Real Estate

Cue the Comeback

It was a near record-breaking year in residential real estate — and an extraordinary year for new construction in Lafayette Parish.

From Wishful Thinking to Solid Sales

For the first quarter, sales are up and look to stay that way.

For four years now, real estate practitioners in and around Lafayette have been looking for signs of our market improving. Minor ups and downs and a tax credit here and there have provided for some fits and starts in the market, but overall it’s been flat for some time. That’s not necessarily a bad thing, particularly with what has been going on nationally and with the mortgage market mess still lingering.

Looking for Signals

Wednesday, October 27, 2010

Depending on what happens at the polls next month, a number of regulatory and tax proposals could be removed from consideration — creating the kind of confidence that will get our economy moving again.

Did anyone else notice the irony of news of the deepwater drilling moratorium being lifted and rescue of the trapped Chilean Miners breaking on the same day? What I found ironic was the similarities in these stories, but difference in their reception. Both were seemingly inevitable and greatly anticipated. However, the rescue was received with joy and triumph, but the end of the moratorium — not so much.

The Tax Credit Hangover

Wednesday, May 26, 2010
Written by Steven Hebert

More selection, less pressure, moderate prices and historically low interest rates — potential Tylenol for the expired homebuyer tax credits.

Lafayette’s real estate market experienced a fever pitch in April as buyers scrambled to take advantage of the extended, and expanded, U.S. Government Homebuyer Tax Credit. First-time homebuyers who put a home under contract by April 30 could qualify for a tax credit of $8,000, an extension of the stimulus program that expired in November of last year.

Some existing homeowners could likewise qualify for a $6,500 tax credit if under contract by April 30. Both groups have until June 30 to finalize their deals and close on their homes. Once closed, a simple amendment to their tax return will have a nice refund check on the way. 

This increased activity was like a return to the good ole days of 2006, particularly this April, as 351 listings were put under contract and 262 homes sold in Lafayette Parish. To put this into perspective, in April of last year, 208 homes were reported under contract, and only 159 sold. In fact, there hasn’t been any one month with more than 300 homes reported under contract since June 2007. Since then, the average number of homes reported under contract per month is 213. So, it’s a bit of an understatement to say that April 2010 was a good month for real estate in Lafayette Parish.

After a slow start in January and February due to extremely cold weather and the Super Bowl, the market really took off. For the year, sales volume is up by 12 percent over last year, a pace that should hold through mid-year as deals put under contract in April close. This is welcome news in the wake of two straight years of basically flat real estate activity.
 
Unfortunately, not all the news is good. Even with increased sales activity, average home sale prices are down 8 percent compared to the first four months of last year. There are several reasons for this, including an increase in the number of distressed sales and new appraisal requirements and restrictions that result in lower appraisals and thus lower sale prices. There are also simply more homes selling in lower price ranges, and the first-time homebuyer portion of the tax credit brought many buyers out to see these homes.
 
Some numbers help paint the picture. In 2010, there were virtually the same number of homes sold in Lafayette Parish in the over $250,000 price range — 122 compared to 114 in 2009. Compare that to the difference in home sales under $250,000 — 488 in 2009 and 605 in 2010.  Most buyers this year are concentrated in entry-level, affordably priced homes, so higher price range sales activity remains virtually unchanged.

An unintended consequence of the homebuyer tax credit is the effect it had on home sellers. Sellers hoping to benefit from the increased buyer activity put their homes on the market in a similar fashion to those just after Hurricane Katrina. So even with the dramatic increase in homes taken off the market this year, active inventory has risen.

This time last year, there were 1,118 homes on the market. This year, 1,207 remain. This increase in inventory will continue to hold down prices for some time, which could actually be a good thing as buyers look for reasons to stay in the market in the wake of the tax credit.

But that’s not the only reason buyers need to remain in the market. First of all, the tax credit did not enable sales to take place. Unlike the automobile industry’s “Cash for Clunkers” program, where that tax credit showed up at the time of purchase to use for down payment or transaction cost, the homebuyer tax credit is received by buyers weeks or months after the fact. A nice bonus indeed, but this program didn’t create deals that wouldn’t have happened in the first place. In other words, the tax credit didn’t enable an otherwise unqualified buyer to be qualified.
  
Today’s buyers are operating in a market with more selection, less pressure since that the tax credit has expired, moderate prices and historically low interest rates. In addition, summer and early fall are traditionally better sales months in the real estate cycle. These factors should bode well to lessen a tax credit hangover in coming months.
It’s easy to predict that home sales will be up at mid-year, probably somewhere around 10 percent. It’s also easy to predict that sales will not remain at April’s pace. What happens for the rest of the year is in question. Our market has seen a definite trend toward more affordable homes, so we can expect homes under $250,000 to continue to sell well. Although expired, the tax credit did build momentum that will carry over and give the market cause for a positive end to the year.
 
It’s a little early to tell, but 2010 may be the year that sales begin to tick back up in Lafayette Parish.  

Steven Hebert has been in real estate and construction all of his life, having begun cleanup work on his father’s construction sites at age 6. He is now the COO of Coldwell Banker Pelican Real Estate, a nationally franchised, full service real estate firm.

Boom Time

Written by Teresa  Hamilton
Wednesday, April 28, 2010

Cajun Boomers are finding creative ways to make lifestyle changes involving their homes.

Much has been written about the Baby Boomer generation and its effect on everything from housing to the stock market. National reports indicate a significant impact in helping their parents transition to retirement communities or nursing homes, as well as a powerful new trend by this group in the purchase of second homes.
But Acadiana, as is typical, runs counter to at least one of those trends. Psychologists and social workers in our area have called it a cultural difference because our generation is extremely resistant to moving our parents into nursing homes. Certainly, there are circumstances that require placement in a facility with on-site medical care, but exclusive of that, Acadiana’s Boomers just won’t do it.

Several years ago I identified a behavior that has held true to this day. Only one in 10 of the requests I receive to transition an elderly parent out of their home actually comes to fruition. But you have to give credit to the Cajun Boomers. They have found creative ways to make lifestyle changes involving their homes. Some are preemptive moves as Boomers look to the future, while others are more cultural.

Coco Dupont, a former social worker who is now a real estate agent on my team, describes the difference between Acadiana’s Boomers and Boomers in other areas of the nation as being rooted in our heritage of closely knit, extended families.

“Because Acadiana began as an agricultural area, extended families were required to keep the family farm going. Today, that has translated into numerous family-owned businesses throughout our area,” says Dupont.

“It’s part of the family culture to assist elderly parents in maintaining their own homes, or merge them into ours,” she continues, “and we’ve seen similar behavior in other rural agrarian areas around the nation. There’s a sense of responsibility among the Acadian people. They’re not a liberal people, but they are a very tolerant people.”

My team of real estate agents and I have identified Boomers’ involvement in housing transitions as follows:

1. Down-sizers
These are moves precipitated by children moving out. These Boomers are empty nesters who relish breaking free from the upkeep of a larger property and gaining time to travel. They’re looking for smaller square footage and zero lot lines.
2. Helpful house hunters
These are Boomers with good intentions for helping elderly parents downsize, particularly after the loss of a spouse. These efforts rarely work due to both resistance from the parent or the ultimate reluctance of the Boomer children. Both often defer to Option 3 or 4.
3. In-law cottage or suite
This has long been an option in Acadian home design, with many architects and designers incorporating split floor plans to accommodate such arrangements, often well before the parent is ready to move in.
4. Combination upscale housing
This is a relatively new trend where the Helpful House Hunter discovers that the sale of both the parents’ home and the Boomer’s home will facilitate the purchase of a much larger, more luxurious property. The combined households resolve several issues, particularly that of maintaining the extended family while enhancing everyone’s lifestyle.

With each type of transition comes an impact on our local real estate market. Homes owned by older Americans represent a sizable amount of the local residential inventory, or more accurately, potential inventory. Plus, in 2000, according to the Research Institute for American Housing, mortgages held by Boomers and their parents represented $2.5 trillion in home equity, referred to by statisticians as “untapped wealth.”
From inventory, to equity, to influence in housing transitions, the Boomers represent a powerful force in the future of Acadiana real estate.

Teresa Hamilton of Van Eaton & Romero has been one of Lafayette’s top agents for more than two decades. This representation is based in whole or in part on data supplied by the Realtor Association of Acadiana MLS. Neither the board nor its MLS guarantees or is in any way responsible for its accuracy.