Exceptions to rule: Big cities where homes remain affordable

1 year 2 months 1 week ago Tuesday, July 12 2016 Jul 12, 2016 Tuesday, July 12, 2016 4:15:00 AM CDT July 12, 2016 in News
Source: AP
By: Jim Salter, Associated Press

ST. LOUIS (AP) — Until recently, Christina Brouk was living with her parents. Now, still in her early 20s, she's living the American dream of home ownership — the same dream that's grown elusive for many young adults since the housing bubble peaked 10 years ago.

Homes in many areas of the United States have become so costly that few but high earners can afford them. Rising rents have made it hard to save enough to buy. Cities that offer plentiful jobs for educated young adults — New York, Boston, San Francisco, Seattle, Washington — have become prohibitively expensive home markets.

Then there are the exceptions.

St. Louis, near where Brouk lives, is one. So are Minneapolis, Pittsburgh and Kansas City,Missouri. In those areas, homes remain comparatively affordable relative to local incomes. An improved U.S. economy has fueled job and pay growth. Throw in historically low mortgage rates, and ownership is still within reach — even for those just entering their careers at modest salaries.

"You really live to do this," Brouk, a 24-year-old medical secretary who, along with her fiancé, Derek Schmittgens, bought a three-bedroom ranch home in the St. Louis suburb of Imperial, Missouri, in December. "It's what you work for."

The St. Louis metro area, situated squarely in the Rust Belt, might seem an improbable place for a stable housing market. The local economy is far diminished from its peak decades ago as a hub of muscular industrial giants. Many corporations like brewing giant Anheuser-Busch that once were based here closed, moved or merged. This year, the NFL's Rams cited rosier economic opportunities in Los Angeles as a reason for their decision to return to the West Coast.

Yet having never experienced the heights of the housing bubble, St. Louis never absorbed the full brunt of the bust, either. Its economy has remained reasonably steady compared with turmoil elsewhere in the country where foreclosures caused demand for rentals to surge.

A tech corridor in the city's Central West End is attracting some higher-paying jobs at companies like Square, a mobile payment company founded by Jack Dorsey, a St. Louis native who co-founded Twitter. Jobs in health care and finance continue to grow, economists say. The metro area's unemployment rate is just below the national level of 4.9 percent. And home prices remain roughly in line with area incomes.

Nationally, home ownership is near a 48-year low. A key reason is that surging rents and home prices have made it next to impossible for many people to save enough to buy — even though today's ultra-low mortgage rates have the effect of lightening housing bills. An analysis by The Associated Press found that monthly housing payments have dropped in the past decade while rents have climbed.

Yet in the St. Louis area, buyers in the 25-34 age group are having a comparatively easy time, data tracked by Realtor.com shows: Those young buyers make up 40 percent of purchase mortgages in the metro area, compared with an average of 35 percent nationally.

The median home value in the St. Louis metro area is $152,000, $24,000 less than the national average and far below many other big cities, especially on the coasts, said Charles Gascon, an economist for the Federal Reserve Bank of St. Louis. And, the median household income of $56,041 is about $2,700 above the national average, Gascon said.

"You really didn't see the big boom or the big bust" in St. Louis through the economic downturn, Gascon said. "But you can go even beyond that. Delinquency rates didn't spike as high in the St. Louis area, and our economy as a whole didn't contract as much as the rest of the country."

Brouk and Schmittgens lived separately with their parents as they spent months searching for just the right home. They found it in Imperial, a town of 5,000 a half-hour south of St. Louis. They agreed to the $140,000 asking price the day the home hit the market, grabbing it before other buyers could make an offer.

The brick home, on two-thirds of an acre, lies on a quiet cul-de-sac adjoining a wooded area. It needed some work. The young couple replaced the carpets and painted the walls. Next up, they'll redo the kitchen cabinets and finish the basement.

Still, Brouk said," it kind of ended up being everything we wanted."

Another millennial, Kelsey Funk, paid $113,000 last year for a three-bedroom home that sits near the historic Main Street in St. Charles, Missouri, another suburb.

"What surprised me was how affordable it is," said Funk, a 26-year-old real estate agent. "My monthly payment is way cheaper than rent. The cost to rent was generally $900 to $1,000. My mortgage is now $690. And it's something I own."

"Millennials in many markets are just locked out," said Jim Dohr, president of Coldwell Banker Gundaker, the largest real estate firm in St. Louis. "We're bucking the trend. It all comes back to affordability."

Low prices have benefited housing markets throughout the Midwest, said Jonathan Smoke, chief economist for Realtor.com.

"I think affordability turns into a major selling point for the market — not just for individuals who stay there and put down roots, but also to attract other people, including attracting businesses," Smoke said.

For Funk, there's nothing like the pride and contentment of having her own home.

"Once you own, it's a totally different feeling," she said. "You actually feel like a grown-up."

 

More News

Grid
List
ELDON - The people of Eldon are rallying around a family whose son suffered a spinal injury during football practice... More >>
10 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 7:31:00 PM CDT September 22, 2017 in News
COLUMBIA – A local gym held a fundraiser Friday night, and all it asked for was five minutes. But... More >>
10 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 7:03:00 PM CDT September 22, 2017 in News
BOONE COUNTY - One person is dead and three more are injured after a two vehicle crash on I-70. ... More >>
12 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 5:53:00 PM CDT September 22, 2017 in News
KANSAS CITY (AP) — Planned Parenthood is asking the U.S. Supreme Court to vacate an appeals court order that slowed... More >>
12 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 5:47:01 PM CDT September 22, 2017 in News
JEFFERSON CITY (AP) — Gov. Eric Greitens will begin his first trade mission Saturday when he and First Lady Sheena... More >>
12 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 5:20:15 PM CDT September 22, 2017 in News
COLUMBIA - Jefferson City Public Schools Superintendent Larry Linthacum released a letter addressing the three students who posted a picture... More >>
13 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 4:05:00 PM CDT September 22, 2017 in News
COLUMBIA - The Missouri Orthopaedic Institute is now offering a free sports clinic called Friday Night Lights. Sports physicians... More >>
14 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 3:15:00 PM CDT September 22, 2017 in News
COLUMBIA (AP) — A county clerk in central Missouri has determined that Attorney General Josh Hawley lawfully voted in a... More >>
14 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 2:59:39 PM CDT September 22, 2017 in News
JEFFERSON CITY - Twenty-four clinics across the state were selected to receive a federal grant to fund programs that treat... More >>
15 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 2:50:00 PM CDT September 22, 2017 in News
HOUSTON, Mo. (AP) — A man and two women are charged in the killing of 17-year-old whose burned remains were... More >>
16 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 1:22:00 PM CDT September 22, 2017 in News
COLUMBIA - The UM System hired a large public relations firm to help "craft its message and avoid perception crisis,"... More >>
16 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 1:21:00 PM CDT September 22, 2017 in News
SPRINGFIELD (AP) — The property owner of a former homeless camp site is suing a southwest Missouri city and a... More >>
16 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 1:17:30 PM CDT September 22, 2017 in News
NEW YORK (AP) — Walmart is testing a new service that lets a delivery person walk into your home when... More >>
17 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 12:35:16 PM CDT September 22, 2017 in News
ST. LOUIS (AP) — A St. Louis County outlet mall is being targeted by protesters one week after a judge... More >>
18 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 11:48:00 AM CDT September 22, 2017 in News
ST. JOSEPH (AP) — St. Joseph police are investigating the death of a 77-year-old woman as a homicide and her... More >>
18 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 11:08:00 AM CDT September 22, 2017 in News
LAWRENCE, Kan. (AP) — A second man has been charged with killing one man and wounding two others at a... More >>
19 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 10:44:53 AM CDT September 22, 2017 in News
JEFFERSON CITY (AP) — Gov. Eric Greitens has appointed two new members to the Missouri Highways and Transportation Commission. ... More >>
19 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 10:25:18 AM CDT September 22, 2017 in News
COLE COUNTY – A boil water advisory is affecting around 1,000 customers in the small town of Wardsville. The... More >>
19 hours ago Friday, September 22 2017 Sep 22, 2017 Friday, September 22, 2017 10:10:00 AM CDT September 22, 2017 in News
Columbia, MO
Broken Clouds 70°
6am 69°
7am 69°
8am 72°
9am 77°

Select a station to view its upcoming schedule:

Coming Up Next

5:30a
On the Money
6:00a
KOMU 8 News Today
7:00a
Today Weekend
5:30a
Paid Program
6:00a
Paid Program
6:30a
Paid Program

Tonight's Schedule

7:00p
Dateline NBC
9:00p
Saturday Night Live
7:00p
Family Guy
7:30p
Family Guy
8:00p
Bob's Burgers
8:30p
Bob's Burgers
9:00p
KOMU 8 News @ Nine on The CW
9:30p
Seinfeld