Wednesday, May 26, 2010
Written by Cherry Fisher May
Can we really run government like a business?
When it comes to education, the answer is yes, but it’s up to us as shareholders to make it happen.
When the mantra that we should run our government the way we run our businesses first entered popular political parlance many years ago, it struck me as an odd notion. After all, businesses are free-wheeling enterprises...
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.
Wednesday, May 26, 2010
Written by Ryan Pécot
Optimism that the worst is behind us is evident in the retail real estate market.
Although this market really didn’t get beat up that badly, it’s already looking as if Acadiana’s retail real estate market is picking up steam — and looking to gain solid momentum through the second half of the year. It’s welcome news for those of us in real estate, and apparently we aren’t the only ones taking notice. In mid-May online financial magazine Mainstreet.com named Lafayette one of 20 cities “surviving the recession” and creating new opportunities for job growth. While the deals here never came to the screeching halt like they did in other areas, it was much more difficult getting the blue ink to a lease or purchase agreement. There was too much uncertainty, but optimism is back on track.
Now that most of the distressed landlords throughout America have practically given away their vacant spaces to have just enough cash flow to prevent the lenders from taking them back, the sweetheart deals are done — and it is time to get back to the fundamentals. Sure there is still some low hanging fruit out there for retailers to go after to lock in long-term low occupancy costs, but they are much more limited than just six to 12 months ago. By this point in the cycle, most property owners have swallowed their Tums to ease the indigestion pains and are ready to move forward in this new retail landscape.
For brokers, deals are harder than ever because there are fewer tenants to market properties to with the bankruptcies that occurred during the recession, and the remaining retailers that are crawling back into expansion mode have become very conservative in the approval of new deals. The good news is that all of the smart merchants had become very lean during the downturn, and most have some cash burning a hole in their pocket ready to get back into growth mode. Retailers have historically been very sheepish, which means as soon as the first few expand and show good sales volumes the rest will surely follow. Combine that with the American consumer’s spending habits, and I expect measurable growth moving forward. Let’s just hope that the new credit restrictions keep the shopper in check to avoid another blowout.
That the retail real estate market is getting back to fundamentals should bode well for Lafayette, since most of our property owners didn’t give away the farm to the tenants who came begging. The majority of the big-box vacancies in the market are well located and surrounded by merchants that have had very solid year-over-year sales figures, which will only help excite new tenants as they do their research. Combine that with the newly opened Ambassador Caffery South extension, which finally produced the much-needed connectivity the national players look for, and we have a pretty good stew simmering in the ole’ Cajun kitchen.
Keeping brokers afloat have mainly been the small-shop deals that have closed, since they are a bit easier to get financed and can be done by local franchisees or one-off entrepreneurs who have confidence in Lafayette and don’t need approvals from corporate board rooms. I estimate that the Lafayette market has less than 10 percent small-shop vacancy; that segment is starting to get tighter, which will hopefully lead to new construction when the demand finally warrants it again. Getting financing for new retail construction will likely be the next headache requiring more than one extra-strength aspirin.
There is no doubt that activity has picked up greatly during the last 30-45 days, and all of the brokers I know surely hope it continues. If the retailers, brokers, developers and lenders all focus back in on the fundamentals that govern solid, smart growth, the light at the end of the tunnel will get a lot closer sooner than many thought in our markets. Be sure to thank those who learned to deal with crisis in the ’80s locally, as they are a big reason Lafayette stayed true to the rules of the game and the bubble burst didn’t sink us like it did back then.
Ryan Pécot is a commercial broker with Stirling Properties. Since 2001 he has worked out of the firm’s Lafayette and New Orleans offices.
Wednesday, May 26, 2010
Written by Gregg Gothreaux
Whether you are a start-up, looking to expand or trying to woo a national client to Acadiana, LEDA can provide custom demographics, competitive analysis and industry research. One of the most common formats for this data is maps.
As things begin to look up for the economy, it’s time to start thinking about your business plan moving forward, if you have not done so already. Hopefully you followed the advice I offered in my column last year and kept doing what made you successful in the first place instead of cutting back. Being proactive and finding your niche in the market is always a smart idea in good times, and especially in not so good times. This is where LEDA’s Information Services Department can help. Through the creation of customized reports, maps and data, LEDA’s researchers can supply you with the information you need to make important business decisions.
With access to data points ranging from retail sales to employment figures, LEDA’s team of researchers can conduct customized market research for existing and prospective Lafayette Parish businesses. Our researchers can also gather competitor and consumer data to assist in the growth and development of your company. Some of the most-requested research services include:
Demographics — up to 30 miles from a single point or any standard U.S. geography
Economic Indicators — relevant statistics
Traffic Counts — local and state
Aerial Photography — 2009 and historic imagery
Industry Research — custom-built lists and maps of competitor/vendor/customer data
Custom demographics, competitive analysis and industry research may be used by start-up businesses to substantiate a business plan, by a company looking to expand to a second location, or by a real estate developer trying to woo a national client. One of the most common formats LEDA provides this data in is maps.
Information Services researchers use Geographic Information Systems technology to bind requested data to maps on a local and regional scale. The result is an organized illustration that translates and supports the data that researchers provide in report form. Different size options are available, and clients may request anything from a JPEG image of the map, for use in presentations and reports, to a poster-sized print. These maps are often the easiest method for analyzing and comparing data that is critical in making the best decisions for business development.
The most common mapping request is competitor location. People want to know where their competition is or isn’t; and when that information is paired with available properties or demographics we can help them see the big picture. Maps 1 and 2 are examples of this. In the first map, LEDA noted all convenience stores and banks within Lafayette Parish. The second map shows the location of local fitness centers compared to several retail spaces a client was considering for a 24-hour fitness center location. From this map, our client can see which locations may be most practical or profitable and can make an educated decision about selecting a location.
The maps can be created with multiple layers of data that can be added or taken away as needed to best illustrate the project. For example, either of these maps could also include traffic counts at specific intersections as well as population density of males 18-44, or families with children, residents age 60 and older, or whatever the target market is. Having the ability to visualize his target market between possible locations, while identifying major competitors, will allow our client to make confident decisions.
The third map is an example of a more specialized map that LEDA can produce. The map illustrates the concentration of business in Lafayette Parish. Our research staff mapped the number of businesses per square mile by census tract to demonstrate that downtown is the most concentrated area of businesses in the parish. LEDA’s manager of downtown business development is able to use this map to attract new businesses to the downtown district. These are just three examples of the individually customized maps you can request for your business.
A new service LEDA began offering this year is producing economic impact studies for specific projects on a case by case basis. An economic impact study identifies the economic contribution an organization, company, or project makes to the community. Based on the money put into the economy directly, multipliers are used to measure the additional effects through the interdependence of sectors within the community. These multipliers will vary from region to region; they assume a certain dollar spent gets spent again and again within the same community. Multipliers are often called estimators of the ripple effect. Each economic impact study quantifies the amount of output, income and jobs that are generated by the company, project or organization. It is the ultimate goal of each study to show the return on investment in order to create awareness, increase interest, get a foot in the door, or even break down community barriers.
LEDA can’t offer a crystal ball and tell you what is best for your business. What we can offer is the most complete and accurate data available. And at the right price — free. That’s definitely good for business.
Gregg Gothreaux is president and chief executive officer of the Lafayette Economic Development Authority.
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:
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.
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