While the Capital Region residential housing market continued to make steady gains in 2014 and is poised to see stable growth again this year, market conditions look less certain for the rapidly expanding apartment sector, according to local experts who provided overviews at today’s Trends in Real Estate seminar.
“The Baton Rouge area apartment market remains quite strong, with rentals rising and vacancies near historic lows, but market conditions are likely to change over the next 12 to 24 months as a substantial number of units under construction (and planned) will be gradually delivered to the market,” said appraiser Wesley Moore of Cook Moore and Associates, who presented the apartment overview at today’s seminar.
Already this year, slightly more than 2,150 new apartment units are either under construction or have already been completed—and roughly 3,750 more are proposed for construction by the end of 2016. That means that after seeing an average of 867 new apartments enter the market annually between 2005 and 2013, the annual average for 2014 through 2016 could reach 2,000.
“Apartment owners and managers in certain submarkets should brace for substantial increases in competitive pressures (and concessionary measures) as these new units fight to capture market share,” Moore said.
While one might assume increasing inventory of apartments might lead to lower average rents due to increased competition, the Trends data show the average rent on a two-bedroom apartment in the Capital Region rose last year. Among the 153 complexes included in this year’s Trends report, the average rent for a two-bedroom apartment was $942 in the fall of 2014. That’s up 8.4% from the $869 average rent reported in last year’s Trends data, during which 145 complexes were surveyed. Apartment vacancy, meanwhile, retreated to about 6% last fall, down from a peak of 6.8% in the fall of 2012.
The Greater Baton Rouge Association of Realtors, which annually presents the Trends in Real Estate Seminar, reports total home sales in the eight-parish Capital Region for 2014 finished 3.2% higher than in 2013. As for residential home sales volume, the Trends data show 2014 saw a 6.9% increase over 2013 figures, marking the fourth straight annual increase following four years of decreases between 2007 and 2010.
“We’re in the tail end of a peak market,” said Rick Haase, president of Latter & Blum. “But rates are low, job creation is happening, consumer confidence is improving, demand is high and underserved. We’ll look back and say they are the good old days.”
The Capital Region residential housing market continues to be dominated by East Baton Rouge, Livingston and Ascension parishes, where 91% of all sales reported last year occurred. Among them, East Baton Rouge is leading the way in sales, but the Trends data show a slowing growth rate in recent years.
“The total number of sales units rose by only 0.46% this year to 4,819,” reads the Trends report on the residential market. “During 2013, sales units rose 12.5% to 4,797. There were 4,264 sales in 2012, which represented a year-over-year increase of 16.98%.”
Ascension Parish posted a slight decrease in total sales last year—0.9%—but sales volume actually increased 1.74% due to lower inventory. Livingston Parish posted the strongest growth in home sales last year, at roughly 11%, and it continues to have the lowest average sales price in the Capital Region.
—Steve Sanoski
