HousingTracker.net

St Louis, Missouri Affordability

Home affordability measures for the city of St Louis, Missouri (the St. Louis, MO-IL CBSA/MSA) as determined by the percentage of income required to finance a single family home, the mortgage payment to rent ratio, the home price to income ratio and the home price to rent ratio are shown within. Current ratios are presented in the trend box below. Historical ratios are plotted further down. See also the latest home asking prices and inventory for St Louis, Missouri.

Percent of Income for Mortgage Payment

Affordability is often calculated by determining the percentage of people who can afford a median price home given a distribution of incomes under specific financing terms. A similar representation here shows the percentage of a median family's income required to make mortgage payments on a median priced single family home in St Louis, Missouri. The financing terms assume a 20% down payment on a 30-year fixed rate loan with an average quarterly mortgage rate provided by Freddie Mac. The historical median home sale price is determined by fitting the HPI index to NAR's median home sale price over the last few years.. The median family income is provided by HUD. Conventional lending standards strongly suggest that no more than 29% of a family's income go toward home loan repayment. Lower percent income requirements generally mean homes are more affordable.

Mortgage Payment to Rent Ratio

The mortgage payment to rent ratio compares the monthly mortgage payment on a median priced single family home to the median monthly rent on a 3 bedroom apartment in St Louis, Missouri. Again, the financing terms assume a 20% down payment on a 30-year fixed rate loan and the historical median home sale price is determined by fitting the HPI index to NAR's median home sale price over the last few years. Historical rent data is provided by HUD. Lower mortgage payment to rent ratios generally mean homes are more affordable.

Price to Income Ratio

The price to income ratio compares the median single family home sale price to the median family income for St Louis, Missouri. Again, the financing terms assume a 20% down payment on a 30-year fixed rate loan and the historical median home sale price is determined by fitting the HPI index to NAR's median home sale price over the last few years. The median family income is again provided by HUD. Lower price to income ratios generally mean homes are more affordable.

Price to Rent Ratio

The price to rent ratio compares the median single family home sale price to the median monthly rent for a 3 bedroom apartment in St Louis, Missouri. Once again, the financing terms assume a 20% down payment on a 30-year fixed rate loan and the historical median home sale price is determined by fitting the HPI index to NAR's median home sale price over the last few years. The median rent is again provided by HUD. Lower price to rent ratios generally mean homes are more affordable.

Quarterly Ratios

The two tables below show the calculated affordability ratios. The first table uses the published NAR single family home sale prices going back to 2004. The second table fits the OFHEO housing price index series to the NAR price data in order to exptrapolate the series before 2004. Make sure you read about the caveats with this technique below.

Quarterly Affodability Ratios for St Louis, MO from Realtor Prices

2007-3Q2007-2Q2007-1Q2006-4Q2006-3Q2006-2Q2006-1Q2005-4Q2005-3Q2005-2Q2005-1Q2004-4Q2004-3Q2004-2Q2004-1Q

Year-Quarter	Percent Income	Mortgage/Rent	Price/Income	Price/Rent
14.5%	0.83	2.4	162.4
14.9%	0.85	2.5	169.6
12.5%	0.71	2.1	145.0
13.3%	0.81	2.3	164.0
13.8%	0.83	2.3	164.0
13.8%	0.84	2.3	164.0
13.3%	0.81	2.3	164.0
13.0%	0.72	2.2	145.5
12.4%	0.68	2.2	145.5
12.3%	0.68	2.2	145.5
12.4%	0.68	2.2	145.5
11.3%	0.66	2.0	142.2
11.5%	0.67	2.0	142.2
11.7%	0.69	2.0	142.2
11.1%	0.65	2.0	142.2

Quarterly Affordability Ratios for St Louis, MO from HPI Fit to Recent Realtor Prices

2007-3Q2007-2Q2007-1Q2006-4Q2006-3Q2006-2Q2006-1Q2005-4Q2005-3Q2005-2Q2005-1Q2004-4Q2004-3Q2004-2Q2004-1Q2003-4Q2003-3Q2003-2Q2003-1Q2002-4Q2002-3Q2002-2Q2002-1Q2001-4Q2001-3Q2001-2Q2001-1Q2000-4Q2000-3Q2000-2Q2000-1Q1999-4Q1999-3Q1999-2Q1999-1Q1998-4Q1998-3Q1998-2Q1998-1Q1997-4Q1997-3Q1997-2Q1997-1Q

Year-Quarter	Percent Income	Mortgage/Rent	Price/Income	Price/Rent
14.4%	0.82	2.4	161.7
14.2%	0.81	2.4	161.7
13.9%	0.79	2.4	161.2
13.3%	0.81	2.3	164.1
13.6%	0.83	2.2	162.3
13.5%	0.82	2.2	160.0
12.9%	0.78	2.2	159.3
13.2%	0.72	2.2	147.4
12.4%	0.68	2.2	145.1
12.1%	0.67	2.2	143.2
12.0%	0.66	2.1	140.6
11.8%	0.69	2.1	148.1
11.8%	0.69	2.1	146.2
11.8%	0.69	2.0	142.6
11.0%	0.65	2.0	140.5
11.2%	0.66	2.0	139.6
11.0%	0.65	1.9	135.5
10.3%	0.61	1.9	133.6
10.6%	0.62	1.9	132.6
11.2%	0.70	1.9	145.2
11.3%	0.71	1.9	143.3
11.8%	0.74	1.9	141.7
11.8%	0.74	1.8	139.2
11.5%	0.80	1.8	153.7
11.6%	0.81	1.8	152.2
11.6%	0.81	1.8	149.8
11.3%	0.78	1.8	147.3
12.6%		1.9
12.9%		1.8
13.1%		1.8
12.8%		1.8
13.1%		1.9
12.9%		1.9
12.0%		1.8
11.5%		1.8
11.4%		1.8
11.4%		1.8
11.5%		1.8
11.4%		1.8
11.8%		1.8
12.0%		1.8
12.4%		1.8
12.1%		1.8

Assumptions/Caveats

There are numerous assumptions made in determining the affordability ratios above. Anyone using this information should be aware that it is likely imperfect at some level. Most significantly, since there is no error free way to measure home price movements, a number of reasonable but clearly inexact methods are used here. The technique takes the Realtor reported median sales prices over the last few years and fits them (in a least squares sense) to the OFHEO Housing Price Index (HPI) which tracks changes in home price, but not actual prices. In this way, the HPI series can be turned into a price series.

The Realtor median sales price and the HPI differ in that Realtor is not a constant quality measure like the HPI. Also, the HPI only includes property that sell with conforming (non-jumbo) financing while the Realtor prices do not have that restriction. Furthermore, since there is currently only a few years of NAR price data to fit to, it's likely that the fit data becomes more inaccurate as you move backwards in time. Still, this approach to determining historical prices seems reasonable given the alternative of no data.

In addition to the errors introduced by price, the definition of many metro areas changes over time, so the region covered in the past not be exactly the same region covered today. Many large metro areas (e.g. New York, Chicago, Boston, DC, LA and the like) have been divided up into smaller metropolitan divisions over the years at different times by the different agencies (sometimes even in different ways) that track the constituent measures on which the affordability ratios are based. For this reason, the larger metro areas are probably more suspect than the smaller ones.

Finally, there is the possibility that computational errors have been made in the process of computing these metrics. While every effort is made to minimize errors, there is a lot of messy data to clean up here and it's possible that some errors were made. Confirming this data with other sources is your best bet. Use at your own risk!