Though the Baton Rouge real-estate market overall has fared better than its counterparts around the country, the past year was still pretty dismal, especially in the high-end segment of the market. Sales of homes above $1 million were down over previous years, top sale prices were lower and homes spent more time on the market.
In a word, it was pretty bleak.
“We’ve had to adjust our thinking a bit,” says Realtor Ann Mullins of C.J. Brown Perkins, who sold some of the most expensive homes in the market in 2009. “Homes are selling, but it’s taking a lot longer.”
Consider that by mid-December 2008, 18 homes had sold in East Baton Rouge Parish for more than $1 million, according to the Greater Baton Rouge Association of Realtors’ Multiple Listing Service. This past year, just nine had sold in the same period.
Homes also sold for less. In 2008, two homes in the local market sold for more than $2 million, according to the MLS, while two others fetched more than $1.75. In 2009, the highest-priced sale in the local market was $1.5 million for a 4,570-square-foot home off Moss Side Lane.
As for average days on market, statistics are not made available. But anecdotally, agents say higher-end properties are sitting for months at a time, if not more, compared to the post-Katrina boom years when high-priced homes were snatched up—sometimes within days of appearing on the MLS.
“Some people still have Katrina thinking,” Realtor Jerry Del Rio says. “It’s not like that anymore.”
While the economy is one of the obvious reasons for the market’s sluggishness, Del Rio believes the problem, more specifically, is because of the credit crunch and the unwillingness of banks to write so-called jumbo loans. Any amount over $419,000 falls into that category, and for most of the year banks eyed prospective borrowers with extreme caution.
“The loans just weren’t available,” she says. “So anybody who wanted to do something in this range had to do it with cash.”
Buyers are also being very selective with their purchases, because they can be. Del Rio says they’re shopping more carefully and aren’t willing to pay top dollar for a house that’s not in mint condition.
“Some of these million-dollar homes are getting older, and if they need updating they’re not going to sell for $2 million or $3 million,” she says.
To help offset the sluggishness of the market, agents have gotten more creative. Mullins helped negotiate one sale that was actually an exchange. The seller, who happened to be the builder, traded his newly renovated home for the buyer’s relatively smaller home, which he will flip when the market improves. That’s not the only example of such a swap.
“I’m aware of several trades like that, especially in Bocage Lake,” Mullins says. “I haven’t seen it as much with the existing homes but have with new homes.”
Agents are also seeing sellers deciding to rent homes if they’re not selling. Del Rio has rented three high-end homes in the Country Club of Louisiana. All are at least $1 million homes that now, at least, are bringing in several thousand each month in rent.
The good news is activity seemed to be picking up in the final weeks of the year, and analysts are expecting 2010 to be a slight improvement over 2009. Local Realtors have their fingers crossed.
“We’re certainly hoping 2010 is a better year,” Mullins says. “It’s a lot more fun to sell houses when the market is active.”