When you buy real estate, you expect it to appreciate over time so that it is worth more than you paid for it when you are ready to sell.
While there is a lot of information on the internet about how the housing market is doing, it’s very hard to find information about appreciation rates. The general consensus is that homes have historically averaged a 4% appreciation rate per year.
As you can see from the chart above, the crazy appreciation we saw during the housing bubble years followed by a drastic decrease in sale prices has resulted in housing prices on track for what they would have been if there had never been a housing bubble.
Of course, that doesn’t help people who purchased homes or pulled the equity out of their home at the peak of the housing market who now can’t sell or refinance their home.
St. Louis County Housing Appreciation Rates:
You’ll hear me say it over and over on this website.
You can’t look at national economic numbers to understand what is happening in your community. Every market is different and the national numbers only give you an average of what is happening all over the county.
If you want to understand what is happening in St. Louis County, you need to look at housing prices from St. Louis home sales.
SINGLE FAMILY HOMES:
We don’t have access to local housing prices the 1990s or earlier, so I looked at the last 10 years.
The blue line in the chart above shows the median sale price of all St. Louis County home sales that were listed in the local MLS. The blue line is hidden behind the red line on this chart from 2001-2005.
The red line shows you what would have happened to the homes that were purchased in 2001 if they had followed the 4% appreciation rate historical trend.
Homes purchased 10 years ago have a median DEPRECIATION rate of 7.4%. When you combine the good years with the 4% APPRECIATION and the bad years with DEPRECIATION, they average a loss of almost 1% in value per year.
In comparison, St. Louis homeowners who purchased their home or refinanced at pulled equity out of the home in 2006 are in much worse shape.
The median home sale price in 2011 was 21.2% lower than in 2006. With a median DEPRECIATION RATE OF 4.7% per year, it is understandable why many homeowners are upside down on their mortgage (meaning they owe much more than the house is worth today).
Homeowners who had a 10% down payment when they purchased owe more today than the house is worth. Homeowners who put down 20% still may owe slightly more than the house is worth. Homeowners who put down 0-5% are in big trouble.
CONDOS:
Long term condo owners in St. Louis County are in better shape than those who own a house. During the housing bubble years, St. Louis condos appreciated more than the historical average of 4% per year.
As a result, condo owners who purchased in 2001 have still lost some value, but the total depreciation is only 1.4% across the 10 years.
However, St. Louis condo owners who purchased at the peak of the market in 2006 did worse than their counterparts who bought homes.
With 23.6% total depreciation over the last 5 years, many condo owners are finding that they simply can’t sell.
Reports for St. Louis City and St. Charles County
To find out what the appreciation or depreciation rate has been since you purchased your St. Louis home or condo, contact us for a custom analysis.
Karen Goodman
Karen Goodman is Founder of Arch City Homes and leads a team of top real estate agents in St. Louis, MO.
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