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St. Louis housing market could see big gains in 2014

Date posted:  11/13/15 12:00:00 AM The St. Louis housing market should post big gains in 2014.

The St. Louis housing market recently made waves when Clear Capital announced that the city made the top 10 for projected median-value growth in 2014.

St. Louis, the second-most populated city in Missouri behind Kansas City, is slated for the ninth-highest median-value increase in the nation at 4.8 percent, sitting just behind Denver and in front of Nashville.

"As we enter the next heat of a more mature recovery, there are signs the homebuyer mix may shift more toward non-investor homebuyers," said Alex Villacorta, Clear Capital's vice president of research and analytics. "Ultimately, this non-investor segment will need to get more active to truly stimulate the housing recovery in a way that will have a larger ripple effect on the broader economy. Additionally, moderation at the national level is a healthy move for the broader housing recovery as gains move back into a more sustainable, historical range."

Villacorta added that snowballing gains followed by major declines don't benefit long-term market participants who prefer gradual gains over a period of time.

Chicago topped the forecast with a whopping 11.2 percent expected increase in home values. The Windy City was the only market to net a double-digit increase in expected price, with Atlanta (7.5 percent increase) and San Francisco (6.5 percent) in second and third, respectively.

The majority of the largest metros are expected to see values grow between zero and five percent. St. Louis and Denver just missed out on being part of the exclusive club with a projected value increase of more than five percent.

"With just seven markets slated for price growth exceeding five percent in 2014, it may seem opportunity is scarce," said Villacorta. "There will be, however, subsets of these metro markets where gains are still plentiful. 2014 is going to be a year that requires buyers looking for short- to mid-term gains to do their homework."

A St. Louis suburb is posting major gains in home values
The housing market in one St. Louis suburb is especially driving area home prices upward. Ladue, Mo., which is about 12 miles west of St. Louis, garnered major price increases at the end of 2013, according to Prudential Alliance. Price growth isn't slated to slow down anytime soon, as the city has a small supply of inventory that's keeping buyers competitive.

The seven-day median single-family home value of $1,179,346 recorded at the beginning of the year was the highest median price the city has seen since the start of 2013.

Ladue's large price increase started to gain steam in November. Its Market Action Index was 31.9 - a seller's market - to start 2014, according to Altos Research. A Market Action Index of 30 represents an unbiased market, evenly favoring both buyers and sellers. Ladue's index in November was under 26, which depicts just how much the city's market has changed in a short time.

"What we saw in Ladue to close out 2013 is just a sampling of what's to come in early 2014," said Prudential Alliance's Berkley Land. "Improving consumer confidence and a dwindling unemployment rate will likely lead to attractive opportunities for both buyers and sellers alike in Ladue and throughout St. Louis County."

Land said it might be a good time for some sellers to consider hitting the market earlier than they aimed for.

"Sellers should consider putting their homes on the market early, as there are always more for buyers to choose from in the busy spring season," Land said. "Buyers will gain interest heading into the season, so sellers will want to get ahead of the demand."

The unemployment rate in St. Louis County is also down, falling to 6.5 percent in November after reaching 7.9 percent in July. A strong employment outlook can add competition to the housing market and may lead to stronger home values.