While the dollar volume of single-family home sales dropped nearly 10% last year, sales are still higher than in 2019 and 2020 and experts believe the market is still healthy.
That’s according to Tom Cook of Cook, Moore, Davenport and Associates, who spoke today at the annual TRENDS seminar sponsored by the Greater Baton Rouge Association of Realtors.
While existing home sales dropped, new home sales grew more than 18% in East Baton Rouge Parish last year. Ascension and Livingston parishes both saw new home sales decrease in 2022.
“It’s still a viable market,” Cook says. “It’s still a smart move to put houses on the market because I still believe the market is underbuilt.”
There were fewer homes built in the 2010s than in the past five or six decades, he says, and that has helped create a need for additional residential development in the region.
While lumber prices have lowered since 2022, overall construction costs remain higher than historic averages. Area developers recently told Cook that they still plan to close on lots this year, although there is a fear that lots could become more scarce in the future.
This year, the local residential market has seen a 71% increase of homes on the market. In Ascension Parish, there was a 26% increase in homes listed for sale since last year but that increase is driven by last year’s moratorium, which slowed the development of homes to be listed for sale, he says.
Townhome construction increased 195% last year for the region, Cook says. East Baton Rouge Parish alone saw a 351% increase in townhomes listed for sale.
Moving forward, he believes market conditions will remain viable. While he expects the dollar volume of sales to continue to fall, he says the decrease won’t be too significant. Median sales price will rise again, thanks to rising construction costs and inflation rates.
Meanwhile, while the multifamily apartment market had previously been grappling with increased vacancy rates from a surge of new apartments coming online through 2021, especially in the student sector, vacancy rates are now declining. Over the past year, vacancy rates dropped in the Capital Region from 4.88% to 4.64%—down from the historical norm of 6% to 7%.
Appraiser Craig Davenport of Cook, Moore, Davenport & Associates, spoke about trends impacting the multifamily sector.
Another wave of newly constructed units are set to hit the market over the next two years, mostly for the “affordable” submarket.
While rental rate increases have cooled substantially since the 10% increase seen from 2021 to 2022, Davenport says rates continue to reflect a strong market.
