What’s driving activity in the Capital Region right now? How are market conditions here compared to the rest of the state and the country?
I think in some ways we’re seeing a dual market. At the higher to mid-high end of the spectrum, there are some good things happening. Not a boom. It’s consistent there. But when you get to the lower end, and we start talking housing affordability, there are just some real challenges. The smallest difference in price can really impact people’s ability to purchase a home. As we look to the future, I think we’re all asking, “Where are we going to be able to build?” Ascension, with all the new investment coming in there, seems like it would be so ripe to put in a lot of new neighborhoods. But that raises infrastructure issues, and they’re just not open to that. St. George, we’re waiting for them to find their footing. Where is that zoning and master plan going to take us? I found it interesting that during Parade of Homes, we had three homes that were on teardown lots in classic Baton Rouge neighborhoods. And then there are these other one-street developments squeezed into old neighborhoods. Where is that next Willow Grove or Long Farm going to be? I think those are some of the challenges we’re looking at.
Interest rates are down a little. Are buyers and borrowers adjusting their expectations, or are deals still stalling over rate shock? Are there any creative financing strategies gaining traction among borrowers?
I love the old adage, “Date the rate, marry the house,” because rates can change. You can always go back and refi. But we’re not going to see those low-low rates again. I think people are really starting to understand that that was a very unusual market. Being realistic about it helps. We had so many people purchase houses during that time and they’re going to wait probably five years or more before they’re ready to do another house anyway. So, I think some of the blame for the slowdown that we put on interest rates might not have been totally deserved. Locally and nationally, we’re seeing such an increase in remodeling because of that. A lot of people are choosing to go that direction. So, while the interest rate impact shakes out, it’s driving a whole new sector of the business for us at the same time.
Construction costs have been under a lot of pressure in recent months, and longer. Where do things stand now? Are margins improving?
There’s a ripple effect. When the tariffs first hit, we’re all like, “Oh, here it comes.” People were sitting on inventory already, so we didn’t feel that immediately. But now we’re starting to see more of that inventory coming in at a higher price. Then we’re looking at the cost of fuel. What does it cost to bring it into the market? Looking at electronics, what are we getting from overseas? It just runs everything up. I’ve had a builder tell me they were putting in a stove, and it went up $1,200. That’s not going to work. So, it’s definitely had a huge impact. And again, the impact is disproportionately high for lower-income buyers. Every $1,000 added to the price of a home in greater Baton Rouge means 536 more households that cannot qualify for the mortgage needed to purchase. That is 536 more first-time home buyers losing their chance to build equity and generational wealth. Further complicating matters is disruption in the workforce due to deportation fears. We’re seeing that on job sites. We have a lot of workers afraid to come out. Builders are saying, “I’m hoping we’ll be able to have it ready, but I can’t get a crew out.”
Mixed-use and live/work/play development has been talked about in Baton Rouge for years. Is it gaining momentum, or a passing fad?
I think people still want it. They want that lifestyle—a little retail, a restaurant. Things like that are important. We continue to hear over and over, “We’re going to build a River Ranch like in Lafayette.” Greater Baton Rouge doesn’t really have anything that compares to that. I think people are really loving the idea of that lifestyle. It’s something we’d like to see develop in this area, but right now I’m still waiting. You’ve got to have the right place to do it and the right permitting to do it and everything else. It’s a chicken-and-egg thing. Nobody would live downtown until there was a grocery store. Grocery store wouldn’t come until there were more people living downtown. We’ve seen that with some mixed-use developments, too. You’re selling homes and saying, “It’s going to be great when this grocery store opens.” And people are still waiting.
How do we combat the apathy that people may have about policy decisions being made at the parish, local, state level that affect their ability to buy or build a home?
I think people don’t realize all the potential hurdles that are there for building a home. Nationally they estimate 23% of what you pay for a house has to do with permitting and regulations. So that means you need to be paying attention to what your parish government’s doing, what the state government’s doing. You might think that doesn’t impact you, but every piece of that building process has a permitting element to that and there’s a cost with that. If that permitting process doesn’t work smoothly, it’s adding more costs to it. It’s really important that people are paying attention to what is happening and looking to be sure that they’ve got the best policy structure in their state, parish or community. We’re concerned with flooding, but is your permitting process doing it in a reasonable way? Because you can also go too far in the other direction. Pay attention to that. Have the voice. That’s the way you’re going to get the community that you want. Builders want to be that good neighbor. But everyone has to work together to make it happen.
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