April 10, 2009
Baton Rouge Real Estate Market Trends

As we emerge from a long fall and winter many are wondering how the national recession has affected our local real estate market. Local leaders and media have been eager to point out that so far our local economy has been relatively unscathed. We indeed have a great deal to be thankful for. Compared to what has happened in real estate markets all across the country, our shifts are not nearly as significant. But we have experienced some changes.

Every month last year there was a decrease in the number of homes sold in the areas served by the Greater Baton Rouge Association of Realtors. For the 12-month period ending March 31, 2009, overall unit volume is off by around 25% with the biggest drop occurring last September after Hurricane Gustav. That’s not too surprising when you consider that many of us didn’t have power, and landscapes and homes were destroyed. It was difficult to just get gas and groceries.

What I find interesting is that there isn’t a lot of difference in the trend before and after the major disruption in the financial markets this fall. The decline in the number of homes sold has been going on for over a year. And, I think it’s likely that this decrease may be more a function of the population changes we experienced after Katrina than anything else.

Where we really begin to see the impact of the recession is in the median price of sold homes. During the first half of the year, the “gold” bars are higher than the “grey” bars; median values were still nudging up. This fall and winter the “grey” bars are higher than the “gold” bars; compared to year ago levels home values have come down.

To put this in perspective, the change is around 2% - 3%. And, while that is not a cheery thought, I would challenge anyone to find a much better place to invest their money. OK … there may be a stray stock here and there, or a CD or money market fund where you lost nothing. But all things considered, if you only lost 2% - 3% of the money you had in your IRA or investment account, then you’d be on the front page of every financial paper and magazine in the US.

What the data tells me is that there hasn’t been a better time to buy a house in the Baton Rouge area in the past 2 years. We have good values and enduring values, and at the end of the day we all need a place to call home. Interest rates are at historically low levels and there are multiple incentives for first time homebuyers.

I enjoy sharing this information with you. If you’d like more details or have a special interest in a specific area of Baton Rouge give me a call.