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.