Sellers see rising home values; buyers compete for homes while mortgages are cheap

St. Louis home sellers have good opportunities ahead of them, based on a first-quarter analysis of market activity by the Gellman Team. Meanwhile, St. Louis home buyers are coping with lean home inventories by getting creative with their purchase offers. The Gellman Team offered the following insights on St. Louis residential market conditions:

"2013 was an amazing year," says co-founder Mark Gellman. "It was the best window of opportunity for home sellers in the last 5 years. Well, 2014 is off to an even stronger start. The market is still running on the adrenaline that was created last year. The media remains positive. The stock market is up, while mortgage rates remain low. All considered, it tells home sellers that if you want to sell - do not wait. All the stars are aligned. You take a risk if you wait - who knows where things will be in 3 months, much less 6 months from now."

Neil Gellman says that a stronger economy has helped spur buyer demand, which in turn, has boosted home prices. "As you probably hear in the media, real estate is showing strength! The strength we are seeing directly correlates to a lack of inventory throughout many price points. The imbalance of supply and demand has fueled a sense of urgency in our housing market. We are seeing homes attract multiple offers, sometimes selling for more than the asking price. This is very reminiscent of what happened prior to the last downturn. Unlike that period, the market momentum is not sponsored by speculation - today it's a lack of supply. However, this is not happening in all markets, all price points or even all homes."

Buyers are competing for available homes by including personal appeals in their offers. "They share their hopes and dreams," says Mark Gellman. "They are submitting personal letters along with their purchase offers, making them part of the contract. They say how much they love the home, and how they look forward to spending many years in it. They share details about their families and lifestyle. They are doing this to promote themselves to the home seller, in the hopes of persuading them to accept the offer. We are seeing this happen whether or not there are competing bids."

The challenge of limited home inventory is happening just as mortgage underwriting criteria has started to relax. Mark Gellman feels cautious about lenders who are reducing their standards. "We are concerned that lenders may be lowering their standards further than may be wise - offering financing to credit scores of 600 or below. This is reminiscent of the problems that were created in the past, when buyers who were not financially prepared were lured into the market. Our market is still recovering from the consequences."

Many home buyers are anxious to buy a home while mortgage interest rates are advantageous. This is true of buyers at all price levels, and Neil Gellman explains why. "Rates remain historically low on a conventional 30-year loan, though they have risen almost three-quarters of a percent from the prior year's low. Meanwhile, rates for Jumbo loans over $417,000 remain near record lows. Let me illustrate why this is significant. Several years ago, the spread between a conventional loan and a jumbo loan was almost 1.75%. A borrower with a standard 30-year conventional loan was paying around 4% interest, while the same borrower on a 30-year jumbo mortgage was paying 5.5% to 5.75% interest. Today, a borrower with excellent credit can get that jumbo loan at virtually the same interest rate as your conventional loan. The low cost of borrowing has boosted buyer activity in the upper price ranges. Therefore, lean home inventories are being felt at price ranges we normally wouldn't expect."

The Gellman Team at Coldwell Banker Premier Group provides real estate services to home buyers and sellers throughout St. Louis and the surrounding area. They stand among the top 10 teams for all Coldwell Banker affiliates in North America. They are ranked #1 in greater St. Louis out of approximately 9,000 agents. For more information about The Gellman Team, visit their website at www.thegellmanteam.com or call #314-336-1991.