Posts Tagged: Baton Rouge Real Estate Market Trends

Baton Rouge used to be New Orleans’ second cousin, but not so much anymore.  Just take a look at what’s happening all around us, and you can’t help but be positive about Baton Rouge.  The leaders of our business community have declared 2013 a game changing year and here’s why.

In March we learned that IBM had reached an agreement with area leaders to open a business services center in a new riverfront complex downtown.  This announcement was followed in December with news of a downtown 28-acre Water Campus dedicated to ground breaking research in the areas of coastal erosion and the environment.  We also learned we were getting a branch of the LSU Medical School right here in Baton Rouge.

In 2013 there were some other major annoucements and developments as well.  Construction of new Acadian Village Shopping Center was completed and Trader Joe’s joined the area’s mix of upscale grocers.  Costco announced it was coming to Baton Rouge.  Construction also began on the Super Walmart at Bluebonnet and Burbank. And, Matherne’s announced it will open a much needed new super market in downtown Baton Rouge.

When CB&I purchased The Shaw Group some were concerned about the impact on Baton Rouge, but it’s turned out well.  CB&I has increased their local presence and Jim Bernhard, Shaw’s CEO and Founder, has opened new venture capital offices downtown.  Even our local newspaper changed ownership.  In May, John Georges, a successful New Orleans businessman and entrepreneur, purchased The Advocate from the Manship family.  The blending of news and reporting from New Orleans, Lafayette, and Baton Rouge has engaged readers and is creating an awareness of Baton Rouge’s regional importance and impact.

So, when people ask me “How’s the real estate market?”  I have to put it in the context of the overall growth in the Baton Rouge community.  While there is some concern about rising interest rates an increase into the 5% range is still low compared to high interest rate environments in the past.  We have a strong employment base.  We have major investments taking place in our community, and I am very positive about the future.  That optimism is reflected in last year’s area home sales and also all the new home construction currently underway.  Here’s to 2014!

I was glad to see the front page of The Advocate this morning:  BR-area home sales up 3% in 2011.   All of us in the real estate business and those of you thinking about selling your home in 2012 should feel good about that.  But as Paul Harvey, a great old-time radio broadcaster, used to say, here’s “the rest of the story.”  The gains were made in the second half of the year and correspond with a decrease in the average price of sold homes.
 
Here’s the data for areas 4, 5, and 6 – LSU and south to Shenandoah and east.  With the exception of the 2nd quarter of 2010, which marked the end of the housing stimulus programs, we've seen a consistent decline in the number of homes sold vs. year ago until the 3rd quarter of this year.

Those of us who live real estate all day every day know that something happened in the 3rd quarter.  This market started to turn around and homes started moving again.
 
I think there were two major factors that have contributed to the turn around: 1) buyers and sellers realized that there weren’t going to be any more stimulus programs.  The national economy just wasn’t going to support more government spending at that level.  2) Interest rates have been at phenomenally low levels.  Those low rates have a tremendous impact on affordability and drove buyers who were on the fence into the market.
 
Digging a little deeper into the data you can also see that there was a corresponding shift in the average price of sold homes. 

There are lots of possible reasons for this.  It could be that there were more sales in the lower price ranges.  It could be that we had fewer high-end sales.   It could be that we had more foreclosures.  But the most logical reason for this is that home prices have genuinely come down.   And, in fact, if you go through the data neighborhood by neighborhood, you will see that more often than not, that is the case.
 
How much have home prices come down?  That depends on the house, it’s condition, and the neighborhood.  There are areas in Baton Rouge where home values really haven’t been affected.  And, there are others where there have been significant declines in the average sales price per square foot.  One thing I feel really comfortable saying is that a home in a good location, in good condition, priced right, and professionally marketed is going to sell.  And, if you are a buyer, it’s time to make your move!  The market has shifted, the rates are low, and the local economy is in reasonably good shape.
 
If a move is in your future, please give me a call.  Till next time.

It seems that every day we get bombarded with negative news.  OK – things have not been great, but the sky is not falling and it looks like low interest rates are at long last helping our real estate market.  For those of you who know me from my “pre real estate life” you know I’m one good market analyst.  NOW would be a really good time to list your home.  Take a look at the stats below.

Home Sales are Picking Up

Home sales are seasonal.   The number of homes sold tend to bottom out in January and peak in June and July as families complete their moves before the school year begins. And, while we were off to a slow start this year, the past few months have been good.  In fact, August sales in areas 4, 5, and 6 put in their strongest showing in 3 years. (August 2009 – 287 homes sold, August 2010 – 229 homes sold, August 2011 – 302 homes sold).

 

 

What I think is really important about this is that the improvement in home sales has been accomplished without additional tax credits.  Yes, they were great and they helped us sell homes in the Spring of 2010.  But, they didn’t help long term.  They just shifted demand.   What we are seeing now is different.  I think it’s the low interest rates.  I just can’t imagine it getting any better than this for a home buyer.

Home Prices Are Holding Steady

From month to month, the average price of a sold home in the area is going to fluctuate.  What’s noteworthy about home values in areas 4, 5, and 6 is that despite some bumpy economic times, our home values have remained relatively steady.  Compare Baton Rouge to what’s happened in cities in California and Florida.  We have so much to be thankful for here.  And, I think about that every day.

 

 

Inventory Levels are Dropping

While the number of homes sold and the average price is nice to know, what matters most when you list your home for sale is the competition:  How many homes are available that are similar to yours?  We tend to look at historical data because that’s what appraisers must use in determining home values.  But, the buyer for your home can’t buy a home that is already sold.  They choose from the existing inventory.

When inventory levels are high (greater than a six month supply) most in real estate consider it a buyers market.  When inventory levels are low (less than a 6 month supply), most would consider it a sellers market.  Just look at what’s happened to inventory.  It’s shrinking steadily.  Out of all the numbers to watch this is the most important one.

If you’re thinking about selling your home, let’s talk about what happening in your neighborhood.