Increased prices for homes coupled with low inventory and selling times indicate the Baton Rouge residential market was extremely strong and experienced great demand in 2021.
Local homes sales in 2021 increased by 21.18%, eclipsing the average from 2015 to 2019 by four times. Meanwhile, median home sale prices increased from $220,000 in 2020 to $239,000 in 2021, an 8.64% increase.
Homes in 2021 also sold at an incredibly faster pace compared to 2020 as the median number of days on the market decreased from 26 to just seven, a 271% drop.
“You have to sell before they’re listed,” said Tom Cook, an appraiser with Cook, Moore, Davenport and Associates, at the annual TRENDS seminar sponsored by the Greater Baton Rouge Association of Realtors. “That’s really what’s going on.”
So what drove the residential market over the past year? It wasn’t job growth or people moving out of apartments, Cook says, but rather the same thing as in 2020—low mortgage rates.
Mortgage rates stayed low through 2021, but have picked up throughout the beginning of 2022 and now top 5%. If they go up to 6%, Cook says, the number of Baton Rouge residents that could qualify for a $300,000 mortgage could decrease by as much as 25%.
Through 2022 and into 2023, Cook expects rising home costs, continuously lowered inventory due to supply chain issues and an increase in townhouses due to buyers looking for better affordability.
“The market won’t necessarily cool in the next year,” Cook says, “it just may not be as hot.”
Editor’s note: This story has been updated since it was first published to clarify the impact of rising interest rates.