When it comes to housing, O'Fallon, Mo., still lives the American Dream
This article first appeared in the St. Louis Beacon, June 25, 2009 - The American Dream is holding its own in O'Fallon, Mo., local Realtors say.
True, prices are down -- just as they are everywhere. But the declines aren't as dramatic as in many markets, and home sales are beginning to edge upward.
In May, 102 single-family properties in O'Fallon moved to the Sold column, a nearly 21 percent increase from 84 homes sold in April, according to the St. Charles County Association of Realtors. May's sales nearly matched 2008, when 101 homes were sold. On the downside: May's median sales price of $174,500 was a 7 percent decline from last year's median price of $188,000.
Mark Stallmann, CEO of the Realtors association, says O'Fallon's sales are slightly higher than St. Charles County as a whole and reflect a countywide trend since January of slowly rising sales and market activity.
By comparison, the National Association of Realtors reported Tuesday that May's home sales throughout the U.S. showed a modest increase of 2.4 percent over April -- but the median sales price was down a whopping 16.8 percent from a year ago. The price decline was driven by the fact that one in three national sales was a foreclosure or "distressed" property sale.
Karen Vennard, president of the St. Charles County Realtors association, said the market in O'Fallon and the county has fared better because, to a certain extent, there was no housing bubble to burst.
"We didn't have that big bubble -- that tremendous increase in the price of the homes, like you saw in other places, such as the West Coast,'' Vennard said. "From 1993 to 2006, the top of our market in St. Charles County, we actually saw about a 7 percent a year appreciation in homes. Since 2006, we've seen about a 2 percent a year depreciation."
And, in general, the local economy has fared better, she said.
"We can't say that we haven't been affected somewhat by the mortgage crisis and by the recession. Some people have lost their jobs in the St. Charles County area. But we still have a relatively low unemployment rate compared to other parts of the country and bi-state region,'' she said.
Vennard said increased market activity is also apparent in the numbers of pending sales, which appear to be driven by first-time homebuyers taking advantage of an $8,000 tax credit.
Stallmann said that even with the "leveling off" of prices, homes remain a sound investment.
"It's not a short-term, get-rich-quick real estate market like we have had, but it still remains a long-term solid investment," he said. "Yes, if you bought your house last year and the boss says you're moving tomorrow to New York or wherever, you might take a hit. But if, like the average person, you've owned your home for four or five or six years, it will sell for more than you paid for it.''
Flip that dream
Vennard is hoping that the upturn in sales is a signal that the end is near for the nation's housing market crash, which started with the failure of bad mortgages but has been prolonged by the recession.
"We're hoping that the crisis is over with,'' she said. "None of us has a crystal ball, but a lot of the agents out there are saying that they're seeing an increase in pending sales, which is exciting.''
Even so, foreclosures continue to run their course. According to RealtyTrac.com, which tracks foreclosures, 74 properties in O'Fallon received some type of foreclosure notice in May. The month's filings in St. Charles County numbered 259 properties, ranking it fourth in the state. By comparison: St. Louis County topped the state list with 885 foreclosure filings, followed by Jackson County with 784 and St. Louis City at 330.
On the trulia.com real estate website, for example, 141 of 769 houses currently for sale with O'Fallon Zip codes are classified as foreclosures. They can be found in old and new neighborhoods, ranging from the low $70,000s to $500,000.
One such foreclosure listing -- a neatly-kept one-and-a-half story four-bedroom brick home on Brook Hollow Court -- boasts a luxury master bath suite and two-story great room with a wall of windows and a gas fireplace. Though the home sold for $345,000 in September 2007, the asking price was recently cut to $299,900.
Louis Campbell of Mid Rivers Realty said a "short sale" is in the works for the house, which at one point was scheduled to be sold on the courthouse steps. In a short sale, the lender accepts an agreed-upon amount, which is less than the mortgage, and the homeowner avoids foreclosure.
Campbell, who specializes in short sales, works with investors who then re-sell the properties to home buyers -- a form of house "flipping" that, he says, is complicated and time consuming but brings new life to foreclosed homes. He says that neighbors may look askance because they fear that such a "short sale" will drive down their property values.
Campbell said he works predominantly in north St. Louis County where foreclosures have been more common -- and where two- to three-bedroom homes in the $125,000 price range are in great demand.
"The process is assisting the community,'' Campbell said. "A lot of people don't like the term flipping, but it is putting the houses back in circulation. Which is better? Some investor making $5,000 or $10,000 on a house and getting a family in that house, and bringing it back up to a livable standard -- or letting it go into foreclosure and letting it sit there for a year?"
Vennard understands the concerns over "short sales" and points out that appraisals should exclude sales of neighboring properties that are extremely low or high. She says that investors often are performing a service, particularly when foreclosed homes have been neglected or vandalized.
"These investors that are going and buying these houses are at least turning them around and fixing them up and bringing them back up to code and making them livable again,'' she said.
'It's a lifestyle'
Vennard, who has sold real estate for 13 years, has witnessed the growth of the O'Fallon area. Her firm, Integrity Group Realtors, is based in O'Fallon. She says the community's stability is due, in large part, to its location and employment diversity.
"It's in the heart of everything. If you live in O'Fallon and work in O'Fallon you don't have a reason to leave O'Fallon. There is easy access to two major highways; you can get downtown easily. It is geographically in the right place, with the right amenities, shopping and restaurants,'' she said. "It's a lifestyle."
Vennard would like to see more new construction of homes in the $180,000 price range, which she says represents the largest buyer pool. The new construction market is limited for people, such as police officers, teachers and senior citizens who want newer, smaller homes that don't need to be updated or remodeled.
"We have seen some foreclosures, and the number of short sales is higher than we've seen in the past, but I would say our biggest crisis for housing in St. Charles County is still newer construction in what we call 'workforce housing','' she said.
In the meantime, she says, attractive housing prices, tax credits and historically low mortgage interest rates are enticing buyers who are in a position to take advantage of what is truly a buyer's market.
"There is a saying in real estate that all real estate is local. What's happens in Detroit or what happens in Miami isn't what's happening in O'Fallon. Some people just got frightened because they were hearing it was bad news, doom and gloom -- and therefore they have to wait to buy," Vennard said.
"The American dream is owning a home. If everybody quit dreaming, nobody would ever own a home."