Home sales continue to slow down in first half

The number of homes sold in metro Baton Rouge during the first half of 2008 fell by 19% even though average home prices posted a 5% increase. According to the Greater Baton Rouge Association of Realtors Multiple Listing Service, there were 4,014 homes sold through June compared to 4,972 sold during the first six months of 2007. The average sale price was $203,357, an increase over the average sale price of $193,913 for the first half of 2007.

Don Stern, a Realtor with Coldwell Banker Mackey in Prairieville, says the price increase is because of rising construction costs because the price of existing homes is flat. "We're selling fewer new houses, but the ones that sell are more expensive," he says.

One disturbing sign Stern says is taking place in the resale market. While 6- to 10-year-old houses are the fastest-selling properties in Ascension Parish, the second biggest selling category is houses 1- to 3-years old. "That might be Katrina people relocating," Stern says. "I hope it's not people discovering that they are in houses they can't afford to be in."

Stern says there's evidence of the continued oversupply of more expensive homes. In Ascension, there's a 17-month inventory of houses priced $400,000 and above, while the inventory for homes in the $100,000 to $150,000 range is five months and the $200,000 to $250,000 range, which is the most popular market, has a nine-month supply.

More evidence of the strong demand for mid-priced housing: Green Trails, which was built on the site of the former Shenandoah Country Club golf course, was the hottest subdivision in the first half of the year, with 22 homes sold. Most of the homes in Green Trails are priced between $300,000 to $400,000.—Timothy Boone

Perkins Road overpass apartments to become condos

The Edward Street Apartments have been sold for $1.68 million to a developer who plans to convert them to condominiums. Roth Walsh purchased the 14-unit complex from his father, G. Allen Walsh, in a deal that closed last week. The apartments will be refurbished with granite countertops, new appliances and new roofs and renamed the Edward Avenue Condominiums, Walsh says. Units in Edward Avenue, located near the Garden District just off Perkins Road, will start at $170,000. Walsh says five units are under contract with verbal commitments for three more. "They're coming in at a good price point for this neighborhood," he says. "They're building townhomes across the street that are selling for $1.3 million each." The conversion at Edward Avenue should be completed by the spring.—Timothy Boone

Prairieville firm joins with Kansas appraiser

A.R.E. Real Estate Services, a Prairieville appraisal and consulting firm, has joined with IRR-Residential, the second-largest appraisal company in the U.S. The business will now be called IRR-Residential Value Experts. Ben Oubre, managing director of IRR-Residential Value, says the move will help his 50-year-old company by giving customers access to state-of-the-art valuation software. IRR-Residential Value Experts has six employees and an office in New Orleans, both of which will not be affected by the deal.

Maestri-Murrell moves into new office, adds staff member

Maestri-Murrell Real Estate has moved into a new office on Jefferson Highway just past Drusilla Lane. The company had been located off South Sherwood Forest Boulevard. "We just wanted to consolidate all of our divisions into this one office," says Ben Stalter, vice president of commercial real estate and a partner in Maestri-Murrell. Maestri-Murrell's new offices are in an A. Hays Town-designed building.

Along with the new location, Maestri-Murrell has added a new staff member. Jonathan Walker, formerly of Stirling Properties, has joined the company as a commercial sales and leasing agent.

Poll: Majority says gas prices will influence development

The majority of Real Estate Weekly readers says rising gas prices will influence residential development. Sixty-three percent of the people who responded to an online survey say the $4-a-gallon gas prices would lead to more of a push for smart growth and high-density neighborhoods. Thirty-four percent say the prices would not influence development, because people are going to live where they want, regardless how much gas costs. Three percent were undecided. More than 150 people participated in the survey.

This week's question: Will Fannie Mae and Freddie Mac's troubles affect the local housing market?

Tom Cook: Riverton Plantation receives approval

The Ascension Parish Planning and Zoning Commission unanimously approved the proposed Riverton Plantation TND located off La. Highway 22 adjacent to Pelican Point. When complete, the 419-acre development will include 811 detached single-family homes, 70 townhomes and 367 live-work units. The project will also include about 645,000 square feet of office and retail space. The first phase, consisting of 146.6 acres in the center in the property, will include 280 single-family units and a mix of cottages and townhomes along with a private school, church and town center. The town center will include offices, health club and spa, grocery store, café and coffee shop. Steve Oubre of Architects Southwest is the planner, and Ferris Engineering will serve as the engineer. Groundbreaking for the first phase is expected to take place in the first quarter of 2009.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Brian Andrews: The new plan

Last week we looked at an open discussion with the lender when a project is not going as planned and how things went wrong. This week we look at discussing the plan for putting the project back on track with the lender.

Most lenders will agree that a real estate project is probably best left in the hands of the borrower for completion and ultimate sale. This is not to say that the lenders are afraid to take a property back -- they will do that in a heartbeat if that is truly the best way to maximize a recovery. But generally they will look for a way to keep the borrower in possession of the asset and in control of the project.

For a borrower to stay in control, he or she must convince the lender that a new plan can be structured to complete the project that protects the lender and improves the probability of success. There should be all new financial information on the borrowers, including a global cash flow on all projects -- not just the ones financed with that lender. There should be benchmarks for success that can be reported to the lender and that the lender can report to regulators. And the plan should be relatively short term.

Finally, the borrower should have a plan for keeping debt service current, including asking for interest-only terms until the turnaround is complete. Additional deposits to the interest reserve would make the lender happy!

As we said last week, communication is the most important element to any borrowing situation when things don't go as planned. Despite some evidence to the contrary, lenders are open to discussing alternatives and are thrilled to negotiate a win-win situation. But the borrower is the one that needs to initiate that communication.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)

Real estate recap: Foreclosure filings drop in La.; affordable housing coming to Jefferson Highway; AEDC deal for office park breaks down

Reverse of national trend: Statewide foreclosure filings dropped by 17.4% in June from the year before, as one out of every 3,134 Louisiana households received at least one filing. In contrast, the national rate jumped by 53% over the year, according to RealtyTrac, with one out of every 501 households receiving a foreclosure filing. Louisiana continued to rank low on the list of filings by state, coming in with the 43rd-highest foreclosure rate in the country during June. Work starts on Jefferson Highway development: Construction has started on The Reserve at Jefferson Crossing, a 180-unit, affordable-housing apartment complex at Jefferson Highway and Highland Road. Apartments in The Reserve will rent for between $500 a month for one bedroom and $1,000 for a four bedroom and are designated for families who earn 60% or less of the median income. CST Land Developers, a group owned by Tom Delahaye, Chris Coffin and Stan Baudin, is developing The Reserve. Organization looking at other sites: Negotiations have broken down between a private landowner and the Ascension Economic Development Corporation over an 88-acre plot of land at La. 73 and La. 30 that the AEDC had hoped to see used for an office park and light industrial complex comparable to the Industriplex in Baton Rouge. The organization is looking at three other sites, and two other landowners have approached the development corporation.