If you’re considering buying a home in St. Louis, you’re entering a real estate market that has shifted significantly in recent months. While the local dynamics may vary by neighborhood, the overall trend across many markets—including here in Missouri—has tilted ever so slightly in favor of buyers.

We’re seeing some homes stay on the market longer, a few more price reductions, and increasing inventory. These signs reflect broader affordability challenges, which are making it tougher for buyers to make a move—even in a city like St. Louis that has traditionally offered more accessible housing options.

As a result, if you do decide to buy a home today, it’s wise to think of it as a long-term investment. Whether you’re a first-time buyer or moving up, this is likely a property you’ll need to hold on to for several years.

Home Values Are Slowing—And Some Markets Are Seeing Declines

National forecasts from housing data firms like CoreLogic still project modest home price gains—around 3.6% over the next year. But in certain areas, including parts of Florida and Texas, prices have already started to decline year-over-year.

Although St. Louis hasn’t seen sharp price drops, slowing appreciation is a trend to watch. As inventory grows and homes sit longer on the market, sellers have less leverage—and buyers have more time and options.

What’s behind this cooling trend? It largely comes down to affordability. High home prices paired with elevated mortgage rates are stretching budgets thin. According to ICE Mortgage Technology, the national payment-to-income ratio remains near peaks last seen during the 2008 housing bubble.

Even with small improvements in mortgage rates lately, many prospective buyers are hesitant. When you factor in the rising cost of homeowners insurance, property taxes, and general living expenses, buying a home feels out of reach for many Americans.

However, if you have strong employment, a solid credit profile, and some savings, you’re in a much better position—and might even benefit from the slowdown. At Carlson Mortgage, we’re seeing well-qualified St. Louis buyers get some of the lowest mortgage rates available in Missouri—with no broker fees.

Don’t Count on Quick Equity—Appreciation Will Take Time

Even if home values in the St. Louis area remain stable, rapid appreciation is unlikely in the near future. This means that most of the equity you build in your new home will come from your monthly mortgage payments—not price gains.

Unfortunately, with today’s higher interest rates, that process is slower than it used to be.

Let’s break it down:

• On a $400,000 mortgage at a 6.75% interest rate, your monthly payment would be around $2,594.
• In the first payment, only about $345 would go toward reducing the loan balance; the rest is interest.
• Over three years, you’d pay about $79,700 in interest but only reduce your principal by about $13,700.

Contrast that with someone who secured a 2.75% mortgage a few years ago. Their monthly payment would be just $1,632, and over three years they’d pay nearly three times more toward the loan balance—roughly $26,800 in principal.

These numbers illustrate how slower amortization at higher rates means less equity build-up, especially in the early years.

Small Down Payments Leave Little Room to Maneuver

Many buyers today are putting down just 3%, especially with conventional conforming loans backed by Fannie Mae or Freddie Mac. That means for a $412,000 home, your initial equity is only about $12,000.

And because higher mortgage rates slow your principal paydown, your total equity after three years may be only around $26,000—assuming no change in home value.

In a healthy market, home values tend to rise 4–5% per year. If that happens, your home might be worth $470,000 in three years, and your equity could be closer to $84,000. But if prices rise just 1% annually, the value might be only $424,500—barely above your loan balance and likely not enough to cover the costs of selling.

Selling a Home Isn’t Free—Plan for High Transaction Costs

If you decide to sell your home within a few years, you’ll quickly discover that it isn’t cheap. Between real estate agent commissions, transfer taxes, title insurance, and other closing costs, you can expect to lose about 10% of the sale price to transaction fees.

Using our earlier example:

• A $470,000 sale could cost around $47,000 in fees.
• After paying off a $386,000 loan, you’d net about $37,000.
• But since you originally put down $12,000, your “true gain” is only $25,000—before moving expenses or taxes.

Now consider a more modest price increase: a 1% annual gain would put the home’s value at $424,500 after three years. Selling at that price with 10% in costs means you’d actually walk away with less than your remaining mortgage balance.

In that case, you’d need to bring money to the closing table just to sell your home.

The Bottom Line: Think Long-Term When Buying in Today’s Market

St. Louis remains one of the more affordable major housing markets in the U.S., but current conditions mean homeownership is a bigger commitment than it was just a few years ago.

Gone are the days of double-digit appreciation and sub-3% mortgage rates that allowed homeowners to quickly build equity and sell for a tidy profit. Today’s market calls for patience, long-term planning, and careful financial preparation.

At Carlson Mortgage, we’ve helped hundreds of buyers across Missouri navigate changing markets. With over 20 years as a mortgage loan officer and 15 years running our independent brokerage, I understand what it takes to make smart, sustainable home financing decisions.

We offer some of the lowest rates in the state—and we never charge broker fees. If you’re looking to buy a home in St. Louis and want honest guidance and competitive terms, we’d love to help.

Considering buying a home in St. Louis? Reach out today for a free, no-pressure consultation and see how Carlson Mortgage can help you find the right loan for your future.

Ready to Secure Your Dream Home in St. Louis?

At Carlson Mortgage, we’re dedicated to helping St. Louis residents navigate the mortgage process and find the perfect loan for their needs. Our experienced mortgage brokers can help you find the perfect loan to fit your needs and budget and will help you make informed decisions about buying a home. Call or text us at (314) 329-7314 or fill out our loan application at www.carlsonstl.com/apply for a purchase or a refinance mortgage, or if you have any general mortgage lending questions.