Home Buying in Missouri

Missouri represents a crossroads in the Midwestern region of the United States. The Show Me State borders Nebraska, Kansas, and Oklahoma to the west, Tennessee, Kentucky, and Illinois to the east, Iowa to the north, and Arkansas to the south. Although the state is largely rural, most residents live in the St. Louis and Kansas City metropolitan areas. However, the Columbia and Springfield metro areas have grown significantly recently.

Missouri has been seeing a steady increase in people moving into the state, with data showing a net migration gain, particularly since 2019. In addition to the many opportunities in the state's metropolitan areas, home buyers are attracted to Missouri by its diverse landscapes, friendly communities, and low cost of living.

Like so many other states in the US, Missouri's housing market favors the seller, thanks to a significant shortage of housing inventory. As a result, the market continues to become more competitive, with more and more homes selling above the asking price. Although Missouri's median home sale price has steadily risen, at $274,000, it is still below the national average. Homes in Missouri typically sell faster than the national average after 24 days on the market.

When buying a home in Missouri, you'll want to be sure your finances are in order and you can afford to become a homeowner. Remember, there are many financial considerations, including property taxes and the cost of homeowner's insurance. You should also enlist the help of a local real estate professional who can help you find a property that meets your unique needs. Most importantly, you'll want to get to know the housing market in Missouri because by exploring current housing trends, you'll be in a better position to find the home you're looking for.

To truly understand what it takes to buy a home in Missouri, it is important to examine the current housing trends in the state more closely.

Consider these statistics:

If you want to find the right home in Missouri, contact a local real estate agent. Local agents know how to navigate the state's current housing market, from home prices and interest rates to upcoming projects and potential increases in market value, to find the right property for you. By sharing your goals, lifestyle, and budget with your realtor, they will be able to show you the best homes to buy in Missouri.

Finding the Right Home

Here are a few factors, once you've considered and decided on, you should share with your agent:

Here are some common ways to finance a home purchase in Missouri:

Traditional Mortgages

Two types of traditional mortgages are generally available to homebuyers in Missouri:

• Fixed-rate mortgage loans: These are the most common type of home loan. As the name suggests, they maintain a "fixed" interest rate for the life of the loan.
• Adjustable-rate mortgage (ARM) loans: The interest rate on an adjustable-rate mortgage fluctuates based on market conditions.

Government-Backed Loans

Missouri offers several government-backed home loans available to Missouri home buyers, including:

• The First Place Program: This government program offers mortgage financing to qualified veterans and first-time homebuyers. The loans typically have interest rates lower than the current market rates.
• The Next Step Program: This program is designed for repeat homebuyers and first-time homebuyers who don't meet the income requirements to qualify for the state's First Place Program.
• The Mortgage Credit Certificate Program: A Mortgage Credit Certificate (MCC) allows first-time homebuyers in Missouri to claim a federal tax credit on part of the mortgage interest paid during a tax year. It is an important cost-saving tool, especially for first-time homebuyers taking advantage of other government-backed loan programs in Missouri.
• Federal Housing Administration (FHA) loans: These mortgage loans are insured by the FHA, resulting in more lenient credit requirements and lower down payment options for homebuyers.
• Veterans Assistance (VA) loans: These loans are available to veterans and certain military members. They offer no down payment and competitive interest rates.
• U.S. Department of Agriculture (USDA) loans: USDA loans are available to Missouri homebuyers in certain areas of the state.

Down Payment Assistance Programs

Missouri's First Place and Next Step programs offer cash assistance to help cover down payment and closing costs. Many cities and towns throughout the state also have their own down payment assistance programs. Check with your local government office to find out what is available.

Although Missouri doesn't require home insurance, most lenders will require you to have coverage. The amount of coverage you choose, the value of your home, and the type of coverage you opt for can significantly affect the price of your home insurance. In Missouri, $100,000 in dwelling coverage costs an average of $1,133 per year, while $400,000 in coverage costs an average of $2,967 per year.

The primary challenge for Missouri homebuyers is a shortage of available inventory. This has resulted in high competition and rising prices, with buyers sometimes facing bidding wars due to limited options, especially in metro areas. Missouri is also facing the challenge of a lack of affordable housing options for low-income households.

Missouri offers homebuyers unique purchase options thanks to its growing economy, diverse communities, and affordability.

Whether you are drawn to the bustling urban life of major metro areas like Kansas City and St. Louis, charming small towns like Clarksville and Arrow Rock, or scenic rural communities like Hermann and Rocheport, Missouri has something for everyone. The state's lower-than-average home prices and relatively quick market turnover make it an attractive place to settle. However, the competitive market requires preparation and a clear understanding of current trends.

As you embark on your home-buying journey in Missouri, it's essential to have your finances in order, understand the local market, and work with a knowledgeable local real estate agent. By doing so, you'll be well-positioned to find a home that meets your needs and provides long-term value. With its rich history, welcoming communities, and beautiful landscapes, Missouri is more than just a place to live, it's a place to call home.