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.