St. Louis Area Local Market Report, Second Quarter 2016 Today's Market $180,000 Median Price (Red Line) and One-year Price Growth 20% $160,000 15% $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 10% 5% 0% -5% -10% $20,000-15% $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-20% Local Price Trends Price Activity Saint Louis Current Median Home Price (2016 ) $170,300 $239,167 1-year (4-quarter) Appreciation (2016 ) 4.1% 4.9% 3-year (12-quarter) Appreciation (2016 ) 14.4% 17.8% 3-year (12-quarter) Housing Equity Gain* $21,500 $36,200 7-year (28 quarters) Housing Equity Gain* $31,200 $64,800 9-year (36 quarters) Housing Equity Gain* $6,600 $15,400 *Note: Equity gain reflects price appreciation only Local Trend Prices are up from a year ago, but price growth is slowing Gains in the last 3 years have extended the trend of positive price growth after the recession Saint Louis Conforming Loan Limit** $417,000 $625,500 Most buyers in this market have access to FHA Loan Limit $271,050 $625,500 government-backed financing Local Median to Conforming Limit Ratio 41% not comparable Note: limits are current and include the changes made in November of 2012 and extended in November of 2013 Local NAR Leadership The St. Louis market is part of region 9 in the NAR governance system, which includes all of Missouri, Kansas, Arkansas, and Oklahoma. The 2016 NAR Regional Vice President representing region 9 is Joe Pryor.
Benefits of Ownership: Total Equity Appreciation $80,000 $70,000 Total Equity Accrued to Owner by Year and Quarter of Purchase $60,000 $50,000 $40,000 $37,750 $30,000 $20,000 $10,000 $9,401 $0 2003 2005 2007 2009 2011 2013 2015 Total Equity Gained** through 2016 from quarter in which home was of purchased Price Activity SaintLouis 1-year (4-quarter) 3-year (12-quarter)* $9,401 $29,328 $14,963 $46,878 5-year (20-quarter)* $46,577 $82,353 7-year (28 quarters)* $46,477 $77,054 9-year (36 quarters)* $26,978 $31,126 If purchase in 2005, the national price peak $48,572 $34,380 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 30-year fixed rate mortgage at time of purchase and a 10% downpayment. Downpayment is not included in total equity
Drivers of Local Supply and Demand Local Economic Outlook Saint Louis 12-month Job Change (Jun) 12-month Job Change (May) 36-month Job Change (Jun) Current Unemployment Rate (Jun) 32,300 25,100 74,000 4.9% Not Comparable Not Comparable Not Comparable 4.9% Employment has held up and is on an upward trend Unemployment in Saint Louis is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 5.3% 2.4% 5.3% 1.9% Local employment growth is strong compared to other markets St. Louis Area Share of Total Employment by Industry Natural Resourc 4.8% 66.9 Natural R5.3% Natural Natural Resources/ #N/A #N/A Resources/M #N/A #N/A Mining/Con ining/constru struct #N/A Government #N/A ct #N/A #N/A Government 4.8% Manufacturin Other 5.3% 11.4% 14.5% Manufacturing 8.1% 112.7 g Manufac Other 8.6% 8.1% 4.0% Trade/Transporta 18.5% 256.1 Leisure Trade/Tr & 19.0% 3.5% Leisure & Trade/Transp Hospitality Information 2.0% 28 Informa1.9% Hospitality ortation/utilit 11.3% Financial 12.0% Activ 6.4% 88.9 ies Financia5.8% 18.5% Prof. & Busine 15.7% 217.9 Professi14.1% Educ. & Healt 17.5% 242.9 Information Educatio15.5% Educ. & 2.0% Educational Leisure & Hos Health 12.0% 166.6 Leisure & Health 11.3% Other 3.5% 49 Financial Other S 4.0% Prof. & Activities 17.5% Government 11.4% Business 158.6 95.2% 6.4% 15.5% Governm14.5% Professional 100.0% & Business #N/A #N/A 15.7% #N/A #N/A #N/A #N/A #N/A #N/A 14.1% 12-month Employment Change by Industry in the St. Louis Area (Jun - 2016) Goods Producing NA Information Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing Service Providing Excluding Government 3,000 NA NA -2,800 NA Financial Activities Prof. & Business Educ. & Health Leisure & Hospitality Other Manufacturi ng 8.6% -1,200 2,800 10,700 5,500 11,100 0 Trade/Trans portation/uti lities 19.0% Information 1.9% Financial Activities 5.8% Trade/Transportation/Utilities 2,500 Government 700 State Economic Activity Index Missouri 12-month change (2016 - Jun) 36-month change (2016 - Jun) 2.6% 9.6% 3.0% 10.2% Missouri's economy is growing, but decelerated from last month's 2.85% change and lags the rest of the nation
Local Fundamentals New Housing Construction Saint Louis 12-month Sum of 1-unit Building Permits through Jun 2016 5,045 not comparable The current level of construction is 16.0% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Jun 2016) 12-month sum vs. a year ago 4,348 7.5% not comparable 10.6% Production above trend for an extended period of time could cause prices to moderate as inventory is built up. Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.0% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Source: Mortgage Bankers' Association
Affordability 30% Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 25% 20% 15% 10% 5% 0% 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Monthly Mortgage Payment to Income Saint Louis Ratio for 2015 Ratio for 2016 7.0% 7.2% 15.6% 15.8% Historically strong, but weaker than the first quarter of 2016 Historical Average 9.5% 19.5% More affordable than most markets 12% Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 10% 8% 6% 4% 2% 0% 2014 Q3 2014 2015 Q1 2015 2015 Q3 2015 2016 Q1 2016 Median Home Price to Income Saint Louis Ratio for 2015 1.2 Ratio for 2016 1.3 Historical Average 1.3 2.8 2.9 2.7 The price-to-income ratio is high by historic standards and getting worse Affordable compared to most markets
4.0 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 The Mortgage Market 30-year Fixed Mortgage Rate and Treasury Bond Yield 280 5.0% 240 200 4.5% 4.0% 3.5% 160 120 3.0% 2.5% 2.0% 80 40 1.5% 1.0% 0.5% 0 2011 2012 2013 2014 2015 0.0% 2016 Spread (left axis) 30-Year FRM (Right axis) The second quarter of 2016 has been quite tumultuous with the surprising Brexit vote in the United Kingdom. While British citizens voted to leave the European Union last June, the full impact of the vote could take several years to be seen. In the near future, low mortgage rates and stronger refinancing are expected in the. Meanwhile, the 30-year fixed-rate mortgages eased from 3.7 percent in the 1st quarter of 2016 to 3.6 percent in the second quarter of 2016. Similarly, the 10-year Treasury fell to 1.75 percent which is the lowest rate after 2012. As a result of the current market conditions, existing homeowners benefit from low rates by refinancing their mortgages while home affordability is increasing for first-time homebuyers. Rates are likely to remain unchanged as global economies remain weak. The uncertainty in China, Japan, Russia and Eurozone is expected to boost safe-haven buying which benefits mortgage-backed securities market. NAR is now forecasting fewer rate hikes by the FED in 2016 and as a result the 30-year fixed rate mortgage is now expected to average just 4.3 percent for 2016.
REALTOR Price Expectations 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) Source: NAR REALTOR Price Expectations Missouri 2016 - Jul 3.2% 3.6% Prior 12 months 3.2% 3.4% REALTORS expect weaker price growth in Missouri than in the in the next 12 months. Their price expectations for the local market remained at the same level as a year ago.
Geographic Coverage for this Report The Saint Louis area referred to in this report covers the geographic area of the St. Louis metro area as officially defined by the Office of Management and Budget of the Government. The official coverage area includes the following counties: Bond County, IL; Calhoun County, IL; Clinton County, IL; Jersey County, IL; Macoupin County, IL; Madison County, IL; Monroe County, IL; St. Clair County, IL; Crawford County, MO (part-sullivan city)""; Franklin County, MO; Jefferson County, MO; Lincoln County, MO; St. Charles County, MO; St. Louis County, MO; Warren County, MO; St. Louis city, MO More information on the OMB's geographic definitions can be found at http://www.whitehouse.gov/omb/inforeg_statpolicy/