Real Estate Recap: June 26, 2012

From the Baton Rouge Business Report, Real Estate Weekly

More headroom: Tiger Mania’s three brick-and-mortar stores in Baton Rouge and its e-commerce website at have been acquired by Indianapolis-based hat and sports merchandise retailer LIDS Sports Group. Terms of the deal were not disclosed in a news release about the acquisition, which was also vague about the future of the three Tiger Mania stores. Read the full story from Daily Report here.

On the market: A new restaurant has opened downtown, owned and operated by the team behind The Office bar, and with a menu conceptualized by Chris Wadsworth, former executive chef at Nottoway Plantation. Restaurant IPO’s menu focuses on tapas with Louisiana ingredients—nearly everything comes from within 150 miles of Baton Rouge—but with some worldly flair thrown in. Read the full story from 225 Dine here.

Florida farewell: BRAF’s real estate development arm, Commercial Properties Realty Trust, has sold a 130,000-square-foot shopping mall in West Palm Beach, Fla. The Polo Grounds Mall—which is anchored by a Publix grocery store and is 92% leased—reportedly closed for $14.4 million, or $110 per square foot. The mall shows up on Commercial Properties’ 2009 financial report, valued at just a shade over $9 million. Read the full story from Daily Report here.

Rising new home sales point to a strengthening U.S. housing market

From the Baton Rouge Business Report:

Real estate has historically helped bring the United States out of recessions: As interest rates dropped, home sales increased and construction jobs jumped. But as The Los Angeles Times reports, perhaps one of the most significant repercussions of the industry’s collapse during the most recent recession has been that housing hasn’t been available to play its traditional role in the recovery. That appears to be changing, some analysts say. Sales of new single-family houses in May rose 7.6% compared with April and 19.8% from May 2011, the Commerce Department reported Monday. The seasonally adjusted annual rate of sales was 369,000 last month, the highest level since April 2010, when a federal tax incentive for buyers that had been juicing the market expired, sending sales and prices into a renewed decline. “This is the first time I have heard any kind of pulse in the home building business in the last five years, and I think it is legitimate,” says Stuart Hoffman, chief economist for PNC Financial Services Group. “The housing market will be a source of strength to the economy for the first time in years.” Last year, new home sales were so weak, they set a record for the most dismal performance on the books. Nationwide, sales have now rebounded 35% since hitting a low in February 2011. The widely read economics blog Calculated Risk has argued for months that a recovery in housing is under way. Nonetheless, new home sales statistics are historically unreliable, and many economists caution against placing too much weight on one month’s report. Read the full story here.

Still a Buyer’s Market

From the Baton Rouge Business Report:

Real estate pros have been saying for years that the market isn’t as weak as we’ve been hearing, that the bad stuff was only happening in other places, and that the recovery from the non-slump was right around the corner. ?    So when Don Stern of Realty Executives South Louisiana, who helped compile the Greater Baton Rouge Association of Realtors’ yearly report on Baton Rouge-area real estate trends, says, “The bleeding has stopped,” it’s easy to be cynical and note that we’ve heard that before.

But in fact, people who sell homes for a living can point to a few encouraging factors. According to the annual Trends report, the number of home sales in the Capital Region increased in 2011, although the uptick was small enough that the report’s authors still say the market is in a “plateau.”

And in April 2012, sales were up 21% over the same month last year, although much of the action consisted of sales of homes sold for less than $250,000.

Stern says when there’s less than 5½ months’ worth of inventory available, it’s considered a seller’s market. Between 5½ and 6½ is a neutral market; more than 6½ is a buyer’s market.

“Overall, we’re in a buyer’s market right now,” he says. “But [inventory] has dropped over the past few months.”

In fact, he says Ascension and Livingston parishes are trending toward a neutral or even a seller’s market. East Baton Rouge Parish still has an oversupply of housing, he says, although the average number of days on market is beginning to decrease. (The vast majority of home sales in the Baton Rouge area are concentrated in Ascension, Livingston and East Baton Rouge parishes.)

Even though the total number of sales was up last year, the average sale price was down slightly. The apparent culprit was the higher-than-average percentage of real estate-owned or REO sales, which typically are lender-owned foreclosures. In East Baton Rouge, for example, about one in four home resales was an REO.

Still, the number of foreclosures does not appear to be skyrocketing  and certainly is not approaching the levels seen in Florida, Nevada and other hard-hit states. Unless there’s a large hidden inventory of homes destined for foreclosure, Stern says, the number of REO sales isn’t a major concern.

“We’re working through the foreclosure inventory,” Stern says. “If one just looks at average [price], foreclosures have a chilling effect. But if you take the foreclosures out, people [on average] haven’t lost value in their homes.”

Sales of attached single-family homes­—that is, condos and townhouses—continue to decrease, as do sales of homes worth more than $400,000. In general, resales are up, while new construction is down.

U.S. home sales report for May a mixed bag

From the Baton Rouge Business Report:

The National Association of Realtors released its monthly sales report this morning for May, and it contains a mix of good and bad news. The good news: Sales in May were up 9.6% compared to May 2011, evidence that the industry is making long-term progress. The bad news: Sales in May—which is typically a strong month in the spring buying season—fell 1.5% compared to April, suggesting the housing recovery remains choppy at best. May sales were at a seasonally adjusted annual rate of 4.55 million units, which is far below the 6 million mark that economists consider a healthy pace. Another bit of good news came in the average home sales price, which in May was $182,600—up 7.9% from a year ago; it was also the highest average price since June 2010, when sales were temporarily boosted by buyers rushing to take advantage of an expiring tax break. Compared to the national numbers, Baton Rouge home sales looked especially healthy in May. The 732 home sales recorded in May by the Greater Baton Rouge Association of Realtors represents a 25% increase over the 585 sold in May 2011. And at $197,713, the average home sale was about 1% better than the $195,885 average sales price in May 2011—and 5% better than the average sales price in April. Read more about the local sales report in a Daily Report story here.

Mortgage rates sink to new record low

From CNN Money:

Mortgage rates have fallen to a new record low, according to Freddie Mac, and the stagnant economy is to blame.

The 30-year fixed-rate mortgage dropped to an average of 3.67% in the week ended June 7, Freddie Mac said Thursday.

This is the sixth consecutive week of declines. The 30-year rate is down from 3.75% in the prior week, and well below from the year-ago rate of 4.49%.

“Interest rates have been on a one-way elevator trip to the cellar,” said Mike Larson, housing market analyst for Weiss Research. “We have never seen rates this cheap.”

Freddie Mac, one of the nation’s largest backers of mortgage securities along with Fannie Mae, also said the average rate for 15-year mortgage — which is popular for refinancing — dropped to 2.94%. That’s compared to 2.97% in the prior week, and the year-ago average rate of 3.68%.

Rates have continued to slump in tandem with the U.S. economy. Freddie Mac attributed the rock-bottom rates to two recent economic reports: the anemic payroll growth of 69,000 jobs in May, which pushed the unemployment rate up to 8.2%, and the weaker-than-expected gross domestic product growth of a 1.9% annual rate in the first quarter.

Despite the low rates, Larson doesn’t see any reason to believe that the housing market will pick up, given the state of the economy.

“Housing in some markets has stabilized, but it’s not booming, by any stretch of the imagination,” he said. “People aren’t knocking down doors to buy houses.”

The low mortgage rates are happening as home prices hit new post-bubble lows, according to the S&P/Case-Shiller home price index of 20 major markets. Home prices have not been this low since mid-2002.

Livingston, Ascension housing stock among fastest growing in U.S.

From the Baton Rouge Business Report:

In what appears to be further evidence of Livingston and Ascension parishes’ continued population increases, each has landed on a top 100 list of U.S. counties and parishes with the greatest housing gains between April 2010 and July 2011. Among parishes or counties with at least 5,000 housing units, Livingston Parish has the 37th fastest-growing housing stock in the United States, and Ascension Parish the 69th fastest-growing, according to new data released by the U.S. Census Bureau. Two other Louisiana parishes also made the top 100 list for housing growth, as measured between April 2010 and July 2011: Orleans Parish at 77th and Bossier Parish at 91st. Livingston’s housing stock grew by 2.8% over the 16-month span in the Census Bureau report, from roughly 50,195 units to 51,607. Ascension’s stock grew by 2.3%, from 40,757 to 41,702. The county with the fastest-growing housing stock is Long County, Ga., located about 60 miles southwest of Savannah. Though Long County added just 382 units, it represents a 6.3% increase as the county had just 6,030 units in April 2010. Across Louisiana, the Census Bureau reports, the number of housing units grew by 0.6% between April 2010 and July 2011, to just shy of 2 million. You can access the complete top 100 list and more details from the report here.

Real Estate Recap: June 19, 2012

From the Real Estate Weekly:

On file: The number of construction projects permitted in East Baton Rouge Parish in May rose by 3.24% compared to the same month last year, the city-parish Department of Public Works reports. A total of 2,041 permits were issued in May, up from 1,977 in May 2011. However, total commercial projects permitted were down on the month: 57 this year, compared to 91 in May 2011. Total residential projects were also down to 127, from 160 a year earlier. Read the full story from Daily Report here.

Ciao: Enoteca Marcello’s Wine Bar & Café at 4205 Perkins Road has been sold to the owners of Lafayette eatery Romacelli and was closed late last week for renovations, owner Gene Todaro says. “Romacelli will come in and make some changes and will be open by the end of July,” Todaro says. The nearby Marcello’s Wine Market at 4201 Perkins Road is not included in the sale, Todaro says, nor is the Marcello’s Wine Market Café in Lafayette. Todaro says the sale “was just a good opportunity for both of us. They were looking to expand into the market.” The sale price was not disclosed. To learn more about Romacelli, visit its website here.

Brand-new start: After nearly six years of sitting dormant, construction has resumed on the Bluebonnet Palms Office Park on Bluebonnet Boulevard at Jefferson Highway. Earlier this month, work crews began framing the 4,000-square-foot building that, when completed later this year, will become home to a downtown law firm. Groundbreaking is also expected in the next two weeks on a second 4,000-square-foot building that is currently under contract and will eventually house a physician’s office. Read the full story from Daily Report here.

This week’s poll question: Under current economic conditions, do you think it makes more financial sense to own a home or rent one?

How to Negotiate a Lower Home Price

From Fox Business:

A home is the biggest purchase most Americans will make in their lifetime, so  getting a good deal matters.

While playing hardball to get what you want at the price you want, you risk  over negotiating and being left empty handed. Here are five tips to secure the  home of your dreams without breaking the bank.

Keep Emotion Out. Experts advise treating a home purchase as a business  transaction, and avoid getting emotionally attached to a home which eliminates  any leverage during negotiations.

“You have to treat the transaction as a business decision,” says Michael  Corbett, Trulia’s real estate expert and author. “The minute you get too  emotionally attached to this house, you are dead in the water.”

Be Realistic. Yes it’s a buyer’s market, but sellers are still looking  for reasonable offers.

According to Brendon DeSimone, a Zillow blog contributor, the final sale  price of a home always boils down to the motivation of the buyer and the seller. “If the seller really needs to sell the home, they’ll be more likely to  negotiate on price. Likewise, if the buyer absolutely loves the home, they’ll be  willing to make an offer close to, or at list price,” says DeSimone.

Making an unrealistic offer could result in a seller refusing to deal with a  buyer.

Know the Market. Understanding the current state of the real estate  market in the desired area will aid a buyer’s negotiations.

DeSimone recommends buyers know how long the house has been on the market,  how much the price has dropped and how many times, how many deals have fallen  apart and how many similar homes are for sale in the vicinity.

Corbett says the agreed to selling price doesn’t matter if the comparables in  the area are lower. For instance, the final price may be $400,000, but if  comparable houses in the neighborhood are going for $380,000, there’s little  chance the buyer will get a mortgage for $400,000.

“Often times one of the big issues even if the price is negotiated is they  can’t get the bank to agree,” he says.

Find the Seller’s Motivations. Corbett says knowing the seller is just  as important as knowing the market and the house when trying to lower a home’s  asking price.

To glean a seller’s motivation, Corbett suggests checking out the home’s  selling history.

For instance, if there have been previous offers in escrow that have fallen  through, a seller might be more willing to accept a lower price than someone who  put their house up for sale last week.

Offer Non-Price Perks. To make a lower price more attractive, buyers  can offer other perks like a quick inspection process, or paying in cash. Cash  offers mean the seller doesn’t have to wait for a mortgage to get  approved.  A quick inspection/due diligence period is also an enhanced  negotiating tool.

“Instead of the usual two weeks, try to get [the inspection] done in one  week,” says DeSimone. “If you have a contingency to get a loan, have your loan  broker fully document your file and send a letter along with your offer stating  so. Having your file fully documented up front saves time during escrow.” Even  offering a quick close may be enough to get the seller to accept your offer.

On the flip side, buyers willing to meet the asking price but are low on  cash, can ask the seller to pay the closing costs or throw in all the  appliances. Last-minute perks could mean the difference between a deal closing  and falling apart.

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Baton Rouge home sales soar 25% in May

From the Baton Rouge Business Report:

In a continuation of a trend seen every month this year, home sales in the eight-parish region tracked by the Greater Baton Rouge Association of Realtors were once again significantly better in May compared to the same month last year. The 729 home sales recorded in May by GBRAR as of this morning represent a 24.6% increase over the 585 sold in May 2011. While the sales increase may have been expected in light of similar monthly gains seen so far in 2012, an increase in the average sales price in May will likely come as a pleasant surprise to area realtors. At $197,683, the average home sale in May this year was just shy of 1% better than the $195,885 average sales price in May 2011—and 5% better than the average sales price in April. The monthly average home sale price has consistently been about 5% lower this year compared to 2011. Through May, year-to-date home sales in the Capital Region stand at 2,949. That’s 19.9% better than the 2,458 sold through May of last year, 1% better than the 2,918 sold in 2010, and 12.8% better than the 2,614 sold in 2009. A total of 3,309 sales were recorded through May in 2008, which is about 12.2% more than this year. East Baton Rouge Parish led the May sales increase, with 424 sales—95 more than in May 2011, or a 28.8% increase.

New Home Sales Rise More Than Expected in April

New U.S. single-family home sales rose more than expected in April and prices pushed higher, further evidence the housing market was turning the corner.

The Commerce Department said on Wednesday sales increased 3.3 percent to a seasonally adjusted 343,000-unit annual rate after a 332,000-unit pace in March.

Economists polled by Reuters had forecast sales at a 335,000-unit rate in April. Compared to April last year, new home sales were up 9.9 percent.

The data, coming on the heels of a report on Tuesday showing home resales hit a two-year high in April, suggested the housing market recovery was gaining traction.

It also highlighted the economy’s underlying strength, even though job growth has slowed in recent months. The weak housing market has been the Achilles heel of the economy’s recovery from the 2007-09 recession, as falling home values restrain consumer spending.

Signs of life in the housing market were also bolstered by a 0.7 percent rise in the median price of a new home last month to $235,700 from March. Compared to April last year, the median price was up 4.9 percent.

Despite the improvement in sales, the housing market continues to be hamstrung by an oversupply of used homes on the market – especially from foreclosures, many of which sell well below their market value.

While the inventory of new homes on the market rose 1.4 percent to 146,000 units last month, it remained near record lows. At April’s sales pace it would take 5.1 months to clear the houses from the market, down from 5.2 months in March.

New home sales last month were buoyed by a 28.2 percent jump in the Midwest. Sales in the Northeast rose 7.7 percent, to the highest level in over a year, while in the West sales soared 27.5 percent. Sales were down 10.6 percent in the South.

New home sales account for about 7.6 percent of the overall housing market and face stiff competition from the used home segment despite low levels of stock.
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