Part 2 of our two-part series on selling your home in the New Year.
The beauty contest part of selling your home is equally as important as pricing. (See part 1 of this post on pricing your home to sell.) The role appearance plays can’t be overstated, as this is a market where nothing will be overlooked. Fix it, clean it, trim it, paint it, de-clutter, de-brass. Do it all.
Buyers have a ton of houses to look at, and they are constantly comparing. After a few weeks of house hunting, buyers become experts on home condition and the cost of items to repair. If you think they’ll make an offer without repairs, you’re wrong. They will simply move on and your home will still be on the market.
It can be hard to be objective about your home’s condition, so get other opinions. Your agent should go through your house as if they were a buyer and point out objections that buyers will make. Although this process can be difficult, don’t let your feelings be hurt. You need to hear the facts if you want to sell your home.
I grew up in real estate and construction and can’t stress this point enough. I suggest planning a weekend and involving the entire family and good friends in maximizing your home’s curb appeal. It’s amazing what can be done with a pressure washer, paint, hedge clippers, a lawnmower and weed eater. Tips from YouTube and your local Lowe’s or Home Depot can also help.
I guarantee you’ll improve your home’s value and lessen the days it will be on the market with a weekend of hard work. Once done, take everyone out for a celebratory meal on Sunday night. You’ll probably be sore, but satisfied, and a much stronger negotiator when the offers start coming in.
I haven’t always recommended this last point, but it’s well worth it in today’s market. Getting a “Professional Home Inspection” prior to putting your home on the market will help ensure there are no last-minute surprises. The last thing you want to put yourself through is the time and energy of listing and showing your home and negotiating a contract, only to have it fall through over an item you could have easily repaired.
Buyers are wary. One little thing can run them off, so deal with as many of those things as you can now. Your “Pre-Inspection” and proof of repairs becomes a marketing item to assure buyers you have done everything you can to make sure there will be no surprises.
The story on new construction sales in Lafayette Parish for 2011 was unfortunately not a Hollywood movie. And definitely not a comedy. Sales read a little like a horror story at times, depending on your perspective and the length of your memory.
No other segment of our local real estate market benefited more from the 2010 Homebuyer Tax Credit than new construction. This federal program that motivated buyers to purchase homes by the end of June 2010 with an $8,000 tax credit caused a homebuilding bonanza. The vast majority of buyers who took advantage of this program were young, first-time homebuyers, and the new, moderately priced homes available on the market were right in their wheelhouse.
And buy they did – 441 new homes in the first half of 2010 and 114 alone in June. Compare that to only 241 sales in the first half of 2011 and only 38 in June this past year. Ouch. Overall, for the year, new construction sales were down 14 percent in volume, at just over $130 million, compared to a total of $150 million in 2010. In comparison to the artificially stimulated market of 2010, 2011 never had a chance.
As we learned with the “Cash for Clunkers” program for the auto industry a few years back, and in our Econ 101 classes, when the artificial stimulation of demand and its resulting consumption comes to an end, there’s always a hangover. Supply and demand have to come back in balance. I remember people in the auto industry telling me that some of the worst months they ever had came after the Cash for Clunkers Program. It’s the same story for the new homebuilding industry in Acadiana.
In fact, you could argue that the after-effects of such a stimulus to our area lasted much of the past year. Only until the last half of 2011 did the market level out and take on some focus and consistency. Like the real estate market as a whole, the average price of a new home in Lafayette Parish increased even though overall sales were off (click here to see my 2011 Annual Market Report for all sales in Lafayette and Acadiana). In 2010, the average price of a new home in Lafayette Parish was just under $197,000. In 2011, it was $209,400 – the highest level since the post-Katrina boom days.
As I explained at length in my Annual Report, this had more to do with sales in higher price ranges than actual price increases. There have indeed been real price increases, but the new construction market differs from existing home sales in at least one important area. For new construction, construction costs, labor, materials and land rarely, if ever, decline. When demand wanes for new construction, it’s difficult for builders to lower their prices due to their actual cost. They just stop building homes. With existing homes, there’s much more flexibility in pricing, because cost is rarely set and existing home sellers, if they have to sell, will do so at market value. (Click here to see all new construction sales by price range in 2011.)
There is good news for homebuilders for 2012 – and plenty of it, in my opinion. While 2010 was tough, entering 2012, the new construction market is in very good shape in terms of supply and demand. In fact, it’s in the best shape it’s been in since June of 2007 (taking the tax credit during the first half of 2010 out of the equation).
The graph above measures the relative supply and demand of six-month intervals, going back to 2005. As you can see, at the end of 2010 was the first time sales exceeded active units for any six-month period since the first half of 2007, except early 2010. This is very good news.
With a double-digit decline in sales, you would think there would be plenty of inventory sitting around unsold. Not so. One of the remarkable numbers for our new construction industry is that inventory has remained in check. Fewer homes were on the market unsold at the end of 2011, even with slow sales: a testament to the discipline found in the market today. Fewer, more professional builders are building a majority of the homes, and there is very little unchecked speculation that occurred post- Katrina.
With low inventory and a firm record of sales in the last quarter of 2011, look for positive numbers this year for new construction. Builders will still have to remain very competitive with their pricing and provide the high-quality fixtures and finishes our market has always demanded, but they’ll see buyers. And a majority of the inventory will be above $200,000 to meet current demand.
Lafayette Parish and Acadiana Real Estate Sales and Statistics
All Signs Point Forward
Putting 2011 in the real estate history books marks the fourth full year since the very peak of our market in 2007. That year, $548 million worth of real estate changed hands in Lafayette Parish to mark the biggest total ever. The market had been heated by relocations to our area following two devastating hurricanes along the coast. Since then, annual sales settled in to current levels – $451 million in 2008, $442 million in 2009, $436 million in 2010 and finally $426 million this past year.
So, where should our market be? Before Hurricane Katrina hit in 2005, we had been on a nice growth pattern, with sales at $273 million in 2002, $299 million in 2003 and $335 million in 2004. In fact, if you drew a line on that level of growth to where we are today, that rate of appreciation would put us at about current levels. But we know now that we wouldn’t have seen that rate of growth at all. The mortgage market collapse and deep national recession that followed would have affected our market sooner and deeper if it hadn’t been for our post-Katrina boost.
No telling where we would be, but as of now we’re mired in the low $400 million range. I think most in the industry feel there is plenty more capacity for growth in our market. How much and when is the big question. The biggest problem I’ve seen over the last 18 months or so isn’t a lack of loan qualifications, employment or any other financial factor. It’s motivation. Buyers are simply not motivated and will back away from any deal at the first sign of trouble.
I’ve been using a comparison to the 1980s when discussing buyer trepidation. In the early 1980s, interest rates were somewhere around 19 percent and homes were selling as fast as they came on the market. Today, interest rates are unbelievable low at under 4 percent, and buyers are reluctantly dipping their toe in the homebuying water. The difference is that in the early ’80s, we were experiencing a boom cycle. Lafayette was where the jobs were, buyers were will motivated at any interest rate. Today, there is less keeping up with the Joneses and a lot more putting major purchases off in an environment of uncertainty.
But that may beginning to change. This past year was a great test, as buyers showed an increased level of courage and motivation. 2011 was the first year in the last three where there wasn’t a federal housing stimulus program to get people in the market, and it appears buyers are taking the leap at similar levels.
Last year, over 2,200 homes sold in Lafayette Parish to buyers who wanted or needed to buy, qualified for a loan and took money out of their pocket for a down payment. These sales all happened with no assistance from the government. The result was very similar sales to the last two years, indicating renewed confidence and motivation.
January 2012 sales are already showing signs of life. It’s easy to predict, from pending sales reported, even before the end of the month, that sales will outpace the early part of 2011. Our local oil and gas industry is coming into, if not already in, a boom cycle, and it would make history if the local housing market didn’t respond to a flourishing oil patch.
Another positive sign is that, while our market was actually off just a bit compared to 2010, the average home sale price for Lafayette Parish was up. Somewhat significantly, in fact, by 4 percent – $192,794 in 2010 and $199,723 in 2011. I’ll be the first to tell you that it’s difficult to find across the board price increases; in fact, I did a quick study of three very popular subdivisions over the last three years that indicate this point. (View a list of 2011 sales in over 200 of Lafayette Parish’s top subdivisions.)
As you can see from the above graphic, there is little consistent movement one way or the other in these popular subdivisions. What did happen in the wake of the Homebuyer Tax Credit in 2010 is that a majority of the stimulus went to first-time homebuyers who consumed moderately priced homes. Once the tax credit was over, the concentration of sales moved north on the price range scale, dragging the average price with them.
Of the 127 fewer homes that sold in 2011 compared to 2010, this is how they compare by price range:
$0 to $100K – 38 more sales in 2011
$100K to $200K – 224 fewer sales
$200K to $500K – 48 more sales in 2011
$500K and above – 11 more sales in 2011
The activity above $200,000 easily made up for the gaping hole left in the under $200,000 market as a result of the expiration of the tax credit. It also increased our average sales price overall. Much of the price range changes have to do with the new construction market, which was more affected by the Homebuyer Tax Credit hangover than the market as a whole.
The plus $500,000 market gains are also a nice indication that wealthy families are seeing the bottom of the market and starting to make their move. See the movement in all price ranges by viewing our Lafayette Parish Sales by Price Range since 2005 report.
While I truly believe there is renewed optimism and look forward to an improving environment, I also know challenges still abound. Although interest rates are historically low, loan qualifications are still stringent and buyers need to be prepared to put some money down. Plenty of homes on the market is good news for buyers, but competition among sellers is tough. (Lafayette Parish ended the year with a little more than 1,100 homes on the market.)
A good oil patch here and an improving national economy looks to be a good formula to get some wind at our backs. Uncertainty has been the major reason motivation is absent from buyers, but the longer we go with a steady and stable economy,the more that uncertainty will erode. I’m looking toward an improved 2012. The coming year certainly can’t be any worse than 2011 and promises a chance at the first real growth our market has seen in four years. A nice change of page, indeed.
2011 is on the books, so let the number crunching begin. At Coldwell Banker Pelican, we are currently in the process of breaking down all real estate sales in Acadiana and will very shortly publish our “Annual Market Report.” This report will include real estate sales information on hundreds of subdivisions, areas and price ranges. Everything you ever wanted to know about real estate sales in Acadiana over the past year will be there, so stay tuned.
As expected, real estate sales for Lafayette Parish ended very close to the level of activity in 2010. Sales for 2011 came in at just under $426 million, which is almost exactly $10 million short of 2010 and $16 million short of 2009. I have to make my regular disclosure about comparisons to 2010, as it was the year of the much publicized, and widely used, Homebuyer Tax Credit that dramatically inflated sales. For that matter, there was a much narrowower first-time homebuyer tax credit at the end of 2009 that also artificially inflated sales.
In essence, 2011 was the first year in the last three where there was not an artificial stimulus to the real estate market. This fact and several others have me predicting better times ahead. Yes, I know sales were off compared to last year and the year before, but only slightly. The fact that there was no stimulus in 2011 and sales were so close to last year is a dramatic sign. And organic purchases made by buyers with confidence in the market, a good credit rating and some cash to put down are a great sign for 2012 and beyond.
For the first time since 2007, the average price of all sales in the market rose by 4 percent. The average price of a home in Lafayette Parish in 2011 was $199,723 compared to $192,794 in 2010. This trend began late in 2010, and the steady increase in prices, on average, continued through the entire year. This is a signal of the bottom of the market, which hit over a year ago and continues through today.
I’ll dissect this average price increase a great deal in our Annual Report, as some of it can be explained by the revival of high-end sales. Other reasons to have a positive outlook for the year to come are extremely low interest rates and a solid inventory of homes on the market. Good news on the national unemployment rate and positive local economic indicators also add to my optimism that 2012 will be the turnaround year.
I realize “we’re taking listings” is not a bold statement from a real estate firm. After all that’s what we do, right? Typically, the beginning of the year is the time most sellers put their homes on the market, and we just want you to know that we can and will help you. More importantly, we want you to have a pleasant and profitable selling experience, no matter who you use.
If you’ve read the paper or watched the news lately, you may be expecting a challenging experience should you want or need to sell your home. Have no fear. The real estate market in Lafayette and Acadiana has been doing quite well. In fact, the oil and gas industry has picked up, retail sales are through the roof, and our overall economy here is Cajun Country is still way ahead of the national average.
Although sales have been pretty flat for the last the years, our average sales price is actually on the rise. It looks like the average price paid for a home in Lafayette Parish during 2011 will end up right at $200,000. That’s up from just under $193,000 in 2010, a 4 percent increase for this year. Chances are you will have a little easier go at selling your home now than you would have in the past few years. Interest rates are incredibly low, enticing buyers into the market, and the positive, local economic news is providing some motivation for buyers to make their move.
There is certainly more wind at your back should you need or want to sell your home than there has been for a while. Want to ensure success? Want to make it easy, maybe even fun? If so, the following principles apply in this market more than ever.
Two separate real estate trainers I’ve heard recently put it best: “We are in a price war and a beauty contest.” Essentially, buyers are always looking for the best-priced home that is in the best condition, but rarely has that been more true than it is today.
While all of the wonderful local economic news is true, buyers still tend to focus on all the news stories of mounting foreclosures and double digit depreciation coming out of California and Las Vegas. They may even be relocating from one of those areas and have experienced that sort of market firsthand. This makes it critical to price your home very close to its current and realistic market value. Hence, the steps you take to determine market value may be the difference between success and failure, fun and no fun.
I generally don’t recommend an appraisal pre-listing, since a competent real estate professional should be able to produce the facts, data and logic needed to determine the current market value of your home. So, choose your agent wisely. Whether they’re with us or someone else, follow their recommendation on price and chances are your house will sell.
Stay tuned for part 2 on how your home can win the beauty contest next week.
For a quick glance at pricing information, check out our media center here.
Happy New Year. It’s 2012 and after almost three years of bleak national economic news and a downturn in the housing market, things are looking up. Maybe it’s time to think about buying a house.
Here in Acadiana, things are just fine. In fact, our local oil and gas industry is on the upswing and sales tax revenue is at a new high. These indicators point to 2012 being a real happy year. Add to that an abundant supply of homes to choose from (like the one on Yorkshire Place pictured above) and ridiculously low interest rates, and all I can say is it’s good to be a buyer!
Seasonally, January is typically a slow month for real estate. Being a buyer right now will put you in the catbird seat. Your interest in a home will come as a welcome change of pace to the seller who probably hasn’t had much interest during the holidays.
If you’re ready to get out there and want to put yourself in the best position, here are 4 tips to get you get started:
1. Select a qualified and trustworthy real estate agent.
At Coldwell Banker Pelican Real Estate, we have a network of knowledgeable, trustworthy agents. Our agents understand the local market and can help you find all the information and resources you need to get started. Researching on your own is important, and using free online tools (like www.coldwelbankerpelican.com) is a great way to start, but meeting with an agent will ensure you don’t miss any important steps along the way. In fact, the next three tips were sourced from the great advice of our agents. Browse through a list of our agents and their qualifications here.
2. Create your “must-haves” and “nice-to-haves” lists.
This one’s easier said than done, right? But it’s next to impossible to find a first home with everything. You’ll need to think about your lifestyle needs and prioritize the non-negotiable home accommodations, such as a bedroom for each family member, over items you may want, but not need, such as a large master suite. Everyone’s list is different, but knowing your “must-haves” in advance will help you stay focused.
3. Determine your budget.
Be realistic about what is affordable. An agent can help you find comparable home prices and hone in on approximately how much your payments will be.You should also plan to get pre-approved for a mortgage. Doing this prior to house hunting will let you know how much money you qualify for and how much you can afford. You’ll also be able to figure out which mortgage type is best for you.
4. Identify the perfect “location, location, location.”
Everyone has heard this phrase before, and while the surrounding neighborhood and home itself may improve over time, the physical location will remain the same. Determine in advance how close you would like to live to work, schools or extended family. A short commute to work, proximity to family or having easy access to highways and mass transit will often be items for your “must-haves” list.
Use these steps to be better prepared and ensure a great homebuying experience. Buying a home can be big step for you and your family but should also be a fun experience, and we would be honored to help guide you through it.
Market gives mixed signals at year-end but shows strong organic sales.
November 2011 real estate sales for Lafayette Parish ended what was a four-month streak of sales coming in higher than 2010. The oft-mentioned 2010 Homebuyer Tax Credit looms large in this comparison, as sales were artificially stimulated during the first part of 2010 and slow to recover in the last half.
There were only 147 home sales for November 2011 in Lafayette Parish, compared to 167 for the same period last year. This is disappointing as the last four months have been showing solid, steady performance typical for this time of the year. While 2011 obviously lost a little steam in November, year-to-date numbers still compare very well to 2010.
January to November total sales for 2011 stand at $392 million, just behind last year’s total at $394 million. I believe this is extremely good news, especially considering the absence of a tax credit stimulus this year. Sales are organic and rooted more in real need rather than an approaching tax credit deadline. With little time left, there is still a slim chance that 2011 sales will best 2010 as pending sales in December are looking extremely high. I predict a good closing month for December, but December 2010 was an exceptional month and will be hard to beat.
Click here to view the full report in our Media Center.
At any rate, it’s easy to predict that sales at year-end will be very close to that of last year, marking three years of sales for our parish right around $400 million. When comparing this to the record high year of 2007, when $547 million worth of residential real estate was sold, it’s obvious the market is showing us that a $400 million range is more normal and sustainable.
More good news comes in terms of the average sales price in Lafayette Parish. Still on the incline, as it has been much of this year, the November average home sale price was $200,484, compared to $190,991 the same month last year. This is a leading indicator, along with a decline in active inventory, that the market is recovering.
As the year wraps up and our economic picture becomes less cloudy, I’m seeing more confidence in the market. The oil and gas industry appears by all counts to be on the move with new speculation and expansions taking place around Acadiana. Combine this uptick in our core industry with the fact that we really have been lucky here compared to other parts of the country, and it’s merry news all around for the local real estate market.
A couple years ago, I read “Life 2.0: How People Across America Are Transforming Their Lives by Finding the Where of Their Happiness” by Rich Karlgaard. A journalist and private pilot, Karlgaard makes the point that many of today’s creative jobs can be done remotely, so why not work in a cool, inexpensive place? He set out in his single-engine, four-seater and came up with a list of 100-plus progressive, hip, cool places to live.
Another point that became abundantly clear in his research was that almost every one of the cities on his list are college towns. He found that universities – big and small – added youth, creativity and energy to the cities and towns that surrounded them, improving their quality of life and their “cool quotient.”
His book ended up giving me another perspective on why Lafayette is one of those cool places to live, and now we have another reason to love, and live in, Lafayette. For the past several years, Coldwell Banker has been publishing the “College Home Listing Report,” which ranks college towns across the country for home affordability. The current report provides the average home listing prices for three-bedroom, two-bathroom properties that were listed for sale by Coldwell Banker between August 2010 and August 2011 in markets home to 117 of the 120 schools in the Football Bowl Subdivision.
According to the report, three-bedroom homes cost less than $200,000 on average in nearly two-thirds of the college towns included (76 markets) and less than $150,000 in nearly one-quarter of towns (26 markets). In the most affordable market, Memphis, home to University of Memphis, the average listing price of a three-bedroom home is $89,244.
So, what about Louisiana and more specifically, Lafayette? I’ve heard for years how expensive housing is in Lafayette. I’ve done research and comparisons of the Lafayette and Houston real estate markets, and usually we do come out looking more expensive. However, I think that Karlgaard and Coldwell Banker are on to something. When it comes to livability, quality of life, amenities, energy and just plain living, aren’t there more factors to home affordability than just square footage, features and lot size?
Instead of just comparing our home affordability to other towns our size, why don’t we compare it to other college towns? Well, here’s our chance. Lafayette, with its beloved University of Louisiana at Lafayette, ranks #62 – smack dab in the middle of the pack. The average home listing price for a three-bedroom, two-bathroom home is $183,793, second-highest in the state behind Baton Rouge, with an average of $194,518.
Here’s my point: Take what you know about living in Lafayette – its amenities, culture, progressiveness and friendliness – and compare that to what you know about living in other cities on the Louisiana list below. Still think Lafayette housing is too high?
1. Westwood, Los Angeles, CA (University of California) – $1,271,428
2. Palo Alto, CA (Stanford University) – $1,232,070
3. Honolulu, HI (University of Hawaii) – $779,419
4. Los Angeles, CA (University of Southern California) – $733,473
5. Boulder, CO (University of Colorado) – $731,617
6. Berkeley, CA (University of California) – $695,520
7. Chestnut Hill, MA (Boston College) – $669,617
8. Seattle, WA (University of Washington) – $570,535
9. San Jose, CA (San Jose State University) – $541,231
10. Annapolis, MD (United States Naval Academy) – $522,420
As we draw near the end of the year, real estate sales remain steady in and around Acadiana. In fact, compared to the same time last year in Lafayette Parish, total volume of all sales is just slightly ahead of 2010. That’s saying a lot, recalling that 2010 sales were highlighted by the now legendary, at least in real estate circles, Homebuyer Tax Credit Stimulus Program.
Sales for 2011 are ahead this year by a slight 1 percent at $362.5 million, compared to $358.3 million for the same period last year. That number is pretty much on target with the rest of the state. The Louisiana Realtors Association is reporting in its third quarter 2011 statewide report that year-to-date sales are up 2.7 percent. I would suspect the difference is a result of our area of the state faring better than others last year.
Click here to view the full report in our Media Center.
Louisiana Realtors’ report contains other interesting information that continues to highlight the economic strength and durability of our beloved Cajun Country. Louisiana’s unemployment rate as a whole is down to 6.9 percent from 7.2 percent last year, compared to the national rate of 8.8 percent.
The Lafayette area leads all other areas statewide except for oil production-rich Houma/Thibodeaux, which has the lowest unemployment rate by far at 4.7 percent. Lafayette is still at an incredible low of 5.2 percent, and our area continues to lead with a broader base of employment buoyed by recent resurgence in the oilfield. Other markets listed are Baton Rouge at 7 percent, New Orleans at 6.9 percent, Alexandria at 6.5 percent and Shreveport at 6.3 percent.
All signs are good, economically, for our area, but it still may not be enough for our real estate market to move from steady to growing. The national economy, the national political scene and a general uncertainty in the business climate has many sitting on their hands. Until there is clear wind blowing in a single confident direction from the national economy, we may have to be satisfied with steady.
Last year’s Homebuyer Tax Credit was a good news/bad news story for local homebuilders. In 2010, record sales were posted as a lion’s share of buyers, armed with this stimulus and many first-time homebuyers, purchased newly constructed homes. Thus, new construction activity last year, particularly in the first part of the year, was like the good ‘ole days of the early 1980s or 2006 and 2007.
The last quarter of 2010 and much of this year haven’t been so good. Much of the demand for new, affordable homes was satisfied by first-time buyers last year, and sales have fallen considerably. Through the first three quarters of this year, there have been 470 new home sales for a total of $97.7 million, compared to 601 at $118 million last year, a difference of 20 percent. While existing home sales have stabilized to a healthy, steady pace, the fact that new construction was stimulated disproportionately by the tax credit leaves this segment of the market left recovering.
But that may be changing …
While sales are off 20 percent or more, the available inventory of new homes remains virtually unchanged. In fact, fewer homes are available on the market now than a year ago – 343 today compared to 352 last year at this time. This is a positive indication of a disciplined group of local builders with their finger on the pulse of the market. These builders were smart enough not to overbuild and contribute to the problem.
The really good news for the new construction market heading into the final quarter of the year is an increase in sales. In September alone, there were 105 units placed under contract. The best previous month of this year for pending sales was March, with 83 units under contract. In March and April of 2010 (the months most affected by the Homebuyer Tax Credit), pending sales were 117 and 118 respectively. Clearly, new construction sales for October and November will be dramatically increased.
This new activity will build on solid completed sales in August and September. Sales during the last two months were higher than any other month this year and significantly higher than the same periods last year – all good indications of an improving market for new construction as we go forward into 2012.
Click here to download the complete Lafayette Parish Market Report for January through September 2011.
