St. Louis-Area Homes Continue To Sell Even During A Pandemic
FAIRVIEW HEIGHTS — Justin Gough’s house hit the market on April 8 during the height of the coronavirus restrictions. Three days later, the house was under contract for $135,000.
The speed with which the three-bedroom, two-bathroom home went under contract wasn’t that surprising to Gough. He said a friend listed a similar home weeks earlier and had a contract almost immediately.
Gough was more surprised that eight people had looked at his property in the first days it was on the market in early April, when Illinois and Missouri residents were under stay-at-home orders.
“I wasn’t sure,” he said. “You’re just like, ‘There’s no way in hell someone is going to buy a house right now.’ But it’s been quite the opposite.”
The limited number of homes on the market at the time may have helped Gough close the sale so quickly, he said.
“Now that I look back on it, a lot of people didn’t really want to list their houses because they weren’t sure,” Gough said. “It almost had to be a vacant house, or people weren’t going to show.”
In that regard, Gough was lucky. The O’Fallon, Illinois, resident wasn’t moving during the time, just selling a home he purchased in October 2019 and had fixed up.
Gough’s experience highlights a larger trend in the region during the coronavirus lockdowns. Real estate and rental properties saw relatively steady turnover as other parts of the local economy ground to a halt.
Buying during a pandemic
It wasn’t obvious the housing market around St. Louis would stay consistent back in March. At that time, Sam Row was deep in the homebuying process and just about to move. He and his husband had planned earlier in the year to upgrade from their home in Soulard to one with more room.
“The process started off pretty normally,” he said. “We looked at houses, met with the builder and realtor, and made some modifications to it.”
The pandemic restrictions in the region went into place about three weeks after they put their new Benton Park home under contract. Row said he became nervous and started second-guessing the decision to spend $335,000.
“It was scary, because my husband is a hairdresser, so obviously he couldn’t work,” he said. “And I sell real estate. With COVID-19 happening, there were a lot of unknowns in my industry.”
Their old house in Soulard had been under contract, but that fell through with the regional COVID-19 lockdowns. It’s now back under contract. A handful of other deals with Row’s job as a licensed realtor in Illinois and Missouri also fell through, he said.
After a few slow weeks, home sales picked back up with realtors, sellers and buyers adjusting to a new, more streamlined homebuying process, he said.
Open houses transitioned online, buyers obtained preliminary financing approval before starting to look, sellers or realtors regularly cleaned frequently touched surfaces, and realtors limited the number of people who could see a home at a time.
“Thank God we’re not in a state where they’ve shot down real estate transactions, because we are essential,” Row said about Missouri and Illinois. “We deal with people all the time where it’s not that they want to move, they’ve got to move.”
In March, 1,425 home sales closed in St. Louis and St. Louis County and 649 closed in the Metro East, according to preliminary numbers from the St. Louis Realtors Association and the Realtor Association of Southwestern Illinois. Those numbers in April were 1,374 and 625, respectively.
Compared to single-family home sales for the same months in 2019, Metro East home sales in 2020 were down only by single-digit percentages — 3% from March 2019 to March 2020 and 6% from April 2019 to April 2020. St. Louis and St. Louis County sales were up 1% between March 2019 and March 2020 but down 18% from April 2019 to April 2020. Both associations did not yet have numbers for home sales in May.
The steady home sales are partially a product of both Illinois Gov. J.B. Pritzker and Missouri Gov. Mike Parson declaring real estate an essential service in their states.
Staying at home also drove many people to look at their phones more, which piqued some people’s interest in different living options, Row said.
“It was a great time to browse the internet and start looking at houses,” he said.
Other sales drivers
There are other factors that drove sales, too, like historically low mortgage interest rates and fewer homes on the market, said Deb Frazier, chief executive officer of the Realtor Association of Southwestern Illinois.
“We had fairly low inventory before this all started. When the pandemic started, a lot of sellers got nervous and took their homes off the market,” she said. “There is a pent-up market of buyers right now. When something new comes on, a lot of people are jumping on those just immediately.”
Some parts of the Metro East real estate market are so tight that homes go under contract in a matter of hours, Frazier said.
“I had an agent tell me recently that she wrote an offer, was one of the first people in the door and within an hour there were nine offers and they had accepted one,” she said. “The people that are out there right now are very serious buyers; sellers need to understand that. People aren’t just going through their homes for the fun of it.”
The number of people willing to go ahead and move during a global pandemic surprised Annissa McCaskill, the director of residential and commercial development services in Belleville.
“We’ve been told to stay home, to try and limit our social engagement, to not move about as much as we can,” she said. “When you think about moving, all of those things kind of go out the window for the most part.”
Staying socially distant is nearly impossible when moving, regardless if someone hires movers or enlists the help of family and friends, McCaskill said.
“People are finding ways to make it happen,” she said.
McCaskill’s department oversees occupancy permits for Belleville, which someone has to obtain when they purchase a new home or move into a new apartment in the city. Between March and mid-May, her department had issued more than 400 of those permits, about 30% fewer than the same time in 2019.
While a 30% decline is significant, McCaskill said she expected it to be even higher given how the coronavirus quickly upended nearly every aspect of daily life.
“Moving is not cheap. Purchasing is not cheap. Setting up a household is not cheap,” she said. “But people are still willing to do it.”
Her counterparts in cities around the region, like Fairview Heights, Rock Hill and Webster Groves, also expected lower demand for occupancy permits, but all saw strong demand for them during the lockdowns, McCaskill said.
Those who are looking to move right now generally fall into two age categories, Row said.
“That 40-and-over crowd, if they’re looking to move right now, it’s not necessarily because they want to be, there’s just a need for it,” he said. “On the flip side, people under that age — the younger crowd — they’re buying because they recognize interest rates are good.”
Younger Americans are taking advantage of the opportunity low interest rates offer right now, said Charles Tassell, chief operating officer for the National Real Estate Investors Association. He’s noticing new buyers, especially millennials in their 30s, gravitate toward similar kinds of property.
“Single-family homes in that starter-home range, which in the Midwest is $200,000 and under,” he said. “Hard to build those typically, but you can renovate them and have them available.”
In some cases, millennials or those with children are moving more than before, looking to escape cramped living spaces highlighted by weeks of working and living at home, Tassell said.
“Especially if they’ve been in a rental unit, they want some grass and space and a little more elbow room,” he said. “Those who cannot afford taking the step to buying a single family are moving toward renting single families.”
Frazier expects people will continue to move and look for more space even after pandemic lockdown restrictions lift, as some businesses decide if they want workers to return to a centralized office.
“If people are going to work from home, they have to have space; you have to have a good setup,” she said.
Square, Twitter and Facebook have already announced some of their workers can permanently work from home, with other large tech companies weighing similar options. It’s something businesses and employees outside the tech industry will consider, too, Frazier said.
“I think we’ll see that happen within the next six months, easily,” she said. “Companies will start to make those decisions, and then employees will.”
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