The number of houses sold in metro Baton Rouge in April was up nearly 18% from the year before, as first-time homebuyers flocked to cash in on a tax credit for buying properties. There were 691 houses sold in April, according to figures from the Greater Baton Rouge Association of Realtors Multiple Listing Service, compared with 586 MLS sales in April 2009. And despite an increase in first-time buyers, the average sale price was also higher than the year before, from $185,641 to $192,974. Livingston Parish saw the biggest sales gain, jumping up by 67%, from 83 sales to 139. The average sale price in Livingston was slightly lower, dropping from $171,237 to $169,038. Ascension Parish home sales increased from 114 in April 2009 to 124, while the city-parish had the highest average sale price at $217,216, a 7% increase from the year before. East Baton Rouge had the highest sales volume, at 383 MLS deals, compared with 352 from April 2009. The average sale price was $198,061, compared with $182,540. The other category, which includes MLS sales in parishes such as West Baton Rouge, Pointe Coupee and the Felicianas, saw a gain from 37 sales in 2009 to 45 last month; the average sale price dropped to $156,813 from $193,002. Local Realtors say the Capital Region’s market has rebounded to post-Katrina levels. Through the first four months of the year, home sales are running ahead of 2009, with 2,100 MLS transactions taking place, compared with 2,017 the year before. The average sale price was also up slightly, from $191,015 in 2009 to $192,602. —Timothy Boone
The percentage of Baton Rouge homeowners falling behind on their mortgage payments and facing foreclosure continued to rise in March, but still at a slower rate than the state and national averages. The percentage of local homeowners who were more than three months behind on their mortgages was 6.64% in March, according to Core Logic, compared with a 4.21% delinquency rate in March 2009. During that time, the percentage of Louisiana homeowners more than three months behind on their mortgages rose from 4.76% to 7.36%, while the U.S. average delinquency rate was 8.93% in March, compared with 5.79% in March 2009. The local foreclosure rate was 2.27% in March, compared with 1.38% in March 2009. That’s below the state average of 2.53% and the national rate of 3.23%. Core Logic gets its data from public sources, including property and tax records and appraisals.
Baton Rouge builders will get to show off their handiwork for two weekends, beginning Saturday at the Capital Region Builders Association’s annual Parade of Homes. The event, which takes place Saturday and Sunday and May 22 to May 23, is the largest showcase for area builders. This year there are 52 homes in the parade; in previous years there have been between 60 and 80 homes in the parade. Lynda Evans, executive vice president of the CRBA, blames the drop on a lack of inventory. But Evans says there’s a “good mix” of homes, ranging in price from $120,000 to nearly $1 million. “There are a lot of first-time homebuyers who go out to this event looking for a home,” she says. “There are homes out in every price range.” For more information about this year’s event, including a list of homes that will be in the parade, click here.
Forbes magazine says Baton Rouge is the second-best midsized city in terms of job growth. Baton Rouge finished second, five spots higher than the 2009 rankings, despite seeing the number of non-farm jobs drop by 2.4%.
While 2009 was a dismal economic year, cities that had concentrations of government workers and government-subsidized industries, such as health care and colleges, fared better than others. Only Raleigh-Durham-Chapel Hill, N.C., finished higher than Baton Rouge. In all categories, the Capital Region finished 15th in the Forbes rankings. Adam Knapp, BREC president and CEO, says the Forbes report confirms that the Capital Region economy is one of the most competitive in the U.S.
Keller Williams First Choice has opened a real estate office in Prairieville. This isn’t a spin-off of the existing Keller Williams office in Baton Rouge, says Patricia Odom, team leader and CEO for the office; rather, it’s a totally new franchise for the chain, based in Austin, Texas. Keller Williams claims to be the third-largest real estate company in the U.S. Odom says company opened the new office because it wanted to enter the Ascension market. Sue McDonald, a veteran Ascension Realtor, is the operating principal along with Mary Garner DeVoe. The office has 30 agents now, yet Odom says the staffing is growing.
Real estate experts are unsure what the end of the First Time Homebuyer tax credit will mean for the housing market at the end of this month, yet so far more than 32,000 Louisianans have collected $224 million through program, according to the New Orleans office of the IRS. Overall, 1.8 million taxpayers have benefited from the expanded program through the stimulus act, according to the Treasury Department.
Purchasers must have a binding contract to buy a home by April 30 and must close on the home in the next two months to qualify for the $8,000 credit for first-time buyers; certain other purchasers can qualify for $6,500 credits.
If Louisiana housing history is any guide, a recovery in the market is due by 2011, but there is a significant hole to climb out of, according to First American CoreLogic. The firm recently said its Loan Performance Home Price Index showed a peak-to-current plunge in national prices of 29% from April 2006 to January.
“The cumulative loss in home prices . . . is more severe than the next worst housing recession of 24% cumulative decline, which began in Louisiana in the mid-1980s,” says Mark Fleming, chief economist for First American CoreLogic, in a statement. “It took Louisiana five years to recover from the bottom; we expect this recovery to take at least as long.”
Yet through March, the average sales price of a home in the greater Baton Rouge area was $192,782, according to Realtor data, while in 2006, the average price was $186,035. Speculation on how much of a “shadow inventory” is out there— foreclosed-on houses that banks have not put on the market yet—is another factor in gauging the hoped-for recovery. That fuzzy figure varies wildly in the media between 1 million and nearly 18 million units.
—Todd R. Brown
Published by New York Times
DES MOINES — Nine hundred days after putting their house on the market,
Andrew and Jane Palestini were beginning to think they might be stuck
in Iowa forever.
The looming expiration of the government’s housing tax credit pushed
them into action. They dropped their price by an additional $10,000, to
$235,000. Somewhat to their shock, a buyer emerged. The house is now
“I can’t feel happy,” said Mr. Palestini, a retired administrative law judge with the Social Security Administration. “Just relieved.”
After several disastrous months for home sales across the country, when
volume dropped by 23 percent, the pace appears to be picking up again.
The number of Des Moines homes under contract in February rose by a
third from the January level. The number of pending contracts jumped 10
percent in Naples, Fla., 14 percent in Houston and 21 percent in
These deals will be reflected in the national sales reports when they
become final, this month or next. There is no evidence that prices have
begun to move in response to the higher volume. Indeed, so many homes
are coming on the market that prices might well fall further.
Real estate agents say buyers and sellers are hurrying to take
advantage of the tax credit, which is worth up to $8,000 for home
buyers. But the last-minute rush is also prompting some foreboding
about what will happen to the market on April 30 when the credit ends —
and whether it is too risky to let it end at all.
James M. Poterba, an economist at the Massachusetts Institute of Technology, calls this “the exit strategy problem.”
“If you have a short-run program to stimulate demand, it’s always
tricky to figure out how you gently remove it without going off a
precipice,” he said.
Arguments for extending the tax credit a second time are just
beginning. Robert Shiller, a professor of economics at Yale and
co-developer of the Standard & Poor’s/Case-Shiller
housing price index, is an early advocate. He thinks the credit was a
bad idea that nevertheless the market cannot do without.
“You don’t make drug addicts go cold turkey,” Mr. Shiller said. “The
credit interferes with the market in an arbitrary way, but ending it
now would be psychologically powerful. People will be in a bad mood
about buying a house.” He advocates phasing it out gradually.
In some states, worries about the housing market are trumping fiscal
considerations. They are adopting or extending tax credits or other
supportive measures in hopes of bringing the market to life.
California last week renewed a $10,000 credit that proved popular last
year, allocating $200 million for it despite a state budget crisis. New
Jersey legislators just introduced a bill that would give buyers a
$15,000 credit spread over three years. South Carolina recently
announced a $7,000 down payment assistance program for teachers, police
officers and firefighters.
As it has been for several years, housing remains the most coddled and
the most troubled sector of the economy. Outside the realm of real
estate, many of the government banking programs created to deal with
the crisis have ended, and credit markets have largely returned to
normal. On March 8, the Federal Reserve held its final auction in a
two-year-old program that offered banks emergency short-term loans.
A few days earlier, however, government regulators extended a
refinancing program for homeowners whose properties had plunged in
value. Originally due to expire in June, the program has been renewed
to the middle of 2011 “to support and promote market stability,” the
Federal Housing Finance Agency said.
On Monday, just three days after substantially expanding its
antiforeclosure programs, the Obama administration announced another
$600 million to finance innovative measures to help defaulting families
in five hard-hit states: North Carolina, Oregon, Ohio, Rhode Island and
South Carolina. The first round of financing, announced last month,
provided $1.5 billion to states including California and Florida.
Supported by an array of government programs aimed at both reducing
foreclosures and encouraging traditional sales, housing was supposed to
be on the road to a solid recovery.
An earlier version of the tax credit created a rush to buy in the fall,
when people thought it would expire Nov. 30. The housing industry
argued that sales would fall off a cliff if the credit were not
extended and broadened, so Congress went along.
Stan Humphries, the executive in charge of data and analytics at the
housing site Zillow.com, said government support was crucial in
breaking housing’s acute fall in 2007 and 2008, but that it had also
obscured the actual weakness of the market.
“Many people got the sense last year that we had bottomed out and were going to rebound in a V-shaped recovery,” he said.
Instead, the sales volume of existing homes declined in December more
steeply than in any month in the four decades that such numbers have
been tracked. Sales dropped again in January and February. Meanwhile,
the sales volume of new homes fell in January to the lowest level since
record-keeping began in 1963, a record broken again in February.
Buyers who want the tax credit must sign a deal by April 30 but would
have until June 30 to close. Consequently, if sales volume is going to
plunge after the credit expires, it will not show up until the numbers
for July are reported. While Mr. Humphries says he does not expect
sales that month to fall by December’s record rate, he predicts a long
period of merely “dragging along the bottom,” with prices to match.
That was just what the Palestinis were worried about.
If they did not sell by April 30, they anticipated having to lower
their price yet again, to compensate any buyer for the credit he would
no longer get. It also meant they would not get a credit themselves on
buying a new home in Philadelphia, pushing down what they could afford
It has been an unexpected ordeal. The Palestinis bought their spacious
ranch house in the Des Moines suburb of Clive for $185,000 in 1995,
after looking for only three days. “My feeling was it would never be a
problem selling,” said Jane Palestini, a retired specialist in adoptions from China. “Ha, ha, ha.”
In early 2007, the house across the street sold in three days, but the
Palestinis spent the summer getting their place ready. By the time they
put it on the market that September for $265,000, prices were falling.
For months, they lived in a state of readiness for prospective buyers.
To minimize clutter, they carted off many of their possessions to
self-storage. They bought new pillows and kept them mounded on the
beds. They bought fresh flowers and baked hundreds of cookies.
The months became years. They know their mistake: They should have kept
cutting the price until they sold. But every dollar they dropped their
price was one dollar less for a down payment in Philadelphia.
Their house is under contract for $225,000. After paying the agent’s
commission and subtracting the cost of remodeling the kitchen, the
Palestinis are at best breaking even. “You just have to ignore how much
it’s going to hurt,” Mr. Palestini said.
At least they have escaped whatever trouble is to come this summer.
Their agent, Jim Heldenbrand, told them he hoped the credit would “get
the momentum going.” But he also mentioned the plans of a colleague in
real estate: As soon as the credit expires, the man plans to get on his
Harley and just keep riding south.
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From the Business Report:
Capital Region home sales down 6.2%
The number of houses sold in metro Baton Rouge fell by 6.2% during 2009, despite an increase in sales in Ascension and Livingston parishes. There were 6,905 houses sold in the Capital Region, according to the Greater Baton Rouge Association of Realtors Multiple Listing Service. That compares with the 7,362 MLS sales that happened in 2008. East Baton Rouge Parish home sales were down 10.6% for the year, going from 4,467 sales in 2008 to 3,992 in 2009. That outweighed the 3.3% sales gains reported in Livingston, where there were 1,233 MLS transactions compared with 1,193 in 2008, and the 3% gain in Ascension, which went from 1,236 sales in 2008 to 1,274 in 2009. The other Capital Region category, which includes MLS sales in parishes such as West Baton Rouge, East Feliciana, West Feliciana and Iberville, likewise reported a drop in sales, from 466 in 2008 to 406 in 2009. As in most parts of the U.S., local sales were driven by first-time homebuyers and all the incentives given to them. That outcome is reflected in the drop in average sale prices. In 2008, the average sale price in metro Baton Rouge was $201,521, falling to $191,252.