Real estate in Southeast Missouri: Trends and forecasts

In 2019, the number of homes sold in Cape Girardeau, Perry and Bollinger counties held steady, according to Jessica Farrar, Southeast Missouri Realtors president and general manager and broker-salesperson at SOTO Property Solutions. But how is the market looking for 2020? Farrar says the sale price of homes is on the rise and that interest rates are historically low with a strong economy, which is "great" for buyers. Locally, she says the number of homes on the market is holding steady, with only a slight increase so far in 2020.

Here, five Southeast Missouri realtors predict the outlook of the local housing and commercial real estate market in 2020.

What trends are you noticing within home and commercial property buying/selling in the Southeast Missouri region?

2019 was a very solid year for homeowners in our area. There was a record number of homes sold in Cape Girardeau County, albeit a modest increase of 1.6% over 2018. The median sale price rose 8.0% -- from $150,000 in 2018 to $162,000 in 2019 -- and the average sale price was up 7.4% -- from $178,875 in 2018 to $192,196 in 2019. Neighboring counties also enjoyed nice increases.

Over the past five years, the median sale price has risen 16.0% while the median sale price has increased 16.2%. According to MARIS MLS, total residential sales were just over $213,000,000, making it the first year ever where volume exceeded $200 million. On average, it took 69 days for a home to go under contract with the median number of days taking just 39 days.

Mortgage rates were at near lows last year. According to Freddie Mac -- which provides funds to thousands of banks and mortgage companies that, in turn, make mortgage loans to the public -- the average 30-year fixed rate mortgage for 2019 came in at 3.94%, making it the fourth lowest rate ever. However, the average mortgage over the past five months is 3.67%, nearly identical to the low of 3.65% in 2016. Obviously, mortgage rates are extremely attractive right now, making home ownership more affordable.

As far as how 2020 will compare to 2019 ... Well, none of us have a crystal ball. However, the strong economy, low unemployment and low mortgage rates are great indicators that 2020 will be another strong year for real estate in Cape Girardeau County and the surrounding areas. Of course, 2020 is an election year, which brings a level of uncertainty to all things financial.

-- Bill Cole, CPA, broker/owner of Realty Executives of Cape County and Realty Executives Edge

What will 2020 be like for buyers? For sellers? What tips do you have for both?

I think 2020 is going to be a great year for real estate and a win-win situation for both buyers and sellers. Everything I have read points to a good market. With a national election right around the corner, we usually expect to see the interest rate stay constant with very little change, which means it is a great time for the buyer to keep their payments at a comfortable range for their budget and buy up in price. The reason for this is that interest rates are low. Banks and lending institutions have wonderful programs right now, and they are tailored to meet the buyers' needs.

Buyers should meet with a lender they are comfortable with and get pre-approved for their loan before they ever start shopping for a home. It not only gives the buyer a comfort level, it could also allow for negotiating power when they find their dream home. It also makes the seller more comfortable in working with a buyer that they know can finalize the transaction. I will add that online lenders usually take longer to close and have very little interest in a buyers' future, whereas local people have the buyers' interests at heart. Local lenders are happy to work online for the convenience of the buyer.

Sellers are fortunate in that the housing market is strong, and if their home is in marketable condition and priced right, it will sell. February is the busy season, and sellers need to make sure their home is attractive to the buyer and ready to show. Realtors are happy to meet with prospective sellers and give them hints on how to market their home, along with a market analysis of the price range that is realistic. Most realtors do this without charging the seller.

Cape has never faced the extreme highs and lows that some areas have in real estate. With our major industries, the university and the medical community, we are very fortunate: the economic expectations look very promising.

-- Jane Clark, Realtor with Berkshire Hathaway Bridgeport REALTORS

What trends are you noticing within home and commercial property buying/selling in the Southeast Missouri region?

There are always pockets that perform better or worse than the region, but we are fortunate in Southeast Missouri. We've had more commercial activity in the last 12 to 18 months than in some time, and there is confidence in the economy, which bodes well for both residential and commercial real estate.

What will 2020 be like for buyers?

Low interest rates, a strong job market and a healthy economy will keep buyers in the market. Lack of inventory may mean it takes a little longer for you to find exactly what you are looking for. You should expect competition for nice, well-kept homes that are competitively priced.

What will 2020 be like for sellers?

A large number of buyers in the market will help homeowners sell faster; especially homes that are move-in ready with no major repairs needed. If you have considered putting your home on the market, now is a great time to meet with a realtor to discuss your home's value. You might be surprised about what it is worth and how quickly it might sell.

What tips do you have for buyers? For sellers?

Buyers should be ready to go when they decide to get in the market. That means having your financial house in order with mortgage financing lined up and any down payment or closing costs you may need saved up. Have a plan for getting out of your existing home or apartment so the process can move quickly once you find your new home.

Sellers should spend time on their property before they put it on the market. Have it clean and neat on the inside, and don't underestimate the value of curb appeal. Tackle repairs and maintenance items before you list so prospective purchasers don't get turned off. You have to present your house in the best possible light to help it bring maximum value.

What is the state of Cape's housing market? How could it be improved?

The overall state of the housing market is strong. An increase in inventory would help drive the market in a positive manner. Nationally, the U.S. faces a deficit of homes based on population, household formation and the need to replace older homes, and we see signs of that here.

-- Tim Merideth, broker/owner of CENTURY 21 Premiere Realty/CENTURY 21 Ashland Realty

What trends are you noticing within home and commercial property buying/selling in the Southeast Missouri region?

One thing that appears to have been a new trend is that the market is not as seasonal as it once was, with spring/summer being the busiest season; it has opened up to become a more year-round market.

What will 2020 be like for buyers?

Interest rates are still low, so that truly helps buyers.

What will 2020 be like for sellers?

The local inventory of homes for sale is lower than usual, so that aids in the sale of the home when the home is priced right.

What tips do you have for buyers? For sellers?

The first thing to do is to speak with a lender or multiple lenders to find out what your buying price range is and have that pre-approval already in place. For sellers, invite an agent to your home for a Comparative Market Analysis (CMA) of your home, and let them point out items that may need to be addressed before listing in order to present your home in its best light when you list it.

What is the state of Cape Girardeau's housing market?

Certain price ranges are moving much quicker than others, which is frustrating for those in the price range that is the slower-moving group -- not that these houses won't sell, it just may take a little longer.

How could Cape's housing market be improved?

Home maintenance is key in the buying/selling arena -- it truly helps when key items are taken care of in an ongoing manner.

-- Terri Penrod, Executive broker at Realty Executives

What trends are you noticing within commercial property buying/selling in the Southeast Missouri region?

Locally, we have experienced an active three to five years in our local commercial real estate market. Although property sales and lease data are a bit more difficult to track than in the residential sector, internal company and available MLS statistics show us that 2016 to 2019 were historically strong years. The visible results are apparent as many new, exciting developments have popped up and new businesses have moved to our region, making headlines in many areas -- Downtown, Midtown and West Cape, as well as in Jackson and Perryville. So far, 2019 pending activity has trended in the same direction, as retail and multi-family developers continue to eye our area, redevelopments are being planned and many businesses have moved or expanded.

What will 2020 be like for buyers?

Buying commercial real estate is primarily a business and economic decision, so it is difficult to generally predict what the buying market will be like in 2020. Buyers of commercial real estate are one of two types: investors or owner-occupants. On the investment side, properties that have strong market rate leases in place that, in turn, provide an attractive capitalization rate -- i.e., the ratio of the property's net operating income to its purchase price -- for a decent period tend to have a fairly active market, particularly if the tenant is solid. The owner-occupant market is a little bit slower, primarily because many existing commercial spaces are built for a specific purpose, making it potentially just as costly for a buyer to purchase and remodel as it would be to build new. Owner-occupants also must analyze the cost and cash required to acquire a property, often simultaneously comparing these costs versus the cost of leasing or building. In an expanding economy with low cost of capital, it may be more likely for a user to purchase rather than lease, but again, not every business is in the same place. A down payment on a real estate purchase may be valuable working capital that one business needs to hold on to, while another business may not need to have that cash readily accessible.

What will 2020 be like for sellers?

As with buyers, commercial property owners sell their real estate for a number of reasons, so it is similarly difficult to predict what 2020 will look like for all sellers. Some owners have financial or investment motivations for selling, some have tax objectives and others may no longer have a use for the real estate, either because they are closing their business or because they are moving. Generally speaking, the commercial real estate transaction timeline is slower and more unpredictable than its residential counterpart. As noted, in an expanding economy with a low cost of capital, the buyer pool may be larger than in a recession economic phase.

What tips do you have for buyers? For sellers?

Since commercial real estate decisions are typically business-specific, it is very important for buyers -- whether investors or owner-occupants -- tenants, developers, sellers and landlords to perform a strategic economic analysis, as the factors impacting the ultimate real estate decision can differ depending on which perspective they are viewed from. For example, developers must understand factors such as rent levels, vacancy rates, construction costs and potential gaps in the market. Investors must look at many of the same factors, and they also must have a firm grasp on valuation in order to ensure they aren't overpaying for a property. Would-be tenants want to make sure they are obtaining space for the lowest cost, which may entail an analysis of whether it is more cost effective to build or purchase. Sellers might want to undertake a supply and demand analysis in determining whether the market is optimal for selling or leasing. A competent real estate broker who specializes in commercial real estate will have access to the data and tools necessary to assist a buyer/tenant or seller/landlord in arriving at these very important decisions.

-- Chris W. Cole, J.D., broker/owner of Lorimont