid" Cameron, CRS
Wed, Sep 21st, 2005 10:53 pm

For the first time in several weeks interest rates nudged higher (albeit slightly). Freddie Mac reported 30 year fixed rates climbed .03% to 5.74%

Although not a significant increase, there is some uncertainty as to the overall future of interest rates. Many expect the Federal Reserve to raise short term lending rates which would eventually raise mortgage rates- although the fallout of Hurricane Katrina could alter their plans.

So what does that mean to St. Louis? The Post Dispatch reported this week that St Louis area housing prices had risen 9.2% over the past year. That’s one of the largest one year increases St. Louis has had in the past 20 years- and that’s because of the record low interest rates that have kept home sales brisk. (Read the full Post-Dispatch article here.)

As interest rates threaten to rise, there is legitimate concern (expressed almost daily in the news) that it could chill the real estate market if not send it into a full-out tail spin. However in regards to the St. Louis market, understand that the 9% yearly growth in local real estate is a long way from the 20-30% some markets have seen- and even below the national average of 13%. And ironically that’s the good news. As we near the end of what some experts are calling the “real estate bubble,” our relatively modest growth during the bubble should provide insulation to the negative effects a “bubble burst” would have (like crashing real estate values). Indeed, despite the fact that the St. Louis market seldom sees double digit growth like other cities, we also seldom see the declines those other cities see.

So, should we be worried about a real estate crash caused by increasing interest rates? Never say never. However below are a few factors that I think will affect the St. Louis real estate market more than a quarter point interest rate hike.

1) Hurricane Katrina (and any additional damage inflicted by future 2005 Hurricanes like Rita). As discussed in a previous blog entry this month, the fallout from Hurricane Katrina could eventually be felt in St Louis in the form of shortages for construction material. Shortages for cement, drywall, and lumber would in turn cause less new construction homes to be built which should in turn keep upward pressure on housing prices.

2) The Local Job Market. This week St. Louis took a big hit with the loss of some 1,700 local jobs thanks to the Federated buyout of local icon May Department Stores. The question to ask is, “How will St. Louis offset these job losses?” Can the growth from fast growing locals like Express Scripts, Build-a-Bear, Panera Bread, Enterprise Rent-a-Car, and others absorb those lost jobs? Can our nice slow economic growth entice corporations to relocate TO St. Louis- like Hardee’s and Arch Coal have in recent years? More important, will displaced May employees and executives leave St. Louis for good, or will we see start-ups and spin-offs blossom as a result? Unemployment and population shifts mean more to a local economy than interest rates.

3) Outside Investors. One of the more interesting trends we are personally seeing is an influx of out-of-state real estate investors who have been pushed out of the California and East Coast markets by astronomical real estate prices. Couple that with the talk of the “bubble bust” and there’s good reason for an investor to pull out of high priced (over priced?) coastal real estate and look toward safer Midwestern markets. One only needs to look as far as the Washington Street Loft District where 40% of the buyers are out-of-towners relocating or investing in St Louis. If this continues, it too will continue to keep an upward pressure on local real estate prices.

[ Next Article: Cookin' Up Creole in Rockhill ]
[ Previous Article: Katrina Shockwaves Affects Real Estate Industry (Part 2) ]

Search this Blog:

Darin 'Sid' Cameron, CRS

Contact Me on Facebook!

 Contact me on LinkedIn!

Follow me on Twitter!
Darin "Sid" Cameron spent 15 years working in the technology industry which in 1998 relocated him to St. Louis. In 2004 he took over web development tasks for Kimberly's real estate team and later became the full-time Marketing and Operations Director in 2005. In 2011 Sid launched two brokerages, The Realty Store, Inc. and Realty Referral Partners, Inc, while continuing to perform marketing and operations for Kimberly's team. Sid holds a real estate broker's license in Missouri, CRS certification and was the first CyberStar in the St. Louis area.
Certified Residential SpecialistCyberStar!
Follow me on Active Rain!

All Blog Articles XML/RSS

Add to My Yahoo!

All Categories
 News  Things to Do  Real Estate Trends  Misc Stuff  Selling a Home  Calendar of Events  Home Repair  Buying a Home  Interest Rates and Financing  Investment Real Estate  Credit Reports and Safety  Our Website and Services  Government and Legislation  Internet Resources  Living in St. Louis  Home Improvement  St Louis Housing Market  Real Estate Statistics  Home Safety  Blogging In General

RE/MAX Properties West
Kimberly Cameron, Team Leader
RE/MAX Properties West Direct: 314 598-4040
16497 Clayton Road Office: 636 532-5900
St. Louis, MO 63011 Fax: 800 573-1985
Email Us Here! Toll Free: 800 573-5276
Equal Housing Opportunity
The St. Louis Agent Team of RE/MAX Properties West