Housing deflation is slowing in Missouri as home sales climb, but the lower drop in home prices does not correlate to a stronger housing market yet. The global financial crisis is impacting mortgage lending in Missouri, which is projected to take a long while yet to get out of its funk.
Battered by falling home prices for more than two years, St. Louis has seen sales rise for several months aided by the first time home buyers tax incentive. But most of Missouri, including St. Louis, which accounts for 4 of every 10 home sales in the state, depends strongly on employment in manufacturing and retail sales, two of the harshest hit sectors in the ailing economy.
The major driving force of improving home sales in St. Louis have been lower priced foreclosure properties, having their prices slashed by bankers eager to sell off the excessive inventory before more foreclosures hit the market. More than 45,000 foreclosure properties are projected to hit St. Louis in the early part of 2010, and they will add extra deflationary pressure to the marketplace.
The expansion of the federal tax credit to move-up buyers should assist the market in its eventual recovery, but not before weakening home values. St. Louis home prices are forecast by Housing Predictor to deflate 8.6% on average in 2010.
In Kansas City foreclosures turned blocks of neighborhoods into blighted areas, but federal stimulus money has helped to maintain properties to keep them in better shape.
The foreclosure epidemic is having a serious impact on the Kansas City economy as businesses fail in increasing numbers forcing more homeowners to walk away from their homes. Bargain priced foreclosures and bank-assisted short sales make up the majority of home sales in the community. Kansas City is forecast to sustain average housing deflation of 9.2% in 2010.
In Springfield, although home sales have risen slightly, the financial crisis is having a larger impact in this usually sleepy town. Growing foreclosures, mainly investor owned, are adding to the economic downturn and are projected to trouble the market more in the coming year. Springfield is forecast to slumber through 2010 with lesser 6.8% average housing deflation.
The lack of ‘ transparency in banking practices and weak consumer confidence is also hurting the overall housing market in Columbia, which would just like to find a balance in its market. Abandoned homes are adding to the economic troubles Columbia is going through in the financial crisis.
A lack of consumer confidence is ailing many homeowners in Columbia, who are trying to refinance their homes only to learn that housing values have dropped so much they have no choice than to give their homes to the bank. Restrictive mortgage lending criteria is also making it tough for many home buyers to get a loan and until the lending market improves for more consumers the market will have trouble recovering. Columbia is forecast to see 5.9% in housing deflation in 2010.