Heaven for Home Buyers

This is what buying a house is like in the nation’s vast affordable heartland:

You have the luxury of “but ...”

As in: This is a great house, but ... the yard is too steep. But there’s only one sink in the master bath. But we’d prefer a bigger closet in the nursery. So, thank you, but we’ll keep looking.

And why not?

This isn’t Los Angeles or Washington, D.C., or Sarasota, Fla. There’s no pressure to put in a bid the moment you pull up to the curb of any house you can even remotely afford.

Out here in the upper-middle-class suburbs of St. Louis, you can be as picky as you please. Because next week’s listings are sure to bring up 30 more roomy three-bedroom, two-bath homes in a top school district -- homes with decks and fireplaces and hardwood floors, homes with oak cabinets in airy kitchens and carpeted rec rooms in the basement.

All priced less than $250,000.

Real estate agent Dawn Dierker was showing one the other day -- a spotless two-story in a tucked-away neighborhood along a wooded, winding road. Just six years old, the house boasted soaring ceilings, a bay window, ceramic tiles in the kitchen, even a goldfish pond by the patio, and 2,100 square feet of space. Asking price: $239,900. Her clients, Chakra and Lekshma Valluri, clearly liked it.

But lingering in the pale yellow family room, Chakra Valluri, a software engineer, shook his head. “The road behind the house might be too loud,” he said, straining to hear the faint hum of traffic.

“It’s a buyer’s market,” Dierker said, resigned.

The recent explosion in housing prices in California and parts of the East Coast has split the country into two distinct cultures when it comes to pursuing the American Dream.

In Los Angeles County, prices shoot up practically every other week -- they jumped more than 25% this winter alone, compared to the first quarter of 2003 -- and many homes sell in days. Caught up in the frenzy, buyers waive inspections, offer tens of thousands above the list price, even write groveling letters to the seller, vowing to take good care of the property.

Here in the heartland, as real estate agent Sharon Hutson put it, “everything kind of mellows.” Buyers such as the Valluris, who now rent an apartment, spend months sorting through online listings, rejecting one home after another because they lack decks or basement playrooms, before picking out a few to visit. In four months of hunting, the Valluris have studied listings for at least 35 homes in their price range in their preferred school district. They have toured only three.

Yet they don’t consider themselves picky, just prudent: “We go see only the ones we like best,” said Chakra Valluri.

That laid-back approach is typical of much of the Midwest.

In Southern California, the most desirable communities are hemmed in by the ocean or the mountains, with little space to grow. In the nation’s midsection, however, there’s plenty of room to build suburbs on former farmland -- and because traffic tends to be light, even the newest developments are often just 30 to 45 minutes from downtown St. Louis.

The ample inventory helps keep housing prices in check. The median sale price for an existing house in Los Angeles County in April was $387,000. In Ventura County, it was $463,000; in Orange County, $523,000.

In the St. Louis metro area, the median stands at $135,000.

“We’re generally a steady-as-she-goes market,” said Bryan Kelsey, the chief executive of Relocation Realtors in St. Louis.

Certainly, local property values are rising. But at a modest 4% to 6% a year. Bidding wars do occasionally break out, and the best homes can sell quickly, especially in the older, more exclusive, brick-and-cobblestone neighborhoods near downtown.

But in the swings-and-sandbox subdivisions a bit farther from the city, that type of frenzy is rare enough to be thrilling; agents pass on the stories in a breathless hush, awed to report that a four-bedroom near Kiefer Creek drew an offer several thousand dollars over list price.

While homes in Los Angeles tend to sell in a week or two, the typical home here remains on the market 45 days. Homes selling for more than $200,000 tend to be available longer still, often sitting for three full months.

The buyers, not the sellers, have the upper hand -- which helps explain Carrie Lovell’s spreadsheet.

A computer programmer with an 11-year-old son, Lovell decided this spring to buy a home after years of renting.

Her dream house, she knew, would have at least three bedrooms and be in good shape. No fixer-uppers. She wanted a level backyard, with lots of room for her son, Zach, to run around. The neighborhood school, of course, had to be excellent.

She wanted a laundry room on the main floor so she wouldn’t have to lug clothes to the basement. A master bedroom big enough to fit her king bed, dresser and armoire. She was hoping for a spacious master bath.

For this, she was willing to spend as much as $200,000.

Her agent, Kathy Hoffman, grumbled a bit to herself: It was getting tougher, she said, to find homes in that price range that really “wowed.” Still, within a week, she had shown Lovell nearly two dozen listings in and around this suburb of 31,000.

Like other nearby suburbs, Ballwin is full of moderately priced subdivisions built 15 to 20 years ago: friendly communities of cul-de-sacs and neatly edged lawns, where kids play baseball in the streets and residents find it tough to walk the dog a block without stopping to chat with neighbors. The school district is not the very best in St. Louis -- two districts studded with million-dollar homes share that honor -- but it’s routinely ranked among the state’s top performers, with enviable test scores and a curriculum rich in art, music and other electives.

In atmosphere and amenities, Ballwin feels comparable to a Southern California town such as Thousand Oaks. Only the median price for a three-bedroom house in Thousand Oaks last month was $632,140.

Looking at homes less than a third that price, Lovell found much to like. But nothing quite matched her must-have list. “There’s usually just one little piece missing,” she said.

Then Hoffman showed her a place on Oaktree Crossing Court: New appliances in the kitchen, new central air, a deck with a leafy tree-top view. Three bedrooms, 2.5 baths, 1,550 square feet, not counting the family room or the office in the basement. After several weeks with no offers, the price recently had been reduced to $199,900.

Lovell paced the gleaming kitchen floor -- also new -- reflecting. Then she dug out a crinkled piece of notebook paper. On it, she had charted the merits of the top houses she’d seen: closet size, bedroom dimensions, whether the backyard offered any privacy.

“I’m the buyer from hell,” she said.

Her boyfriend, Brad Mueller, didn’t dispute it. A recent transplant from Jackson Hole, Wyo. -- where the real estate market is almost as hot as in Southern California -- he found dithering over closet size unnerving.

“Out there, if something comes on the market in your price range, you take it,” Mueller said. “There’s no being picky.”

Lovell barely looked up from her chart, intent on measuring the Oaktree Crossing house against another promising property. The backyard was a bit cramped for football. Otherwise, it met all her criteria.

She knew she could keep looking for perfection. On the other hand, her lease was up at the end of June, and interest rates looked set to rise.

She moves in June 25.

Except for the backyard -- which at least met her demand for privacy -- Lovell pronounced herself entirely satisfied. “I got everything I wanted,” she said.

There hasn’t been a buyer’s market like this in Southern California since the mid-1990s.

Property along the coast has always been more expensive than in the less-populated, less-alluring plains. But in the early to mid-1990s, housing prices in Los Angeles plunged for six straight years, as the economy reeled from aerospace industry cuts. During that same period, the St. Louis market -- like much of the Midwest -- continued rising slowly but steadily.

By 1997, less than $80,000 separated the median sales price in Los Angeles from the median price in St. Louis.

Then the Southern California economy took off. With tech jobs booming, the Golden State looked golden once more. And homes were suddenly in hot demand. Over the next six years, the gap between housing prices in Los Angeles and St. Louis would nearly triple.

That shift echoed a broader, national trend. Housing markets in parts of Florida, in New England and in other Western cities such as Las Vegas have exploded in the last few years, far outpacing the plodding pace of Midwest gains.

Atlantic City, N.J., and Providence, R.I., both posted price jumps of more than 20% last year; communities such as New Haven, Conn., and Trenton, N.J., weren’t far behind.

Some of that gain is caused by the higher salaries common on the coasts, which “allows prices to be bid up,” said Allegra Calder, an analyst with Harvard University’s Joint Center for Housing Studies. (The average hourly wage in the Los Angeles metro area, for instance, tops that in St. Louis by 11%.)

The rising tide in regions like New England lifted even smaller, out-of-the-way towns -- as Carolyn Marston learned when she was transferred here from Maine for an executive position with a shoe company.

She and her husband, Steve, had lived in a roomy old split-level in Lewiston for four years. During that time, families began flocking to the area, viewing it almost as a suburb of Portland, the bigger (and much more expensive) city about 45 minutes to the south. The Marstons purchased their home for $127,000. They sold it for $200,000 in two weeks this spring.

“We made a killing,” Carolyn said.

The hefty profit was a rush. But the Marstons quickly came to appreciate the more relaxed housing market in the Midwest.

For one thing, they felt no hurry to buy. For another, they felt certain their investment would be secure: Without a boom, they need not fear a bust.

The Marstons and their two children moved last month into a sunlit 2,200-square-foot home in O’Fallon, a town in booming St. Charles County, about 50 minutes from downtown St. Louis. Their subdivision, built in 1991, features a community pool, tennis courts -- and neighbors who welcomed them with cookies, flowers and offers to help with the yard work.

The Marstons paid $200,000 for their home. Before they closed, their agent warned them not to expect anything like the appreciation they enjoyed in New England; 5% a year was far more likely, he said.

They’ll have to stay here more than a decade, Carolyn figures, to make as much as they made in four years in Maine.

That’s fine by her.