Last week, David Jacobs, with the Baton Rouge Business Report, reported a startling study about how high and out of sync Greater Baton Rouge housing prices are when combined with transportation. The article, Baton Rouge-area household spends 52% of income on housing and transportation, was published on 8/9/2011. In the article or study, the CNT recommends spending no more than 45% and that combining local housing prices with true transportation costs provides “an accurate measure of of the true affordability of housing”.

Other Studies. We also know that according to Core Logic, Baton Rouge is in its’ 9th straight month of home price correction. We also know from the 24/7 Wall Street study that Baton Rouge made America’s 10 Sickest Housing Markets list this month.

We’re In For More Correction. It would appear, based on these 3 studies, that Greater Baton Rouge Housing is in for more correction.

This is my reply below to David Jacobs submitted on 8/10/2011:

I read your Business Report Weekly and wanted to thank you for reporting on this. This has really helped me. Just 3 weeks ago, I was ready to go for a visit to the LSU Real Estate Research Department with similar questions as to where should GBR Housing be priced relative to local incomes? I think this is a foundational question going forward and might possibly shed some light on where the bottom might be in local housing prices in the future. If GBR housing is out of proportion, by how much or by what percentage? Are the current still nose-bleed high housing prices sustainable? Obviously if we asked this question in 2007 from some of the Zachary and ASC $300,000 neighborhoods, the answer today is probably not. $140/sf for new homes wasn’t sustainable across the board. This is why builders like DSLD Homes are having such success……because the insanity in local new home prices from 2006 to 2008 was never sustainable based on local incomes.

As a local home appraiser, I’ve been scratching head all along here wondering WHY local housing is so expensive…..in Louisiana. Baton Rouge has been a wonderful place to grow up and now raise my family, but we’re not California with almost a perfect climate where one would expect high prices. Why are home prices so high here….still in 2011? Even with the modest correction, it would certainly seem that we’re still at nose bleed levels on the pricing of some local housing relative to local incomes. I scratch my head monthly on this issue.

Please understand, I’m not a conservative appraiser. Whatever the housing market’s decision has been, in the form of home sales, I reflect in my reports. However, we’re now about 9 months into this local correction and I’m beginning to think that locals are finally coming to their senses on what they pay for local housing relative to local incomes. There are A LOT of sellers in denial right now, and Hurricane Katrina didn’t help with that at all. It only made it worse. Today, some local Real Estate Agents are hiring me for my Listing Appraisals on their listings that have been on the market for months now, they know are overpriced and they bring me in to show the seller the reality of the local numbers in comparison to sellers perception that their home is worth more.

The chart below doesn’t indicate a huge problem in GBR housing, not like some sour markets in the USA where there’s 3-4 years of supply. However, talk to most appraisers locally and you’ll find that we’re checking “Slow” market for growth or sales and in some subdivision/markets, there’s been such few home sales that it’s become very difficult to complete appraisals for the lack of comps sold within 3 to 6 months, especially under $125,000.

NOTE: Based on information from the Greater Baton Rouge Association of REALTORS®\MLS for the period of August 2010 to July 2011. This information was extracted on 8/10/2011. YES, this appraiser does have the permission of GBRMLS to use the chart above.

These are some of the things I’ve been thinking about in GBR Housing since 2007 and going forward. Are we fairly priced or still way out of balance? Yes, the market is correcting back to some sense of sanity…..finally…..and how many more months or years will it be till we reach equilibrium (sanity) based on local incomes.

New Homes Are Still Priced High. I still see a local builder and have them say something like, “This market is killing me…when the market coming back?!”. And that builder just doesn’t get it….that the post Hurricane Katrina builder’s market isn’t coming “back” in terms of such exaggerated pricing. The odd thing here is the LHBA (La Home Builders Association) would probably tell you today that we’re too low for their builders to make a decent profit on local home building. What they experienced in 2006-2008 (unsustainable pricing) and expect in the future just wasn’t/isn’t sustainable.

This is why I believe that new TND in Zachary recently announced will take a decade or more to build out because $140/sf to $200/sf just isn’t what local incomes will support and until local builders understand this, they’ll be more developments started and then finished by DSLD Homes. This is also why I believe that new Wyndam Estates development in Denham Springs with 1600sf homes on “tiny lots” in $190′s or $120/sf will also take much, much longer than expected to fill and should be filled with homes in the $150s to $160s. It’s about market economics and local incomes and the local economics, at least outside of Baton Rouge itself, is in favor of DSLD Homes pricing. Those builders and developers that fail to understand local incomes will continue to have their fledgling developments sold to and finished by developers like DSLD Homes after spending millions to break the dirt.

Bill Cobb, Appraiser

The Denham Springs housing market hasn’t seen this many high-end home sales in such a short time period in years. The five (5) homes below sold from 1/6/2011 through 4/15/2011, from $450,000 up to $689,167. One (1) was a $450,000 Cash Sale and the other four (4) were financed Conventional per GBRMLS records. The sales are listed below beginning with the most recent sales first.

25536 Southern Hills Ct in in Greystone Golf Community, with 3,120sf, sold 4/15/2011 for $455,000 or $146/sf. Marketing time was only 100 days. Listed by Crysal Bonin with The Mortensen Group LLC and sold by Lawson Covington with Covington & Associates Real Estate LLC.

21452 Stone Bridge Ct in Stone Bridge Subdivision, with 4,704sf, sold 3/31/2011 for $615,000 or $131/sf. Marketing time was only 189 days. Listed by Rene’ Pollet with Coldwell Banker One and sold by Tammy Williams-Sparks with Keller Williams Premier Partners.

21461 Stone Bridge Ct in Stone Bridge Subdivision, with 3,870sf, sold 3/11/2011 for $640,000 or $165/sf. Marketing time was only 68 days. Listed by Alvin Washington with Alvin Washington Realty and sold by Kelli Wascom with Keller Williams Premier Partners.

8289 Allen Drive in Harrells Ferry Landing, with 4,637sf, sold 2/24/2011 for $689,167 or $149/sf. Marketing time was only 145 days. Listed by Denise Stockwell with RE/MAX FIRST and sold by Denise as well.

328 Chateau Jon in Chateau Jon Subdivision, with 3,717sf, sold 1/6/2011 for $450,000 or $121/sf. Marketing time was 140 days with Agent and was FSBO for several months. Listed by Jeannie Spell with RE/MAX FIRST and sold by DREW LANGHART & DARREN JAMES with Keller Williams Premier Partners.

NOTE: Based on information from the Greater Baton Rouge Association of REALTORS®\MLS for the period of April, 16, 2011 to April 22, 2011. This information was extracted on 04/23/2011.

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Author’s Bio:

Bill Cobb is Greater Baton Rouge’s Home Appraiser frequently called upon by banks, homeowners, and savvy real estate investors to assess property values. A home appraiser with 20 years experience, Bill Cobb brings a wealth of knowledge to the table as a home appraiser.

Bill’s company, Accurate Valuations Group, serves Greater Baton Rouge (East Baton Rouge Parish, West Baton Rouge Parish, Western Livingston Parish and Northern Ascension Parish).

Contact Bill Cobb and Accurate Valuations Home Appraisal Group for your next home appraisal:
Office: 225-293-1500, Cell: 225-953-0638
Fax: 1-866-663-6065
info@accuratevg.com
http://www.accuratevg.com/

The LREC or Louisiana REALTORS are reporting on comprehensive housing numbers for 2010, including 4th quarter 2010. So, the source for this report and charts and graphs is LREC.

NUMBER OF SALES DOWN 7.3%. Overall, the number of Greater Baton Rouge Home Sales was down 7.3% for 2010. Total volume for 2010 was 5,708 versus 6,160 for 2009.

AVERAGE SALES PRICE. The average home sales price increased in 2010 to $202,138 vs $197,587 for 2009. This would appear to be due to strong local employment numbers of 355,797 in 2010 versus 354,044 in 2009. However, the Baton Rouge Business Report just reported this morning that “B.R. home price index drops for fifth month running“. So, according to the CoreLogic Home Price Index for Louisiana, Baton Rouge home prices are continuing to correct to the downside, not the upside, and I would agree. And, a look at the median sales prices would be more helpful than average sales prices since average sales prices can include homes from $10,000 up to $3,000,000 – outliers.

SOME IMPROVEMENT. Not all areas are declining though, but marketing time periods are well over 6 months. I’m appraising the 2011 St. Jude Dream Home in Prairieville and the general market of competing solds and listings is showing a rising median sales price, but very long marketing time periods of well over 6 months. Some homes in one local high end development on Highway 73 in Prairieville have been on the market since 2008 without selling.

AVERAGE DAYS ON MARKET. The average days on market remained almost unchanged at 90 days in 2010 versus 91 in 2009.

Click Below To Enlarge The Numbers!

To Read The LBOR 2010 Newletters, Click Below!

I have provided a few snippet paragraphs from this two page article below. Read the full article here: Real Estate Appraisal Rules Changing

“According to Lucien Salvant, a spokesman for the National Association of Realtors, or NAR, in Washington, D.C., the law is intended to:

*Strengthen appraiser independence.
*Sunset a problematic industry agreement known as the Home Valuation Code of Conduct, or HVCC.
*Regulate appraisal management companies.”

“Buyers, sellers can inform appraisers

That said, the end of the HVCC should help to clear up widespread confusion over who can present information — including data about recent sales — to an appraiser.

“The intent of the HVCC was to put a firewall between the lender and appraiser, but it put up such a big wall that everybody was afraid to talk to appraisers,” Salvant says. “The (new law) does say that Realtors and sellers and buyers can talk to (appraisers).”"

“Appraisal management companies

The new law also regulates appraisal management companies, or AMCs. AMCs aren’t new, but they have gained more control over real estate appraisers and appraisals in the 15 months since the HVCC was implemented.

The financial reform law requires federal oversight of AMCs controlled by federally regulated financial institutions. It also requires state registration of all other AMCs, according to the Appraisal Institute.”

“Questions to ask (editor’s note: should be rephrased “Questions AMC’s should be asking those appraisers they intend on hiring for the appraisal order”)

If there is an upside to the confusion over appraisals, it’s that homebuyers, sellers and homeowners are now more aware of these issues, says Richard Koestner, a partner at Koestner, McGivern & Associates, an appraisal firm in Davenport, Iowa. He says they are more likely to ask questions about the appraiser’s experience and expertise and calls the development “encouraging.” He also offers a few examples of questions buyers and sellers might want to ask:

How long have you been an appraiser?
How many appraisals have you completed?
How often do you appraise homes in this area?
How familiar are you with the local market?
Where do you get the data that you use in your appraisal reports?”

Read the full article here: Real Estate Appraisal Rules Changing

This morning, “The Guys” from TBWS reported existing home sale fell 27.2%, the lowest number of sales since 1968, see the video below.

The Baton Rouge Business Report is reporting on a National Assocation of Realtors housing study and I quote: “Sales of previously occupied homes fell to the lowest level in 15 years last month as the economy weakened. The National Association of Realtors says July’s sales fell by more than 27% to a seasonally adjusted annual rate of 3.83 million. It was the largest monthly drop on records dating back to 1968. June’s sales pace was revised downward to 5.26 million. Home sales picked up in the spring when the government was offering tax credits. But the market has struggled since the tax credits expired on April 30. It would take 12.5 months to sell off the 4 million unsold homes on the market at the current sales pace. The median sale price was $182,600, up 0.7 percent from a year ago.” I have included three charts below from Mortgage News Daily’s July Existing Home Sales: Recap and Charts to help put this in perspective. I then discuss the local Baton Rouge Housing Market Numbers.

While the NAR study covers the entire U.S., how do the local Western Livingston Parish housing sales numbers compare? By Western Livingston Parish, I’m defining Denham Springs, Watson and Walker, MLS Areas 81, 82 and 83, the more active portion of Livingston Parish. The answer is that I see Western Livingston bucking the national trend. Within the Greater Baton Rouge Association of Realtors data extracted from 1999 through August 25, 2010, covering almost 12 total years, the lowest yearly rate of home sales was in 1999 with 759. As of 8/25/2010, there have been 654 home sales. If this pace of home sales continues, 2010 projections will be approximately 980 sales, which would conclude a healty housing market.

The chart below, extracted from data from the GBRMLS on August 20, 2010, shows that the median sales price in MLS Area 81, Denham Springs north of Interstate 12, has continued to remain stable to increasing slightly. The chart actually shows an increase in median sales price from 8/2009 to 8/2010 of +3.49%. The chart also shows a fairly low 7.4% REO or Foreclosure Rate for this market as well, 235 foreclosures out of 3,175 homes sales since 1/1/2004.

HOWEVER

I want to responsibly point out that just because the NATIONAL “number” of home sales have been declining in 2010 doesn’t mean the LOCAL “housing prices” are equally declining significantly! And, this is an important point. As a home appraiser, the one thing I hear from local homeowners is a misunderstanding of the local market. They say things to me like, “I know this is a horrible time to be refinancing and getting an appraisal with the housing market the way it is, but we just couldn’t pass up the low mortgage rate”. I hear this constantly from locals and you can’t watch the national news and apply that to our local market. Linda Fredericks, former President of the Greater Baton Rouge Association of Realtors, is correct when she delivered the message that housing marketings are “local” and you can’t apply the national news headlines to a one size fits all local housing market!

Take The Baton Rouge Business ReportPoll: When will the U.S. housing market recover? So far results are:

NOTE: Data Used With Permission of the GBRAR MLS. Data was extracted on 8/25/2010 from periods 1/1/2009 through 8/25/2010.

Tags: Western Livingston Parish, Denham Springs Housing Study, Denham Springs Real Estate, Watson Louisiana Housing Study, Walker Louisiana Housing Study

The Baton Rouge Business Report Daily PM Report is report a Capital Region home sales plunge of 21% in July 2010. “The number of homes sold in metro Baton Rouge fell by 21% in July compared with the year before, as the market corrected itself after being bolstered by the federal homebuyer tax credit. There were 523 homes in the Capital Region sold in July, compared with 665 sales in July 2009, according to figures from the Greater Baton Rouge Association of Realtors Multiple Listing Service. An $8,000 tax credit for homebuyers expired earlier this year, and transactions had to be under contract at the end of April to qualify for the money. That led to Capital Region home sales posting 21% and 28% increases in April and May over last year. The average sale price in July was $197,076, down from the $203,735 average in July 2009. Sales were down nearly 31% in Ascension Parish in July, from 111 in 2009 to 77. Livingston Parish saw a 25% drop, from 114 homes changing hands to 85. In East Baton Rouge, there was a 24% drop in home sales, from 414 to 313. The other category, which includes MLS sales in West Baton Rouge, Iberville and the Feliciana parishes, actually saw an 85% increase, from 26 to 48. Through the first seven months of the year, home sales continued to run slightly ahead of the 2009 pace. There were 4,107 homes sold through the end of July, up 3% from the 3,985 sales total at the end of July 2009.”

http://www.batonrougerealestatebuzz.com/

Kevin DeLaune, with RealtyStudioHD, delivers a new pro video listing for Coldwell Banker One Denham Springs Location Broker, Kayla Johnson.

Make sure you switch from “360p” to “480p” for higher quality! Enjoy!

These are some recent photos I took in Seigle Landing Subdivision, Denham Springs, Louisiana 70706 located off Simms Road. The development appears to be divided into two sections, the front section with larger homes and rear section with smaller more affordable housing. Sorry of the rain drops on the lens and if the photos aren’t exactly straight- it was raining very hard at photo time.

This video describes what’s included in a “Pre-Listing” Home Listing Appraisal for the Greater Baton Rouge Housing Market performed by Bill Cobb with Accurate Valuations Group! Visit http://www.gbrprelistingappraisals.com/ and find out more about having a video made for YouTube to help sell your home faster. Plus, this appraiser can help your home get found on Google for interested buyers. So, we not offer Pre-Listing Appraisals, but a full marketing package and a listing on the Greater Baton Rouge Realty Video Visual Tours Website: http://www.gbrrealtyvisualtour.com/

Tags: Denham Springs Real Estate, Denham Springs Home, Denham Springs Homes, Denham Springs Listing Appraisal, Denham Springs Listing Appraisals, Denham Springs Pre-Listing Appraisal, Baton Rouge For Sale By Owner, FSBOBR.com, FSBO.com, For Sale By Owner Baton Rouge, For Sale By Owner Greater Baton Rouge