Market Update w/ Matt Becker – April 2025

I. Seller’s Advantage in a High-Demand Environment

• Leveraging Buyer Urgency: Supply is still low, and demand is high especially among certain demographics. Older boomers are the key sellers, urgently wanting to downsize and simplify. However, there is a shortage of the types of properties they want to buy, which slows the flow.
• The Psychology of Competitive Bidding: Sellers have an opportunity to capitalize on the impact of past market conditions. Buyers’ agents have been so trained over the past two or three years that they must come in strong to win, now they’re terrified not to. Offers over asking price are still a thing—if the comps are there and the list price is right to start. Just let the buyers’ agents know you’ve had a lot of interest!
• When Perfection Isn’t Paramount: Currently, demand is so high that houses don’t have to be perfect, cosmetically, to sell.  Buyers are so afraid not to get the house that they agree to accept the house as is.
• Strategic Use of Earnest Money: More often in 2025, buyers who agree to take a house as-is will change their mind later and demand repairs or walk away.  One way the seller can protect against that is requiring non-refundable earnest money. While the buyer keeps the right to walk away, the earnest money is lost if they do.

II. Significant Influence of the Boomer Generation

• Boomers as Key Sellers: Older boomers are on the move in large numbers, selling the two-story homes where they raised their families. They’re downsizing to smaller ranches and villas that better suit their aging bodies. Investors should pay attention to what they want to get rid of.  Typically, boomers have made some improvements, but not enough to be super-appealing, so there are many clean-and-list opportunities. Spice it up with new countertops, backsplash, and paint, and you’re good to go.
• Boomers Driving Buyer Demand: Boomers want low-maintenance properties. They want it easy to keep clean; they want minimal yard work. And their adult kids are all-in with not having to go to their parents’ house every weekend to mow, rake or shovel! There is a huge demand for this type of home, and the boomers are cashing out their equity and paying in cash. But boomers will only look at houses when the weather is nice—so try to avoid going active with your listing on a rainy weekend!
• The High Demand for Villa Properties: What older boomers want most right now are the lowest maintenance properties of all—villas! Villas are hottest thing on the market today, but there are just not enough of them available. As an investor, if you can find a good villa that needs a little cleanup and you can flip and list it, and the HOA is solid, you’re going to do very well on it.

III. Millennial Market Participation and Preferences

• Millennials in the Affordable Price Range: On the buying end, millennials with a couple of kids are actively searching for homes in the $300,000 and under range. They especially want four- and five-bedrooms on the main floor, which just doesn’t exist in this market.
• The Growing Need for Larger Homes: Bestselling homes among millennials right now are those with a main floor primary bedroom or apartment-style in-law suite, with the other bedrooms upstairs (not so much in a finished basement).
• Location: Investors and sellers’ agents need to pay attention to the hit counters in the MLS to know where the buyers are looking as well as what they’re looking for. In St. Charles County right now at the $350,000 price point there are 400-550 buyers looking; under $300,000 and under $250,000 there are 500 buyers. Investors, never pass up a house you can flip in that range. Good ones are bringing offers over asking.

IV. Shifting Dynamics in Buyer Due Diligence

• Increased Buyer Scrutiny Post-Inspection: A year ago everyone was waiving inspections. Now we’re seeing many more mutual releases. Lenders are seeing deals fall apart very frequently, which hasn’t happened in years. This is probably because sellers got used to not having to make repairs—not the case anymore! If you have a solid buyer, it’s worth working with them.
• Heightened Concerns Regarding Foundation Issues: There is increasing caution regarding foundation issues, even when the foundation repair has been done correctly and is under warranty. This is probably due to the heavy rains we’ve had over the past couple of years, making everyone concerned about water coming in.

V. Strategic Tools for Sellers in a Fluctuating Market

• The Importance of Securing Backup Offers: Backup offers can provide crucial security and streamline transactions for sellers. If you have multiple offers and two are close together, lock in the second one as a backup offer in case the first falls apart. That way you never have to go back to active on the MLS.

VI. Interest Rate Impacts and Market Adjustments

• Navigating the Current Interest Rate Landscape: Interest rates are still high but coming down a little. People who really need a house will buy regardless of the interest rate.
• Potential Impacts of Builder Price Adjustments: Materials prices and supply chain issues are affecting builders. They are raising their prices on new construction in anticipation of the future impact of tariffs and trade wars. This creates opportunities for flippers, who can offer a like-new product that is more affordable than a new build.

VII. The Art and Science of Property Pricing

• The Crucial Role of Accurate Market Analysis: The market for St. Louis is still strong. Capital gains tax should be gone by the end of 2025.
• Balancing Patience with Necessary Adjustments: Sometimes price drops are necessary, but if it’s priced right and you have good comps, give it some time before considering a drop.
• Understanding City Market Specifics: In St. Louis City and St. Charles city pay attention to keeping some of the historical character of the house in your renovations. People in these areas like their house to have some charm, with unique touches and special features.

VIII. The Value Proposition for Real Estate Investors

• Investors as Inventory Catalysts: Investors can play a significant role in revitalizing properties and increasing housing supply. Each finished flip adds to the inventory and creates a ripple of movement in the market as a chain of buying and selling begins.
• Potential Tax Benefits for Investors: The likely elimination of the Missouri capital gains tax by the end of 2025 should stimulate a new wave of investing, as older landlords may be more willing to sell off properties, and flippers will see greater profitability.
• Strategies for “Weird” or Unconventional Properties: Weird houses are not good for investors unless the flipper can find a way to make an unusual layout flow well, highlight something unique, or otherwise appeal to a wider range of buyers. Be sure to check add-ons for structural integrity, visual appeal, and wiring/ plumbing/ HVAC to code, before purchasing.
• Uncovering Opportunities on the MLS: Investors tend not to make good enough use of the MLS when searching for deals. They think they are competing with families who want to live in the house and will offer more. But if the ARV is high enough and the numbers work, you can still make a good profit even if you overpay slightly for the house.

IX. Key Takeaways and Strategies for Success

From the Boomers’ selling boom to the Millenials’ urgent desire to buy mid-priced homes with more bedrooms, Matt Becker believes opportunities in St. Louis area real estate investing abound. Long term homeowners are selling homes that need updates in highly desirable areas, and low inventory ensures top selling prices. Millenials want homes in a price range ideal for flippers, and if anyone can figure out how to create more bedrooms in an existing space, it’s an experienced rehabber. Let’s get the inventory rolling. Your local St. Louis hard money lender is ready to finance your next deal.