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 City 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 City, you need to look at housing price trends from local 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 City home sales that were listed in the local MLS. The blue line is hidden behind the red line on this chart from 2001-2002.
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 4.7%. When you combine the good years with the above average APPRECIATION and the bad years with DEPRECIATION, they average a loss of almost 0.5% in value per year.
The chart looks very different than what you see for the same years in St. Louis County and St. Charles County.
While long term St. Louis City homeowners are only down a little over the last 10 years, those who purchased their home or refinanced and pulled equity out of the home in 2006 are in much worse shape.
The median home sale price in 2011 was 37.6% lower than in 2006. With a median DEPRECIATION RATE OF 9% 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).
CONDOS:
Long term condo owners in St. Louis City are in much worse shape than those who own a house. During the housing bubble years, condos appreciated more than the historical average of 4% per year but not enough to compensate for the major crash they have taken since 2009.
St. Louis City condo owners who purchased at the peak of the market in 2006 have lost half of their value.
With 54.5% total depreciation over the last 5 years, condo owners whose financial situation changes and would normally sell are ending up in foreclosure. The lucky ones are able to work out a short sale in which the mortgage holder agrees to take less than the mortgage is worth as payment in full when the condo is sold.
Reports for St. Louis County and St. Charles County
To find out what the appreciation or depreciation rate has been since you purchased your home or condo, contact us for a custom analysis.
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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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