Frustration has set in for Jordan Mandel. The 36-year-old resident of Brentwood has his finances in order. Recently he bid $35,000 over the asking price for a house in St. Louis’ Franz Park neighborhood. He only had the fourth-best offer.
It’s a frustrating time to be a homebuyer. Inventory is low, and prices are way up. In some instances, people who bid thousands of dollars above a home’s asking price are still losing out because others are willing to bid even more.
“I kind of feel like dating in a way,” Mandel said. “You go around to all these different houses and [have] first impressions, but in this [housing market], you don't really have time to get a second date. You have to make the decision right away.”
Mandel is not alone.
“Ever since October of last year, every offer that I've made with the exception of one has been a multiple offer situation,” said Gail Brown, president of Brown-Kortkamp Realty.
The last home she pursued, in the Metro East, sold for $81,000 above list price. Her client wasn’t the successful buyer because that bid was only $60,000 more.
Creighton Brinson, a real estate agent with Re/Max Gold, said a carriage house in St. Louis priced at $285,000 last December brought an offer $90,000 above list price.
“We had 14 offers. Only one offer was less than $300,000,” he said. “It's pretty crazy. We have agents calling us all the time asking, ‘Do you have anything coming soon? Do you have anything in this price point?’… And we do the same thing with other agents [because] we have buyers that are always looking for certain things. And many times when [homes] pop on the market they’re gone pretty quickly.”
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Data from Missouri Realtors show demand for housing remains high and inventory remains low. In April, there was a 21% increase in sale price over last April, with the average residential property selling for $254,631.
Low interest rates, in part, are fueling the high demand. Plus, many millennials have finally jumped into the homebuying fray.
“They are late to the market,” Brinson said on St. Louis on the Air. “They have been noticeably missed for years. And now they're all in. And it's great to have that group of buyers, but it just adds to the competition, unfortunately.”
High demand has also allowed sellers to be extremely picky. In many cases, they can choose buyers willing to waive contingencies: an appraisal, home fixes and, in some instances, the inspection.
Waiving the inspection contingency makes Brown queasy.
“I've seen some real expensive repairs come up with building inspections, some things that you definitely can't see when you're walking through the house, especially the sewer lateral. [In one instance] it cost a family $11,000 to correct,” she said. “As a first-time homebuyer, you may not have those reserves to make all of those repairs, and you don't want to get yourself in trouble because you're paying the mortgage and then trying to make these repairs. So there are times when it's worth getting the inspection and walking away.”
Brown and Brinson have seen the ebbs and flows of the market. And while it’s a sellers’ market now, at some point, it’ll likely swing the other way. They agree that reversal will take some time.
“I would encourage people to look at that diamond in the rough, properties that have been on the market for a minute, rather than trying to get the brand-new property. That’s going to be a feeding frenzy,” Brown said.
And for buyers just jumping in, Brinson advises doing as much planning as possible.
“Get your finances in order. Get all the paperwork that you need to your mortgage lender, so all you need is an accepted contract, and you've put your best foot forward,” Brinson said.
Jordan Mandel hasn’t given up searching for his first house, though he wants to make sure emotions don’t get the better of him.
“I am starting to go back into the search. I took some time off because I was seeing [up to] six houses a week, and it was just exhausting and a little disheartening as well,” he said. “I'm being a little idealistic, where it's such a huge amount of money that I don't want to settle for anything.”
Listen to the conversation to hear more about the real estate boom in St. Louis. Also discussed was how it’s not a sellers’ market for everyone. Parts of the region aren’t experiencing the same advantages, especially areas long subject to disinvestment and the effects of discriminatory housing practices.
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Home prices are up in the St. Louis area and supply is down. Are you a buyer who's found yourself in a bidding war – or a seller fielding multiple offers? Tweet us (@STLonAir), send an email to talk@stlpr.org or share your thoughts via our St. Louis on the AirFacebook group, and help inform our coverage.
“St. Louis on the Air” brings you the stories of St. Louis and the people who live, work and create in our region. The show is hosted by Sarah Fenske and produced by Alex Heuer, Emily Woodbury, Evie Hemphill and Lara Hamdan. The audio engineer is Aaron Doerr.
