BusinessReport.com

This year’s outlook for the Baton Rouge metropolitan area’s housing market appears to be healthy, but it depends on who’s gazing into the crystal ball.

“People are influenced by the national gloom and doom which is not Baton Rouge,” says Linda Fredericks, president-elect of the Greater Baton Rouge Association of Realtors. “There is no national market. Every market is local.”

With Baton Rouge literally running out of space for new construction, Fredericks says she doubts any slowdown in the market is from overbuilding in the city. However, the situation changes for neighboring Livingston Parish, where so much new construction is under way it’s making it difficult for existing houses to compete in price and size. In Ascension Parish, higher-end houses are being built but are taking longer to sell.

The greatest concentration of houses on the metro market is from $200,000 to $350,000, she says. There is a 22-month supply of high-end houses, and an 11-month supply in the middle and lower end of the range. For newly built houses, the supply is 15 months. For houses one year to 76 years old, there is just under a five-month supply.

According to association numbers, the metro area’s median house price is $189,913, compared to $189,457 last year. As of Feb. 27, there were 4,600 houses on the market compared to 3,778 houses listed at this time last year.

The National Association of Realtors [NAR] forecasts a buyer’s market this year yet calls it “solid for Louisiana and very healthy relative to most markets around the country.”

That’s what Mark MacKenzie, owner of Mark MacKenzie Real Estate Planning Brokerage, says of the area market, too. MacKenzie, who has housing inventories in more than 70 major markets and 400 suburban markets, says there’s a big difference between what’s being reported in the national news compared to what’s actually happening in some markets. In these cases, perception has people believing their market is bad when it’s still healthy or even good.

“The Baton Rouge market is one of the most favorable of the established 73 markets covered,” MacKenzie says. “It’s by far one of the most of the favorable real estate markets in the country and that is very clear.”

According to MacKenzie’s numbers, Baton Rouge has a 5.86-month housing inventory; Denham Springs, 5.86 months; Prairieville, 7.16 months; Zachary, 8.76 months; Walker, 9.26 months; and Gonzales, 9.75 months.

Even area outlying cities with larger inventories are outperforming many in the U.S., he says. As of February, the nation averaged a 10.3-month inventory, which is getting bigger.

MacKenzie says a six-month inventory is considered a balanced market. Less than six months indicates strong demand and stable prices. More than six months indicates oversupply and potentially weaker or falling prices.

From January to February, the city of Baton Rouge inventory has hovered at the same time frame, showing stability, MacKenzie says. That is contrary to many other markets he observes that report rising inventories. Last month, the worst were Miami [57.28 months], Orlando, Fla. [24.95 months], Indianapolis [23.92 months] and Los Angeles [19.7 months].

Some of the better markets include Austin, Texas [4.16 months], Seattle [4.14 months] and Rochester, N.Y. [4.18 months].

Billy Ward, board president of the Capital Region Builders Association, is assembling a coalition to initiate a campaign to restore consumer confidence in the area housing market.

“Our market is good despite the national media,” Ward says. His company, Champion Builders, is busier than ever building for first-time buyers in the $140,000 to $180,000 price range. “We want to counter what is happening nationally because it’s not really applicable to our area.”

According to the NAR forecast, house prices will remain positive because, unlike past downturns, the economy continues to add jobs [more than 14,000 new jobs are projected for 2008-09]. Based on fewer building permits, homebuilders also cut production drastically. Also, that declines in mortgage rates are not luring more buyers indicate “a confidence factor” in the area market.

Ward also points to steadily rising property values, fewer foreclosures and better house prices from lower material and labor costs as housing demand declines in other parts of the U.S. The issue isn’t oversupply, he says, it’s buyer apathy.

“They’re taking a wait-see attitude,” he says. “I want to buy when the market’s at the bottom at the best price I can buy, and you keep seeing in the media that housing prices are going down. In this market, we’re just not there.”