As 100% financing options are becoming a thing of the past in the conventional financing market, FHA is becoming a more prominent financing mechanism for people buying a home in the St. Louis Real Estate Market. Some of the reasons people typically do not want to use HUD financing is they believe there are extra inspections, more paper work, they must invest 3% for a down payment, FHA loans are only for first time home buyers, and all borrowers must occupy the property. These concerns are unfounded. First of all, HUD requires an appraisal not a special inspection, if the appraiser finds issues that concern the possible safety or habitablility of the property then they can ask for an inspection. However, almost everyone buying a home should have a qualified ASHI inspector inspect the property. In addition to no special inspections, there is no additional paper work, it is simply different paper work. Also, buyers do not need to spend their own money on the down payment. They can receive their down payment from other sources such as: gifts, grants, and seller funded down payment programs. The FHA loan limit in St. Louis is $281, 250 so most home buyers can use FHA financing not just first time buyers. All borrowers do not need to occupy the residence, only one. So a buyer can in effect have a co-signer on the loan if for example parents want to help a child buy their first home. Its a good time to learn about FHA, its projected that 48% of all home loans will be FHA financed in 2008 compare to 2% in 2007.
A recent story by NPR suggests that areas with long commutes are seeing the largest drops in home prices. Also, areas near the city center are actually faring better. The example in this story is the Washington DC area, which has some of the longest commutes in the country. St. Louis certainly does not have the same level of traffic and resulting diminished demand for housing further from the city. However, the same principles apply albeit in a diminished way.
The longer a person spends commuting the less time they have to participate in family, civic obligations, and leisure. People used to move their home search further from the city center until they could afford the house they wished. Now people are beginning to more heavily consider time spent in the car and money spent on gas. It appears there is statistical evidence that sprawl is slowing. Americans are starting families later in life and the overall population is aging. These two groups of people tend to enjoy urban living. Is the 50+ year trend of sprawling development patterns over?
I’m going to begin a new feature where I examine one neighborhood per week and give a general overview and opinion of investment in the neighborhood. I’m going to start with Tower Grove South because it is one of my favorite neighborhoods and one I’m very familiar with.
The Tower Grove South Neighborhood has two smaller neighborhoods within it, The Tower Grove Heights Neighborhood and the Grand Oak Hill Neighborhood. The Tower Grove Heights Neighborhood borders Grand Ave on the east, Tower Grove Park on the north, Utah Place on the south, and Gustine on the west. This is the most desirable area in Tower Grove South. Much of the housing stock is large, especially on Utah Place, which is a divided street with landscaping in the middle. In general as you move West and South in the neighborhood the housing stock becomes smaller and there are a higher number of multi-family housing.
One of the great features of Tower Grove South is the fact that there is a variety of housing stock. Near grand Ave and Tower Grove Park the houses are generally larger. As you move west from Grand and South from the park the housing gets smaller. In the days before cars rich people lived near the major streets and poorer people lived further away. After the advent of the car many of the rich and middle class people have moved further from the poor to the suburbs. Tower Grove South is well positioned to be a well integrated (economically) community because of the variety of housing.
There are two major business districts in Tower Grove South. The Grand South Grand Business District is on the Eastern border and contains a large variety of shops and restaurants. This area is being considered for a major renovation as part of the federal great streets initiative. The Morgan Ford Business District is growing quickly. In 2005 many of the buildings on Morganford, just south of Arsenal were boarded up. In the last few years roughly twelve new businesses have opened and the area is thriving.
I think Tower Grove South is one of the best neighborhoods to invest in because it is already stable, but still has room to grow. There are other neighborhoods that have a much bigger upside, but also have far greater risk.
One of the fastest growing trends in commerical and residential construction is Green Building. I’ve often considered adapting green building ideas to a rehab. I was pleased to find out that The American Society of Interior Designers Foundation and the U.S. Green Building Council has written the nation’s first green residential remodeling guidelines. These guidelines are very useful because they take into consideration the special challenges of rehab projects, including: phased rehabs and combining old and new systems. These guidelines are not a rating system such as LEED certification, instead they are best practices guide. This is particularly useful because the guidelines can be used as new projects in your home come up or as a guide for a gut rehab. Consider incorporting green elements into your next rehab, I know I’m going to.
