Millennials find mortgage havens

ST. LOUIS — Until recently, Christina Brouk was living with her parents. Now, still in her early 20s, she’s living the American dream of home ownership — the same dream that’s grown elusive for many young adults since the housing bubble peaked 10 years ago.

Homes in many areas of the United States have become so costly that few but high earners can afford them. Rising rents have made it hard to save enough to buy. Cities that offer plentiful jobs for educated young adults — New York, Boston, San Francisco, Seattle, Washington — have become prohibitively expensive home markets.

Then there are the exceptions.

St. Louis, near where Brouk lives, is one. So are Minneapolis, Pittsburgh and Kansas City, Mo. In those areas, homes remain comparatively affordable relative to local incomes. An improved U.S. economy has fueled job and pay growth. Throw in historically low mortgage rates, and ownership is still within reach — even for those just entering their careers at modest salaries.

“You really live to do this,” Brouk, a 24-year-old medical secretary who, along with her fianc?, Derek Schmittgens, bought a three-bedroom ranch home in the St. Louis suburb of Imperial, Mo, in December. “It’s what you work for.”

The St. Louis metro area, situated squarely in the Rust Belt, might seem an improbable place for a stable housing market. The local economy is far diminished from its peak decades ago as a hub of muscular industrial giants. Many corporations such as brewing giant Anheuser-Busch that once were based here closed, moved or merged. This year, the NFL’s Rams cited rosier economic opportunities in Los Angeles as a reason for their decision to return to the West Coast.

Yet having never experienced the heights of the housing bubble, St. Louis never absorbed the full brunt of the bust, either. Its economy has remained reasonably steady compared with turmoil elsewhere in the country where foreclosures caused demand for rentals to surge.

A tech corridor in the city’s Central West End is attracting some higher-paying jobs at companies such as Square, a mobile payment company founded by Jack Dorsey, a St. Louis native who co-founded Twitter. Jobs in health care and finance continue to grow, economists say. The metro area’s unemployment rate is just below the national level of 4.9 percent. And home prices remain roughly in line with area incomes.

No big boom or bust

Nationally, home ownership is near a 48-year low. A key reason is that surging rents and home prices have made it next to impossible for many people to save enough to buy — even though today’s ultra-low mortgage rates have the effect of lightening housing bills. An analysis by The Associated Press found that monthly housing payments have dropped in the past decade while rents have climbed.

Yet in the St. Louis area, buyers in the 25-34 age group are having a comparatively easy time, data tracked by Realtor.com shows: Those young buyers make up 40 percent of purchase mortgages in the metro area, compared with an average of 35 percent nationally.

The median home value in the St. Louis metro area is $152,000, $24,000 less than the national average and far below many other big cities, especially on the coasts, said Charles Gascon, an economist for the Federal Reserve Bank of St. Louis. And, the median household income of $56,041 is about $2,700 above the national average, Gascon said.

“You really didn’t see the big boom or the big bust” in St. Louis through the economic downturn, Gascon said. “But you can go even beyond that. Delinquency rates didn’t spike as high in the St. Louis area, and our economy as a whole didn’t contract as much as the rest of the country.”

Brouk and Schmittgens lived separately with their parents as they spent months searching for the right home. They found it in Imperial, a town of 5,000 a half-hour south of St. Louis. They agreed to the $140,000 asking price the day the home hit the market.

The brick home, on two-thirds of an acre, lies on a quiet cul-de-sac adjoining a wooded area. It needed some work. The young couple replaced the carpets and painted the walls. Next up, they’ll redo the kitchen cabinets and finish the basement.

Still, Brouk said,” it kind of ended up being everything we wanted.”

Another millennial, Kelsey Funk, paid $113,000 last year for a three-bedroom home near the historic Main Street in St. Charles, Mo., another suburb.

“What surprised me was how affordable it is,” said Funk, a 26-year-old real estate agent. “My monthly payment is way cheaper than rent. The cost to rent was generally $900 to $1,000. My mortgage is now $690. And it’s something I own.”

“Millennials in many markets are just locked out,” said Jim Dohr, president of Coldwell Banker Gundaker, the largest real estate firm in St. Louis. “We’re bucking the trend. It all comes back to affordability.”

Low prices have benefited housing markets throughout the Midwest, said Jonathan Smoke, chief economist for Realtor.com.

“I think affordability turns into a major selling point for the market — not just for individuals who stay there and put down roots, but also to attract other people, including attracting businesses,” Smoke said.

For Funk, there’s nothing like the pride and contentment of having her own home.

“Once you own, it’s a totally different feeling,” she said. “You actually feel like a grown-up.”