A spike in delinquent mortgages last year contributed to Baton Rouge’s fall in a national ranking of the overall health of 400 housing markets across the U.S., according to a Nationwide Economics report released last week.
This time last year, around 3.5% of Baton Rouge homeowners were more than 90 days delinquent on their mortgages, says Nationwide Senior Economist Ben Ayers, one of the report’s authors. In the second half of the year, the number jumped to 5%.
“That’s a lot more people in a short period of time that said, ‘Hey, I can’t afford my mortgage,’” Ayers says.
The August flood, which had a widespread impact on the region’s housing market, could have played a part in the delinquency rise, Ayers says. The health of the market remains neutral, stemming from a cooling off of housing prices and demand factors like job growth, he says.
Kyle Petersen, a broker with Keller Williams who has been studying the market for the upcoming Trends Seminar, says the market overall is robust, with days on market for homes ranging from 33% to 50% last year compared to 2015, and certain areas seeing significant growth in housing prices. The average days on market dropped from 88 in 2015 to 60 last year, he says.
Housing prices dropped slightly in the greater Baton Rouge area overall last year, Petersen says, likely due to the number of homes that came on the market “as-is” after being flooded and not repaired.
But certain neighborhoods located in flood zones that required insurance saw a drastic increase in the average home price since the flood, he added. In the O’Neal Place neighborhood, for instance, homes are selling on average $9 per square foot higher than pre-flood levels.
“I think Baton Rouge is staying healthy,” Petersen says. “The Baton Rouge market is just slow and steady, so for the future housing remains to be a good investment here.”
The Nationwide Economics report found the overall housing market in the U.S. to be healthy, though it has declined slightly in recent years. Lafayette ranked second worst for health of housing markets, as energy-heavy areas have still not completely rebounded from the steep decline in oil prices since 2014.
“The general trend is still very good. We still feel like the economy is going to be growing over the next few years,” Ayers says. “The main concern we have, particularly in the larger markets, is unsustainable house price gains.”