Analyzing the residential market

Analyzing the residential market




Residential market activity seems to have plateaued after its precipitous slide began in 2008. Sales reported to the Greater Baton Rouge Multiple Listing Service showed a slight increase in 2011, most likely due to low interest rates and more available financing. The fall in sales volume that began in 2007 and continued until 2010 stopped as volume rose in 2011 by 6.32%. Current inventory rose by 0.78% over last year, and the current month’s inventory fell by 5.32%. Monthly inventory is strongly impacted by the rate of sales, but this is still a significant decrease. Total number of sales rose in Livingston, Ascension and East Baton Rouge parishes, and inventory increased only in East Baton Rouge.



The data studied includes all sales reported to the Greater Baton Rouge MLS, which includes East Baton Rouge, West Baton Rouge, Livingston, Ascension, Iberville, Pointe Coupee, East Feliciana and West Feliciana parishes. Last year, there were more than 1.28 billion sales reported to the Greater Baton Rouge MLS by a membership of over 2,600 agents. This study applies to market data analyzed from March 16, 2004, to Feb. 16, 2012. All data was analyzed on a 12-month basis from March 16 to Feb. 16. Therefore, when the year 2010 is referenced below, it means March 16, 2010 to Feb. 16, 2011; and when the year 2011 is referenced, it refers to March 16, 2011, to Feb. 16, 2012.



An analysis of data taken from the Greater Baton Rouge MLS from 2011 to 2012 indicated that from March 2011 to February 2012 there was a total of 6,742 sales. This was up from 6,341 sales in the previous year, but down from the high of 11,826 sales in 2005. Total sales volume rose to about $1.284 billion, down about $1.235 billion the previous year. This represents a gain of 6.32% in total sales, and a rise of 3.91% in the total sales volume. However, average list prices fell from $201,364 in 2010 to $196,980 in 2011. This represents a decrease in list prices of 2.18% from 2010 to 2011. Average sale prices fell from $194,871 in 2010 to $190,452 during the same time period in 2011. The decrease in sale price represents 2.27%. The average days on market rose to 104 in 2011 from 90 in 2010, or 15.56%. The months of inventory decreased to 8.55 in 2011 versus 9.03 in 2010, representing a 5.32% decrease. In summary, the entire market experienced an increase in volume both in number of sales and total dollar volume, but there were some slight decreases in sale price and increases in the time it took to sell a home, even with total inventory increasing. The chart below demonstrates changes from 2004 to 2012.



East Baton Rouge

East Baton Rouge Parish experienced similar trends as compared to the regional market. The total number of sales rose by 3.73% over last year. The fall from 2010 to 2011 was more than 10.5%. In 2010, 3,514 sales took place, and in 2011 there were 3,645. List prices fell by 1.19%, from $211,855 in 2010 to $209,336 in 2011. Sale prices also fell from $204,220 to $201,664 during the same period, representing a one-year decrease of 1.25%.



When the time it took to sell a home in East Baton Rouge was analyzed, the market reflected an increase from 85 days in 2010 to 104 days in 2011, up 22.35% in marketing time. Current inventory increased from 2,594 in 2010 to 2,705 in 2011, up 4.28%. The current monthly inventory increased only 0.56%.




The chart on the next page reflects market data for East Baton Rouge from March 16, 2004, to Feb. 16, 2012.



Ascension

The parish of Ascension also experienced a rise in total number of sales and in dollar volume. Both categories increased after decreasing by 5.04% last year. List prices and sale prices remained almost flat in Ascension, with less than a 2% decrease. Days on market increased by 10.11% in 2011 to 98 from 89 the year before. Current inventory fell by 5.74%, from 802 homes available for sale in 2010 to 756 in 2011.



It is also interesting to note that in 2006, after Hurricane Katrina, 2,017 homes sold; the drop in sales volume from 2006 to 2011 was 62%. Prior to the storm, in 2004, there were 1,478 homes sold in Ascension Parish, and in 2011 there were 1,342 homes sold, so the sales volume has still not reached pre-Katrina levels.



The chart below reflects market data for Ascension from March 16, 2004, to Feb. 16, 2012.



Livingston

Livingston typically has been the parish where more affordable housing exists. The average sale price in Livingston Parish in 2011 was $151,283, as compared to the average sale price in East Baton Rouge of $201,664, and Ascension of $199,903.




Livingston exhibited some of the slowest market conditions within the greater Baton Rouge area from 2007 to 2008, but seemed to have rebounded somewhat from 2008 to 2009. In 2008, 1,134 sales took place.



By 2009, that number had increased to 1,241, up 9.44% after falling by 26.46 % the year before, but market conditions slowed again in 2010. Total sales dropped from 1,241 in 2009 to 1,092 in 2010, or about 12%. In 2011, the number of sales had increased to 1,141, or 4.49%. Dollar volume dropped during the same period by 7.97%, while list prices and sale prices both fell in 2011.



The average days on market went from 100 in 2010 to 102 in 2011, an increase of more than 2%. Inventory decreased by 6.26%, from 879 homes available for sale in 2010, to 824 homes available in 2011. Total month inventory decreased by 10.26% during the same period.



The recovery that appeared to be taking place in Livingston has slowed; and even though the market appears to be reviving from the overbuilding it experienced after Hurricane Katrina, the parish still has not reached the sales volume it produced prior to the storm.



In 2004, there were 1,346 homes sold in Livingston Parish; in 2011 the sales volume was 1,141. The total number of sales had risen to a high of 1,826 after Hurricane Katrina.



The chart below reflects market data for Livingston Parish from March 16, 2004, to Feb. 16, 2012.



Total MLS

The data taken from MLS tend to suggest that the precipitous falls taking place in 2008 and 2009 have slowed, and although the gains have been modest, it represents a gain nonetheless. Average sale prices have dropped in some areas, but not by any significant degree. The entire MLS area studied and the parishes that dominate the market have all experienced some growth, both in total sales and total dollar volume and that is something the local residential real estate industry thinks is long overdue.



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