May 2023 St. Louis Real Estate Market Update
The market usually starts to heat up in May, along with the weather, and 2023 was no exception. The median sale price increased by 3.6% compared to May 2022, reaching $285,000 for May 2023, which marks the fourth consecutive monthly increase of this year.
As more homeowners decide not to sell their homes in order to hang on to the historically low interest rates they secured before rate hikes began in March 2022, often below 3%, the number of units for sale continues to lag far behind demand. The number of units for sale in May 2023 is 6% lower than in 2022, and 10.6% lower than 2021.
Needless to say, buyers are finding there isn’t much to choose from and when a listing they like comes to market, there are many others ready to take a swing at it. In order to avoid a higher interest rate than they have presently, more homeowners are finally taking on the addition or kitchen renovation project they’ve been putting off so they can stay comfortable in their current homes and avoid entering an exceptionally challenging real estate market. Read on to see what the numbers have to say.
→ If you prefer to digest this update visually, click here to skip to the graphs and data below.
What the Data Tell Us
1. The market is not cooling off
The median sale price in May was $285,000, up from $258,000 in April 2023. The chart below demonstrates that this metric is moving up more aggressively than in the two prior years, which is likely a result of higher interest rates suppressing inventory levels. It’s important to note that buyer demand is still strong and they are ready to transact despite higher interest rates, but fewer sellers are motivated to sell. For many homeowners, it’s much more attractive to stay put than to enter a highly competitive market with inflated prices and interest rates that are 3 times higher than they may already have. The market is slowing down (fewer sales) but isn’t cooling off.
2. Prices are still going up
The median sale price isn’t up just for the month of May, it has increased in every month of 2023, and year-to-date is 3.9% higher ($265,000) than 2022. The market is very much pay-to-play and buyers who are making the highest offers and who can remain fearless in the face of the appraisal process, are beating out more conservative buyers. For those who don’t have the flexibility to throw tens of thousands of extra dollars at the sale price of a home it can be a long and challenging journey to secure a contract. It’s critically important to work with an agent who can precisely analyze recent sale prices to give you the best odds of succeeding in a multiple offer situation, without exposing you to more risk than you can manage (hi, call me!).
3. Supply continues to dwindle
The St. Louis real estate market has been in a state of not just low, but historically low inventory for years now. In May of 2021 there were 2,316 units for sale. That figure dropped to 2,213 in 2022 and again to 2,085 in 2023. In May 2023, the St. Louis region has 231 fewer homes on the market than in 2021, a decrease of nearly 11%. Buyers are finding there are far fewer listings for them to consider and this typically presents some type of compromise for them. Many are having to consider different neighborhoods, buying a home that doesn’t exactly fit their needs, being open to longer commutes, and other choices that weren’t necessarily part of their plan. These conditions are even more exaggerated in communities known for having highly coveted school districts as buyers vie for the opportunity to get in before they’re priced out.
4. Sellers are in control
Because of everything outlined above (high demand, inflated prices, rising interest rates) sellers are very much in control of the market. A new listing is likely to be the only one of its kind. This forces buyers to compete eagerly for the opportunity, knowing the next one may be months down the road. In May 2023 sellers were capturing an average of 103% of their asking price which means many homes were selling for even more. Sellers presently have all the leverage and can cherry-pick who they perceive to be the best (i.e. lowest risk) buyer for their listing.
My Observations in the Field
Multiple offer scenarios are still the norm with many buyers offering tens of thousands of dollars over asking price with limited or no contingencies whatsoever.
Appraisals are keeping pace with rising prices. The majority of my clients in 2023 have payed considerably over asking price and appraisals have all come in at or above the agreed upon purchase price, except for one.
Inventory levels continue to plummet, as evidenced by many buyer clients having to pivot or make compromises when it comes to their search criteria in order to improve their odds of landing a contract.
Offer deadlines seem to be getting less popular. It has been customary for a long while now for listing agents to set an offer deadline, such that all offers on a new listing are due on a specific day and time. More frequently now I’m seeing no deadline and instead, a simple directive such as “all offers will be reviewed as received” or “please allow 48 hours for a response.” This may hint at some anxiety about whether multiple offers will continue.
Housing Market Statistics for
St. Louis City & County Combined
MEDIAN SALE PRICE
The median home sale price in St. Louis in May 2023 increased by 3.6% to $285,000 when compared to the same period of the prior year. Year-to-date the median sale price has increased 3.9% to $265,000.
PENDING SALES
The number of pending home sales in St. Louis in May 2023 decreased by -12.7% to 1,685 when compared to the same period of the prior year. Year-to-date, pending sales have decreased by -15.5%.
CLOSED SALES
The number of closed home sales in St. Louis in May 2023 decreased by -15.9% to 1,481 when compared to the same period of the prior year. Year-to-date, closed sales have decreased -19.1%.
MONTHS OF INVENTORY
The number of months of inventory (i.e. supply) in the St. Louis housing market in May 2023 has increased by 15.4% to 1.5 months when compared to the same period of the prior year.
NUMBER OF UNITS FOR SALE
The number of units for sale in the St. Louis housing market in May 2023 has decreased by -5.8% to 2,085 units when compared to the same period of the prior year.
DAYS ON MARKET
The number of days on market in St. Louis for May 2023 is up by 12% to 28 days. Days on market year to date are up by 28.6% to 36.
PERCENT OF LIST PRICE RECEIVED
The percent of list price received by sellers in St. Louis for May 2023 has decreased by -2% to 102.9% when compared to the same period of the prior year. Year-to-date the percent of list price received has decreased by -2.6% to 100.7%
This residential real estate data is representative of single family homes in St. Louis City & County combined, and is provided by Mid America Regional Information Systems. Some numbers may be rounded to the nearest whole number.
