One of Sandy Daly’s agents recently closed more than $1 million worth of residential real estate in a week. Historic low interest rates have the telephones ringing with lots of lookers as well as buyers. And Daly’s seeing multiple offers again.
While there are some big ifs that could snuff this recent bright spot, Daly—a broker at C.J. Brown Realtors who’s also president of the Greater Baton Rouge Association of Realtors—cautiously predicts a stable housing market in 2009.
While Daly declined to project the year’s sales because of these looming uncertainties, which include Louisiana’s budget issues, falling oil prices and layoffs, she blames last year’s lower home sales on Hurricane Gustav, which made landfall in south Louisiana on Sept. 1 and buffeted the Capital Region with near-record gusts that plunged some areas into darkness for weeks.
“In many offices in December, you could have shot a cannon and not hit anyone,” she says. “Parking lots are full. Toward the end of the year, we had a sprinkling of cars. I do believe the activity is picking up, so I’m cautiously optimistic.”
Daly does expect the median price to hold near last year’s $170,000, with some gain possible if the market absorbs more new construction; that figure was $167,000 in 2007. The average sales price also could remain level at $201,207; that number was $197,321 in 2007.
And she anticipates properties that cost less than $277,000 to continue moving fast with available Federal Housing Administration financing that calls for a lower 3.5% down payment. The sale of properties that cost more than $500,000—which slowed last year—could slow even more unless financial markets stabilize and prospective buyers recapture wealth on Wall Street.
FHA and Rural Development loans, which are available through the U.S. Department of Agriculture, likely will continue driving sales, Daly says, as should an $8,000 tax credit retroactive to Dec. 1, 2008 in President Barack Obama’s recently signed economic stimulus bill.
“I’m optimistic, because I think President Obama understands the needs for a housing stimulus,” she says. “Now that it’s been passed and signed into law, that will give him and Congress the opportunity to direct the remaining $350 million of TARP into housing.
“Finally, attention appears to be focusing there to lower rates, mitigate foreclosures and, with this addressed, fewer houses will come on the market and heal the increasing inventory.”
The Capital Region currently has an 8.6-month supply of existing homes, increasing from 6.5 months last year. The area also has a 12-month supply of new homes, which should decrease in coming months as builders focus more on selling and less on building.
High-growth areas will continue to include the Interstate 12 corridor from Sherwood Forest Boulevard to Millerville Road and O’Neal Lane and including Coursey Boulevard, the northern part of East Baton Rouge Parish in and around Zachary and Central and also in Ascension and Livingston parishes. Demand should continue in south Baton Rouge from LSU to the Highland Road and Perkins Road corridors.
And Forbes magazine recently listed the Capital Region among the nation’s top 25 housing markets.
“The most positive sign,” Daly says, “is we continue to be written about in the national media for being one of the hottest real estate markets.”
Still, the area’s property values declined 0.7% in the last quarter of 2008 and .3% for the year. A five-year average, however, showed a 33.7% gain.
“I feel what really hurt us in the last quarter was not the national economy, but the two storms—Gustav and Ike—where houses couldn’t be shown with no electricity and repairs,” says Judy Burkett, president of the Louisiana Realtors Association. “The biggest thing we can’t predict is the weather. But as far as the general economy of our state, I feel like we’ll do better.”
Burkett also points to Baton Rouge having the lowest percentage of foreclosures than any of the 100 largest cities in the U.S. According to RealtyTrac.com, 0.35% of the homes in the market were foreclosed in 2008. The foreclosure rate in the Capital Region was slightly better than the state average of 0.4%; the state ranked 41st for foreclosures with 7,837 filings in 2008.
According to the Office of Federal Housing Enterprise Oversight, the state ranked 13th for housing value with a 2% decline in 2008. Property values fell 8.3% nationally, ranging from a 1.9% gain in North Dakota to a 28.2% drop in Nevada.
In the past five years, however, Louisiana home values have appreciated 28.3%. Hawaii experienced a 56.6% increase, while Michigan had a 19.7% decrease.
Louisiana’s economy also factors into Burkett’s forecast. The state added 6,800 jobs in 2008, and among the business wins were Albemarle’s relocation of its headquarters from Richmond, Va., to Baton Rouge, Bercen Chemicals’ relocation of its headquarters from Rhode Island to Denham Springs and the establishment of an Electronic Arts game testing center at LSU’s South Campus.
With a hurricane-free summer and fall and low interest rates, Burkett says the statewide market could also hold well. “In the last week,” Burkett says, “I’ve been as busy as I’ve ever been.”