When it comes to real estate predictions, the 2011 foreclosure situation seems to be anyone's guess. At least, that's what officials in the Florissant community think.
Carol O'Mara, the City of Florissant's Director of Housing and Community Development, said that foreclosures have persisted. If nothing else, however, today's foreclosures have different causes than at the beginning of the economic downturn in 2008, she said.
"A lot of the foreclosures that we're seeing now are not due to predatory lending," O'Mara said. "It's due to job loss. That's probably the biggest thing."
The city is doing its part to turn the local housing market around through the Neighborhood Stabilization Program. With funds from the State of Missouri, Florissant has been able to purchase, rehabilitate and resell foreclosed homes.
"We have two of them on the market," O'Mara said. "For one of them, we just got an offer for our asking price. To get asking price is not what you see a lot of these days. People want to undercut it because it's a buyer's market."
With housing prices at a low point and interest rates below five percent, those who can afford to purchase a home should act now, O'Mara said. Expensive homes have depreciated the most, while homes costing less than $200,000 have held their market value better.
Two Florissant city councilmen took opposite views of the future.
"There are signs that the economy is going to recover this year, and I think we’re going to see those foreclosures turn around," Ward 3 City Councilman and mayoral candidate Tom Schneider said. "Consumer confidence is rising, and there are more people who are being employed."
Schneider cited the popularity of Hokkaido Restaurant and a resurgence of business at Yacovelli's, Cannoli's and Ruiz Mexican Restaurant as examples of how the economy is improving. Schneider reported that on a recent evening, as many as 400 people were eating in Hokkaido and 100 more were waiting for a seat.
"People are tired of waiting for this thing to get over," Schneider said. "People in this country want to spend money. The hunker-down phase is over, and the get-out-and-buy phase has started already."
Not so fast, Ward 2 City Councilman John Grib said. Although he had not done an extensive amount of research, he thought the prognosis for a 2011 housing recovery was poor.
"I don't think it's going to change much," Grib said. "I don't see this economy going forward or backward. I think we're kind of stagnated right now for another year. That's just what I gather from reading the newspaper."
Jim Dohr, the president of St. Louis-based real estate agency Coldwell Banker Gundaker, said it's too early in the year to tell.
"My crystal ball's a little cloudy," Dohr said. "It’s very difficult right now to make any predictions because the market has been very volatile over the last couple of years."
Two rounds of federal tax credits for first-time homebuyers--one in 2009 and one in 2010—has exacerbated the volatility, Dohr said. The tax credits artificially stimulated the market for a limited period of time.
A number of factors go into creating an ideal housing market.
"So much of our business in real estate is impacted by consumer confidence and employment," Dohr said. "How people feel about the overall economy dictates whether they’re going to go out and make what is traditionally the biggest investment of their lives."
Perhaps one promising sign is Mid America Regional Information System's (MARIS) report that the average sale price of homes rose five percent in 2010, Dohr said. The multi-listing system tracks sales in St. Louis City, St. Louis County and the counties of St. Charles, Jefferson, Franklin and Lincoln.
"I hope we saw a stabilization of prices last year, and we hope that the worst is over, and we’re cautiously optimistic about this year," he said.