Residential real estate closings continue to be on the rise amid slim pickings here, especially those houses in the most desirable price range — $150,000 to $225,000.
A 2019 and 2020 fourth-quarter comparison shows a 72.5 percent increase in closings. High demand coupled with low inventory is a nationwide issue due to the pandemic. In Southwest Louisiana, available housing has been further hampered because available stock is being repaired after being damaged by the hurricanes.
Houses that would have normally closed in 35 to 40 days are being pushed out further as repairs are made, according to Brandon Duhon, EXP Realty.
During October, November and December of 2019, 408 properties closed on the Southwest Louisiana Multiple Listing Service. In January and February 2021, closings are already at the 500-plus mark. As of Feb. 24, 512 houses were active on the muliple listing service. (A multiple listing service is a database established by cooperating real estate brokers to provide data about properties for sale.)
Demand is determined by the number of homes listed for this area, how long a home is on the market and how long it takes it to go under contract, according to Duhon.
It’s been six months since Hurricane Laura made landfall on Aug. 27. Delta followed the first week of October.
“Repairs will take time,” Duhon explained. “Some homeowners are still negotiating with insurance companies. There is so much damage and not enough contractors, plus the ice storms have stalled repairs even more.”
“It’s the largest seller’s market I have seen in my 17-year career,” said Robbie Ingle, Coldwell Banker/Ingle Safari.
Ingle pointed out what she considers a bright spot.
“Investors can purchase homes for pennies on the dollar, fix to sell as a flip or fix and keep for rental property,” she said.
“Despite two historic natural disasters and a pandemic, Southwest Louisiana’s real estate industry has been fortunate to maintain and even increase momentum,” said April Manuel, CEO and association executive of Southwest Louisiana Association of Realtors. “Real estate has proven to be a solid investment for families and investors alike.”
The median house price in Southwest Louisiana is $216,000, a 9 percent increase over 2019. The U.S. median home price is $340,000 for existing housing. The median value of owner-occupied housing units, according to the U.S. Census Bureau based on data from 2015 to 2019, is $155,700.
Building new costs about $150 to $170 — on the average — per square foot, according to Duhon. Duhon and Ingle agree there is not only a shortage of quality existing housing but also newly constructed homes.
Housing prices continue to creep up across the U.S. and wages aren’t following. Unemployment because of COVID-19 restrictions have impacted sales, services and productivity across the globe. In 2020, Louisiana had an average unemploynent rate of 8.8 percent, the highest average unemployment rate the state has had in a year since 1988 when the rate was 10.9 percent, according to figures from the Bureau of Labor Statistics. In the Lake Charles Metropolitan Statistical Area, unemployment was at 4.4 percent in February 2020. In April, it rose to 14.2 percent. In December, it was at 7.7 percent. Repairing hurricane damages put some of the unemployed back to work.
Housing affordability continues to be a challenge in many areas of the country, according to a Forbes article by Ellen Paris.
“What may help buyers is increased inventory later in the year,” Paris writes. “As vaccines are rolled out, expect to see sellers who have held back listing their homes due to COVID put their homes on the market.”
If there is a bright spot for buyers, it’s that Interest rates continue to be historically low, according to Amanda Cox, Latter Blum real estate professional certified in residential housing and other areas of expertise.
The long-term savings on buying a home are proving significant. For example — and remember, every lending situation is different based on many variables — a 30-year fixed mortgage for $200,000 at a 6 percent interest rate might have a monthly mortgage of $1,199. But at a 2.9 percent interest rate the monthly cost would be $832.