Housing market in St. Charles County signals renewed health of local economy
Back in 2011, students learning carpentry or other home building trades at Lewis and Clark Career Center in St. Charles faced grim job prospects. The recession was on and home construction was off – a once-booming real estate and housing market, particularly in St. Charles County, was in the toilet.
But times have changed. As of 2015, that downward slide has reversed – not yet to the levels in the mid-2000s – but the best it’s been since then. And the 34 students in the center’s training program are not having problems finding work.
“A lot of people who were working during the recession [and] who could get out retired. It created kind of a gap. Students also didn’t go into it [construction] because there weren’t jobs,” said Kathy Frederking, the career center’s director.
Frederking said there is a need again for workers who can hang drywall, perform interior work and wield a hammer.
New home construction is on a solid upward trend, but the rise, particularly in new single-family housing, has been gradual over the last few years. Lower interest rates, a better job market and an improving economy continue to fuel its recovery.
Another factor also has revitalized the housing industry in St. Charles County – existing home sales. “We’ve had a record-setting year,” said Mark Stallmann, chief executive officer for the St. Charles County Association of Realtors®, which represents more than 1,700 realtors in the county. “It’s been phenomenal.”
Stallmann said 6,848 single-family, detached homes and condominiums were sold in the county in 2015, the most the association has recorded in 10 years. Last year, 5,927 homes were sold in the county, and the totals for the last two years are the highest recorded since 5,877 homes were sold in 2006, he said.
The county’s low unemployment rate – hovering at 3.5 percent at the end of 2015 – also aids in boosting homebuyer confidence.
“People feel they are going to have a job,” Stallmann said.
A barometer for the local economy
Single-family housing construction remains a barometer of the overall economic health of the county and the St. Louis region as a whole; though St. Charles County continues to lead the St. Louis region in single-family home construction as it has for a number of years, even during down times.
According to a variety of reporting agencies, the number of single-family permits issued continues at a steady pace. For 2015, 1,706 single-family housing permits were issued in the county, according to separate statistics gathered by the county’s community development department. That compares to 1,704 single-family permits issued in 2014 and 1,742 for 2013. Those totals contrast to 2,124 issued in 2007, the highest total recorded by the county before the housing bubble burst. Only a few years later, in 2011, the number of single-family permits fell to 939.
“We see 1,700 as something of a new normal for the time being in our community, but we still believe the area can return to the 2,000 annual range in the future,” County Executive Steve Ehlmann said in a news release on Jan. 14.
In all, 1,776 single and multi-family housing permits were issued in St. Charles County in 2015, compared to 1,832 total permits in 2014, and 1,816 in 2013, according to the county’s statistics. Ehlmann underscored the significance of those numbers by noting that about half of all single-family housing construction in eastern Missouri happens in St. Charles County.
The next highest permit totals were in neighboring St. Louis County – 788 single-family permits had been issued through last November, compared to 698 for the entire year in 2014 and 712 for all of 2013, according to the Home Builders Association of Eastern Missouri.
But the story is different for multi-family permits issued for building new condominiums and apartments. Numbers gathered by the county show that in 2015, 488 multi-family permits had been issued in St. Charles County, compared to 883 multi-family permits issued in 2014 and 333 in 2013.
HBA numbers show that St. Louis County saw a resurgence in multi-family permits with 590 issued through November, compared to 110 for all of 2014. No multi-family permits were issued in Jefferson, Franklin and Warren counties through November 2015, though 38 multi-family permits were issued in Lincoln County, according to HBA data.
Stallmann said people still value single-family homes.
“Condos are a niche market,” he said. “In the Midwest, we’ve always liked single-family, detached homes. Right or wrong, that’s what we like.”
Jim Brennan, president of McKelvey Homes, said this may be the best year for homebuilders in the last eight years. Although the ranks of builders has thinned, the ones that remain are finally seeing a resurgence in buyers. “It’s fun to be a builder again,” he said.
But new homes aren’t the only ones in demand. Many people, particularly millennials, are now in the market for first homes, often existing ones.
“We’re looking at a lot of pent-up demand for a long time,” Stallmann said.
In turn, demand is driving up prices. The median price for a single-family home in St. Charles County was $190,000 in 2015 – the highest median price since $188,500 in 2007, Stallmann said.
“We’re outperforming most of the region,” Stallmann said of St. Charles County. In 2015, a home was on the market for an average of 23 days, which is half of what it was a year ago, he said.
John Fischer, president and chief executive officer of Fischer and Frichtel Custom Homes, said that despite the recession life continued to happen – people had more children, got married or wanted to downsize. Once the economy got stronger, people became more confident about taking that leap into the housing market.
That confidence, particularly about buying a new home, may continue, Fischer predicted. One reason is that the inventory of older homes in the county at times isn’t high. Another reason is apartment rents may continue to rise, forcing people toward a buying decision.
“The generational statistics show that there are a significant number of people coming into home-buying age,” Fischer said. “A lot of people have been living with their parents.”
Wentzville leads the way
The epicenter of the county’s housing market for new homes is Wentzville and western St. Charles County.
“Those are the areas with a lot of land,” Stallmann said. “The inner parts of the county in many ways are built out. There are still pockets of development there but a lot of the available land is to the west.”
According to Wentzville Mayor Nick Guccione and City Administrator Robert Bartolotta, the number of housing permits is on the rise. Through November 2015, 605 single- and multi-family permits were issued in Wentzville, according to county statistics. Of that total, 596 were single-family housing permits. While that total may not be close to the 1,000 housing permits issued years ago, it’s an improvement from the low of 218 permits issued in 2011 in the city.
Bartolotta said more than 600 permits in the last two years are the highest totals in nine years.
“It’s unabated, it just keeps moving along and there are a lot of reasons for that I think,” he said. The Wentzville School District is first-class, crime rates are very low, and transportation is good. The city’s employment rate is hovering at 3 percent, the lowest in the region, he added.
“It’s quality of life, that’s always the No. 1 deal,” Bartolotta said. “The other thing is affordability – you can buy a lot more house in Wentzville than you can in other places in the region. Yet you’re still close to regional amenities and you still have a small town atmosphere, which is kind of unique. Most places don’t have that.”
Interest rates and the economy will determine future growth rates but Wentzville officials expect to see the number of housing permits issued in 2016 similar to 2015. The U.S. Census Bureau estimated the city’s population at 33,912 in 2014, a jump of more than 15 percent from the 2010 census estimate of 29,070, and the city expects its population to reach 36,000 to 37,000 in the short term.
Neighboring cities are facing some of the same issues.
In 2015, 397 single- and multi-family housing permits had been issued in O’Fallon through November, according to county totals. Of that total, 357 were single-family permits, and permits on 40 lots for 189 multi-family units were issued.
County statistics for last year show that 171 single-family and 14 multi-family permits were issued in St. Charles; 143 single-family and 56 multi-family permits on six lots were issued in St. Peters; 123 single-family and 58 multi-family permits on four lots were issued in Lake Saint Louis; 57 single-family and 88 multi-family permits on eight lots were issued in Cottleville; and 35 single-family permits and no multi-family permits were issued in Dardenne Prairie.
In the unincorporated area that includes Augusta, Weldon Spring and West Alton, 177 single- family and three multi-family permits on two lots were issued. In Flint Hill, Foristell, Josephville, New Melle, Portage des Sioux, St. Paul and Weldon Spring Heights, 47 single-family permits were issued.
Changes in the marketplace
McKelvey Homes is building homes that are more expensive, but loaded with modern amenities that homebuyers want, Brennan said. Those amenities include homes that are more technology-friendly and oriented toward iPads and other devices that are plugged into its walls. While some homes are as large as 3,700 square feet, smaller houses packed with high-tech gadgets, open spaces, luxury showers and fireplaces is another trend, he added.
Developers joining together to work on a single development is another change born of the recession.
McKelvey, Payne Family Homes, Fischer & Frichtel and Consort Homes have teamed up to develop about 88 acres of the former Emmaus Home campus off Randolph Street near Blanchette Park in St. Charles. The group is developing 251 single-family homes and 180 multi-family units, with each concentrating on a specific price range from $100,000 to $300,000.
“Things are going very well, the market is strong,” Stallmann said. “The biggest portion [of growth, however] is the cheaper home. Through the first six months of [last] year, about half the homes in the county were selling for $200,000 and under. That’s the highest-selling market.”
While variety is helping drive buying decisions, “builders are going to continue to offer a lot of different housing choices,” Fischer said.
More good news ahead?
It’s impossible to say how long trends of low employment and interest rates will last, but local authorities remain confident of continued gradual growth trends.
Interest rates, Stallmann said, remain low. Fischer added, “That’s not going to stay that way forever but I feel in 2016 rates will generally continue to be a bargain.”
For now, potential buyers not only can find the house they want but also can obtain financing. Interest rates on home loans have dropped after going through a period where home mortgages were more difficult to obtain as part of the aftermath of the housing market crash.
“It’s gotten easier,” Stallmann said of obtaining a home loan. “The pendulum is slowly starting to swing back toward the middle. We went from a period that obviously was too lax – people were buying houses they should not have been buying – to the point that it was hard to get a mortgage. We’re not quite back to the middle yet, but we’re getting there.”
At the local level, Guccione said Wentzville made it a point to encourage business development and job growth. “Everything started coming when more jobs came, more houses, it’s just dominos,” he said.