Walker La Home Buyer Question: Should I Buy In Collins Place and How Much Should I Pay?

I received a phone call from a potential buyer that lives in Denham Springs and possibly wants to upscale and move to Collins Place in Walker. They wanted to know what I thought of the development and what they should pay for a home in there.

My thoughts on Collins Place.

FIRST, Collins Place is a beautiful development with upscale homes, probably too upscale for the Walker La Housing Market, which is why it has taken so long to make the progress it has to this point. And, then the obvious correction in home prices from the $125/sf in 2007 down $110/sf to $113/sf in 2010-2012, which is exactly where pricing should be and was prior to 2006. The builder’s target pricing for Collins Place was $125/sf to $127/sf after Hurricane Katrina when support was at only $111/sf. And, now we find 7 years later that home prices have corrected back to down 2006 support in the $110/sf to $116/sf range. I honestly don’t believe the local economy has as much to do with slowness of Collins Place build out as does the location in Walker itself.

SECOND, one has to understand the Walker Market to understand why the high end homes market has corrected so severely. Walker is primarily a housing market with concentration of sales from $110,000 up to $160,000 range as evidenced by the sales chart below, noted in GBRMLS. Yes, there are some home sales in $170′s, but roughly 70% of home sales in Walker take place under $179,999, 60% under $170,000 and the price ranges that sell the most homes are $120,000 to $130,000, $140,000 to $150,000 and $150,000 to $160,000. This means there are few buyers and demand in subdivisions like Three Lakes and Collins Place and why the correction in high end homes prices in Walker has been so severe. Even in The Lakes At Fennwood, it has seen a correction and lack of buyer interest into 2012 with sold price per sq. ft. dropping from $111/sf in 2008-2009 down to just $101 and $103.55/sf in 2011-2012. There are some that bought at the highs that are upside down right now.

THIRD, It’s Very Easy To Overimprove A Home In Livingston Parish. With the Walker market predominantly priced under $170,000, it’s been very easy to overimprove a home and many have done so.

FOURTH, Collins Place resales hurt buyers! Since 2010 in GBRMLS, there have only been 3 existing home sales or resales.

13314 Brookcrest Dr sold for $260,500 in 3/2008 and resold in 11/2011 for only $225,000, a loss of $35,500.

13327 Williamsburg Dr was a home partially built and taken back by the Bank of Greensburg in 2010, COB 1072/213. Home was finished sold in 2/2012 for only $185,500 or $94.55/sf. This was not a foreclosure or distressed sale.

13306 Brookcrest Dr sold for $236,500 in 5/2009 and resold in 9/2011 for $239,000, a gain of $2,500 but after paying a 6% Real Estate Agent Commission, this was a substantial loss.

FIFTH, Where’s The Momentum and Confidence From Spec Builders? Today’s drive through Collins Place felt like the same drives from years past – lots of vacant lots, almost no building activity and newly built homes for sale. I witnessed 1 home under construction and 1 slab being formed up. It appears individuals buying lots and building their own homes is taking place. But where’s the momentum or spec builder interest? There isn’t much at all because of so low sales prices. However, this isn’t the case in more favorable housing markets in Baton Rouge, Prairieville and Central where new home construction is taking place.

SIXTH, Expect very little home price appreciation! In housing markets where prices are predominantly lower and you build or buy the high end home price range, you generally experience lower price appreciation. This has been the case in Collins Place based on the MLS chart of home values. Little home price appreciation is generally not the goal of most home buyers.

DO I RECOMMEND A HOME PURCHASE IN COLLINS PLACE?

Let me first ask the question, have you really considered the commute to work from Walker in Baton Rouge? Answer that question on your own, AND, NO, I don’t believe adding only “1″ extra Interstate 12 lane is going to help much. They should have “8″ laned I-12 for it to have truly eased congestion. I’ve performed Pre-Listing Appraisals for those moving out of Walker because of the horrible traffic situation.

The only way I would recommend a home purchase in Collins Place Subdivision is if the price were at or below $113.65/sf support. I wouldn’t pay a dime more than $113.65/sf in there regardless of whether the home is on or off the lake or how much slab granite it has. New homes on the market are priced at $116, $117 and $125/sf. And YES, there was a recent sale for $287,000 where someone paid $123/sf for 2,337sf. The reason for $123/sf was home included an additional lot. This is why I recommend local buyers obtain a Pre-Listing Appraisal to avoid overpaying for local housing.

NOTE: Based on information from the Greater Baton Rouge Association of REALTORS®\MLS for the period of January 1, 2005 to April 9, 2012. This information was extracted on 04/09/2012. YES, this appraiser does have the permission of GBRMLS to use the chart above Subdivision Price Trends Report!

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