2012 Real Estate Report
Still a buyer's market
|Even so, brighter times may finally be at hand for single-family home sales.|
Real estate pros have been saying for years that the market isn't as weak as we've been hearing, that the bad stuff was only happening in other places, and that the recovery from the non-slump was right around the corner. ? So when Don Stern of Realty Executives South Louisiana, who helped compile the Greater Baton Rouge Association of Realtors' yearly report on Baton Rouge-area real estate trends, says, “The bleeding has stopped,” it's easy to be cynical and note that we've heard that before.
But in fact, people who sell homes for a living can point to a few encouraging factors. According to the annual Trends report, the number of home sales in the Capital Region increased in 2011, although the uptick was small enough that the report's authors still say the market is in a “plateau.”
And in April 2012, sales were up 21% over the same month last year, although much of the action consisted of sales of homes sold for less than $250,000.
Stern says when there's less than 5½ months' worth of inventory available, it's considered a seller's market. Between 5½ and 6½ is a neutral market; more than 6½ is a buyer's market.
“Overall, we're in a buyer's market right now,” he says. “But [inventory] has dropped over the past few months.”
In fact, he says Ascension and Livingston parishes are trending toward a neutral or even a seller's market. East Baton Rouge Parish still has an oversupply of housing, he says, although the average number of days on market is beginning to decrease. (The vast majority of home sales in the Baton Rouge area are concentrated in Ascension, Livingston and East Baton Rouge parishes.)
Even though the total number of sales was up last year, the average sale price was down slightly. The apparent culprit was the higher-than-average percentage of real estate-owned or REO sales, which typically are lender-owned foreclosures. In East Baton Rouge, for example, about one in four home resales was an REO.
Still, the number of foreclosures does not appear to be skyrocketing and certainly is not approaching the levels seen in Florida, Nevada and other hard-hit states. Unless there's a large hidden inventory of homes destined for foreclosure, Stern says, the number of REO sales isn't a major concern.
“We're working through the foreclosure inventory,” Stern says. “If one just looks at average [price], foreclosures have a chilling effect. But if you take the foreclosures out, people [on average] haven't lost value in their homes.”
Sales of attached single-family homes—that is, condos and townhouses—continue to decrease, as do sales of homes worth more than $400,000. In general, resales are up, while new construction is down.
Overall, Stern says, prices have stabilized, and there is some statistical evidence that begins to confirm what Realtors have been reporting anecdotally: That the light at the end of the proverbial tunnel is visible, and brighter times may finally be at hand.
|3/2004 – 2/2005||8,829||$1,290,699,582||$146,188||84|
|3/2005 – 2/2006||11,826||$1,969,387,901||$166,530||77|
|3/2006 – 2/2007||10,761||$2,033,258,350||$188,946||65|
|3/2007 – 2/2008||9,316||$1,836,278,393||$197,110||145|
|3/2008 – 2/2009||7,093||$1,430,661,986||$201,700||95|
|3/2009 – 2/2010||6,878||$1,313,255,284||$190,931||94|
|3/2010 – 2/2011||6,341||$1,235,680,205||$194,871||90|
|3/2011 – 2/2012||6,742||$1,284,029,425||$190,452||104|
BY THE NUMBERS
$1.28 billion Total value of home sales in the Capital Region from March 2011 through February 2012, the period of time covered by the Baton Rouge Trends report
$2 million Price of the most expensive home sold in the Capital Region in 2011
6,742 Total number of home sales in the Capital Region from March 2011 through February 2012
6.32% Percentage increase in the number of home sales from March 2011 through February 2012, compared to the prior year
$196,980 Average list price of homes sold from March 2011 through February 2012
$190,452 Average sale price of homes sold from March 2011 through February 2012
-2.27% Percentage change in the average sales price, compared to the prior year, from March 2011 through February 2012
$6,528 Average difference between list and sale prices
104 Average days on market for homes sold from March 2011 through February 2012
8.55 Average months of available inventory from March 2011 through February 2012
The Capital Region has not experienced the massive wave of foreclosures that has been seen in some cities. Still, real estate-owned sales are frequent enough to drag down the average sales price and partially mask the tepid ongoing recovery. CoreLogic says a large “shadow inventory” of distressed homes that have not yet been through the foreclosure process looms nationally. “My general sense of our markets and a review of foreclosure data from local municipalities tell me that, while the shadow inventory issue might still be a problem in some states, we in south Louisiana probably won't see much of an impact,” writes certified mortgage banker Brian Andrews.
No one buys a home when they're not confident about their own economic prospects. The recent increase in sales indicates that some people are feeling better lately and are willing to take advantage of low interest rates and better availability of financing. However, the still-sluggish market for homes worth more than $400,000 seems to show that high net-worth families are in many cases still cautious when it comes to writing big checks for major purchases.
The so-called traditional neighborhood development along Perkins Road has been controversial since the day it was proposed, and some of the project's possible future neighbors in the Southdowns area continue to fight it every step of the way. While different housing and commercial uses are planned for the site, single-family homes are coming first. On May 21, in the most recent development of the four-year-plus saga, the East Baton Rouge Parish Planning Commission approved a development plan for a subphase that would consist of 17 homes.
There isn't really much new residential construction happening right now. But if there was, some real estate pros say, less of that building than in years past would be sticking to the country French-inspired style that dominates the region. It seems a more contemporary look, with cleaner lines and less ornate design, is becoming more fashionable. Outdoor spaces that seem to flow naturally from the indoors are also becoming popular, as are larger windows that trade a bit of privacy for natural light.
INDEPENDENT SCHOOL DISTRICTS
Organizers would like to create a new independent school district that would serve the area of southeast East Baton Rouge Parish between Interstate 10 and Interstate 12. Although the measure twice failed in the latest legislative session, the concept of ISDs isn't going to go away, regardless of what happens this year. Highly ranked school districts in Zachary and Central, not to mention Ascension and Livingston parishes, are credited with driving home sales in those areas; more such districts in East Baton Rouge could change the game.
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