Anyone who’s gone house hunting in Baton Rouge over the past three or so years knows this to be a fact: Sellers have had the upper hand over buyers in a residential real estate market characterized by low inventory rates and record-breaking annual home sales.
But in 2019 the market is expected to shift in the direction of buyers—or at least balance out. The inventory shortage is clearly over, the supply of homes is gradually rising and properties are sitting on the market for longer periods.
That doesn’t exactly mean a buyer’s market is imminent, local real estate agents say, though they admit a shift is afoot. And that shift will be more pronounced in certain areas and homes in certain price ranges, while others will remain strong seller’s markets.
Take, for instance, homes in the high-end price range, which have seen a major slow down.
“The upper end has been dead for months now,” says Jerry Del Rio, a veteran agent with real estate giant Engel & Völkers. “All of a sudden, the market dropped and sellers haven’t realized it yet. I’ve had several just take houses off the market.”
Del Rio can’t quite put her finger on what’s causing it, she says, but it may just be uncertainty in the market. People no longer feel comfortable putting so much money into a house.
Popular older neighborhoods are also experiencing a bit of a shift, though not enough to be considered buyer’s markets.
“I have noticed, especially in Southdowns and the Garden District, homes are sitting on the market longer than normal,” says agent Vicki Spurlock of Locations Real Estate.
Days on the market are up, according to monthly indicators compiled by the Greater Baton Rouge Association of Realtors. As of November, homes were on the market for an average of 65 days in 2018, up 16% from the same time last year.
Meanwhile, months supply of inventory has been in steady ascent, gradually creeping up each month in 2018 after dropping to historic lows in 2017. The greater Baton Rouge market hit 4.9 months of inventory in November, up 23% from the same month the year previous, according to GBRAR.
A seller’s market, however, is considered anything below six months supply, so technically the Baton Rouge area is still in seller territory for now. But if the upward ascent continues, the six-month inventory line may be crossed in 2019.
Spurlock says the shift has to do with rising interest rates. High rates means people searching for homes have less buying power, which will hurt the market.
As a result, you can expect to see sellers start to offer more incentives for buyers, such as bumping up closing costs or realtor bonuses, Spurlock adds.
“Buyers who can afford it will buy, but sellers may have to make adjustments,” she says.
Another potential cause of the market slowdown? Millennials. 2018 GBRAR President Donna Villar says the younger generation of buyers are smart. They analyze the numbers as well as the homes and whether they are updated, everything from appliances to countertops.
Typically, though, if a home is priced right and up to date, it will sell, Villar says.
One strong area of Baton Rouge market is new construction, although some agents say it’s gone overboard in recent years. New residential developments seem to pop up overnight in Baton Rouge, and that may be because it’s what people are looking for.
“New construction is winning the day,” says Keller Williams agent Kyle Peterson. “There’s so much new stuff, and buyers are pickier.”
As long as the economy keeps going strong, Peterson doesn’t expect the seller’s market to see any major shift yet. And at least one important indicator seems to support that prediction: pricing. Both median and average year-over home sale prices were up about 5% in November, according to GBRAR.
“Pricing is not reacting to inventory,” Peterson says. “Maybe we’re not there yet. You might start to see some pricing reaction in 2019. If you have more inventory and the same buyers, prices should go down. But they haven’t yet.”
What may seem like a slow down in the market may just be a returning-to-normal period as the effects of the 2016 flood finally wear off, Peterson says. The flood aftermath sent the market into overdrive as damaged and renovated homes flooded the Baton Rouge area market.
“We’ve been so busy, the market now feels slow,” Peterson says. “We may be overreacting.”