Eisenberg: Economic indicators positive - Baton Rouge, LA

While economist Elliot Eisenberg—keynote speaker for today's TRENDS in Real Estate Seminar—enthusiastically called the state of the Louisiana and Baton Rouge economies a "happy story," he warned that the energy boom won't last forever. "You know it will end," Eisenberg told those gathered this morning at the BREC Independence Park Theatre for the half-day seminar. "Energy booms always end. I would try and plan for what happens the day after. Lafayette in '86 wasn't a happy place, remember that. Nothing good lasts forever. Don't say this time will be different, because it won't be different." Still, Eisenberg detailed a mostly optimistic outlook for the state and Capital Region, celebrating the the area's low unemployment rate, labor force growth—which is above the national average—and 5% increase in home prices since last year. "You're a happy city and a happy state, you really are," said Eisenberg, a nationally acclaimed economist and speaker based in Washington, D.C. By contrast, he noted, the national economy is improving, but at a slower pace than has been seen locally. Crediting less economic uncertainty and increased capital expenditures, Eisenberg said we are now entering the "pleasant phase of the recovery." "Overall, the economy really is improving," he said, adding that he expects "interest rates will go up because of it." The 26h Annual TRENDS in Real Estate Seminar, hosted by the Greater Baton Rouge Association of Realtors Commercial Investment Division, kicked off this morning with Eisenberg's keynote address and will continue through noon. With roughly 680 registered to attend, this will be the largest TRENDS seminar since 2006, according to GBRAR Communications Director Saiward Pharr Hromadka. Read Daily Report PM later today for more coverage from the seminar. —Rachel Alexander

3 Reasons the Housing Market Should Thrive in 2014

Recently, HousingWire asked David Berson, chief economist at Nationwide, for his opinion on the near-term future of housing. Below are what Mr. Berson believes to be the three things you need to know about housing in 2014. We have included a quote from the article and a small comment from KCM for all three points.

Number 1: 2014 should prove to be the strongest year for housing activity since before the Great Recession

“Most economists expect an improved job market in 2014, with employment growth accelerating and the unemployment rate continuing to decline. That jobless rate drop will reflect more of a pickup in employment than further declines in the labor force participation rate. This will be the key factor improving housing demand this year, even if mortgage rates rise and affordability declines. While the housing market tends to do especially well when the job market improves and mortgage rates decline simultaneously, that combination of events occurs only rarely…People buy homes when their job and income prospects improve – even if it’s more expensive to do so – rather than buy when it is inexpensive to do so but they’re worried about keeping their jobs.”

KCM Comment:

We agree that the job market will continue to improve and that rising interest rates will not be a detriment to the market in 2014. As Doug Duncan, SVP and chief economist at Fannie Mae, recently revealed:
“Consumers have taken the interest rate rise in stride. Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track.”

Number 2: Demographics should start to favor housing activity

“If the economy expands at a faster pace this year, bringing a more rapid rate of job creation, that should translate into more households, raising housing demand. We won’t see all three million missing households return to the housing market at once. (That wouldn’t be a good thing for the housing market anyway, since that would be on top of the 1.2 million households that normally would develop this year; such a surge would swamp the existing housing supply). Beginning in 2014, the pace of household formations should accelerate to an above-trend pace for several years, pushing up housing demand.”

KCM Comment:

The Urban Land Institute recently released a report, Emerging Trends in Real Estate 2014, projecting that 4.48 million new households will be formed over the next three years. Millennials will make up a large portion of these new households. With the economy improving, we believe they will finally be moving out of their parents’ homes and, after they compare renting versus buying, many will choose homeownership.

Number 3: Mortgage availability shouldn’t worsen and may improve

“The rise in mortgage rates already has reduced mortgage origination volumes as refinance activity declines. If mortgage rates rise further this year, as expected, then refinance activity will fall still more. In response, mortgage lenders probably will ease lending standards to the extent possible under the QM rules to boost lending activity by increasing purchase originations. As a result, the increase in new households expected to be created this year, spurred by a stronger job market, should find that qualifying for a mortgage loan will be somewhat easier in 2014 than in prior years.”

KCM Comment:

We also believe that, as the refinancing market begins to dry up, mortgage entities will be more aggressive in the purchase money market (mortgages necessary to purchase a home). There even seems to be recent evidence that lending standards are actually loosening.

 

Call Christie at 225-315-9003 or Christiefarris@gmail.com

B.R. ranked No. 2 among U.S. mid-size metros for 2013 business expansions

Baton Rouge and Louisiana have each received a top three ranking in the nation for the high number of business expansions announced on the metro and state level in 2013. In its annual economic development rankings, trade publication Site Selection magazine places Baton Rouge tied for second among all U.S. metros with a population between 200,000 and 1 million for the number of new major projects or expansions announced last year.

Baton Rouge's 46 projects tied it with the Allentown, Pa.-Bethlehem, Pa. metro area, and placed it just two projects behind the No. 1 metro area on the list: Omaha, Neb.-Council Bluffs, Iowa. This year marks the fourth in a row that Baton Rouge has ranked in the top 10 on the list. Last year, the 34 new or expanded projects in the Baton Rouge area was good enough for a No. 4 ranking nationwide.

"Being included on this list four years in a row is a testament to the strength of our region and the momentum underway," says BRAC President and CEO Adam Knapp in a press release.

Site Selection counts projects in its ranking only if they include a capital investment of at least $1 million, create at least 50 jobs, or add at least 20,000 square feet of floor space. Retail, government projects, schools and hospitals are not counted. BRAC says it worked with 15 companies last year that ultimately announced expansions or relocations in the region.

"These projects will result in the creation of over 2,167 new jobs, $112 million in new payroll, and $4.4 billion in capital investment," reads the release from BRAC, which notes the payroll and capital investment figures are both local records.

Site Selection also ranks Louisiana No. 3 among all states for the number of projects it announced last year, per capita. The 180 projects per capita recorded in Louisiana trailed only Ohio and Nebraska. Texas, meanwhile, was awarded the magazine's Governor's Cup for total business developments and expansions in 2013.

The 5 Best Time-Tested Remodeling Projects — and the Worst

5 Best Remodeling Projects for Return on Investment

More Americans Confident about Home Buying

Last week, Fannie Mae released their January 2014 National Housing Survey results.  Two categories reported all-time survey highs.

• 52% of respondents thought it would be easy for them to get a home mortgage today
• 70% of respondents said they would buy if they were going to move

Doug Duncan, senior vice president and chief economist at Fannie Mae explained what this may mean to the real estate market moving forward:

“A majority of consumers now believe that it is getting easier to get a mortgage. For the first time in the National Housing Survey’s three-and-a-half-year history, the share of respondents who said it is easy to get a mortgage surpassed the 50-percent mark. The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month’s increase in consumers’ intention to buy rather than rent their next home. The dip in overall home price expectations, though notable, is consistent with our view of moderating home price gains this year from a robust pace last year, while positive trends in perceptions about the economy and personal finances over the next year support our view of stronger growth in the broader economy.”

With home prices projected to increase in 2014 (albeit at a slower pace than they did in 2013) and with mortgage interest rates projected to increase, it is good news that consumers are becoming more confident in their ability to buy a home if they so desire.

 

 If you are looking to buy or sell a home:
 call Christie Farris at 225-315-9003 or email at Christiefarris@gmail.com

Exisiting Home Sales Report January 31, 2014

Home Sales in 2013 Rise to Strongest Level in 7 Years

Daily Real Estate News | Friday, January 24, 2014

The housing market has been experiencing a “healthy recovery” over the past two years, with home sales last year rising to the highest level since 2006, according to the National Association of REALTORS®' latest housing report.
“Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates, and a large pent-up demand driving the market,” says Lawrence Yun, NAR’s chief economist. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”
Existing-home sales rose 1 percent in December 2013 compared to November and reached a seasonally adjusted annual rate of 4.87 million.
Existing-home sales for all of 2013 reached 5.02 million sales, 9.1 percent higher than 2012, and the largest rise since 2006 when sales were at 6.48 million at the close of the housing boom, NAR reports.
Home prices were also on the rise in 2013, up 11.5 percent over 2012, with a median existing-home price of $197,100 last year compared to $176,800 in 2012. It was the strongest gain in home prices in a year since 2005, when home prices rose 12.4 percent, NAR reports.
NAR President Steve Brown says that with job growth expected this year, home sales should hold despite rising home prices and higher mortgage rates.
“The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory,” Brown says. “With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home.”
Housing Recovery Regional Snapshot
Here’s a look at how existing-home sales fared in December and for the year across the country:

• Northeast: Existing-home sales fell 1.5 percent in December but remain 3.2 percent higher than December 2012. Median price: $239,300, up 3.6 percent from year ago levels
• Midwest: Existing-home sales dropped 4.3 percent in December and are 0.9 percent below year ago levels. Median price: $150,700, 7 percent higher than December 2012.
• South: Existing-home sales rose 3 percent in December and are 4.6 percent higher than December 2012. Median price: $173,200, up 8.9 percent from a year ago.
• West: Existing-home sales increased 4.8 percent, but are 10.7 percent below a year ago. Median price: $285,000, up 16.0 percent from December 2012.

By REALTOR® Magazine Daily News

Baton Rouge's Most Expensive Home Sales of 2013

http://businessreport.com/1212014/Baton_Rouge_s_most_expensive_home_sales_of_2013

4 Things you Need from your Listing Agent

Are you thinking of selling your home? Are you dreading having to deal with strangers walking through the house? Are you concerned about getting the paperwork correct? Hiring a professional real estate agent can take away most of the challenges of selling. A great agent is always worth more than the commission they charge just like a great doctor or great accountant. You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish the average agent from the great one. Let us help.
If we were hiring an agent to sell our home today, we would require that they:

1. Understand the timetable with which my family is dealing

You will be moving your family to a new home. Whether the move revolves around the start of a new school year or the start of a new job, you will be trying to put the move to a plan. This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. I am not suggesting that your agent can pick the exact date for your move. You just want the agent to exert any influence they can.

2. Remove as many of the challenges as possible

It is imperative that your agent know how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.
Remember: If you have an agent who was weak negotiating with you on the parts of the listing contract that were most important to them (commission, length, etc.), don’t expect them to turn into Superman when they are negotiating for you with your buyer.

3. Help with the relocation

If you haven’t yet picked your new home, make sure the agent is capable and willing to help you. The coordination of the move is crucial. You don’t want to be without a roof over your head the night of the closing. Likewise, you don’t want to end up paying two housing expenses (whether it is rent or mortgage). You should, in most cases, be able to close on your current home and immediately move into your new residence.

4. Get the house SOLD!

There is a reason you are putting yourself and your family through the process of moving. You are moving on with your life in some way. The reason is important or you wouldn’t be dealing with the headaches and challenges that come along with selling. Do not allow your agent to forget these motivations. Constantly remind them that selling the house is why you hired them. If they discover something needs to be done to attain your goal (i.e. price correction, repair, removing clutter), insist they have the courage to inform you.

Make sure you let your agent know what you and your family expect from them.

 Christie Farris - Baton Rouge Realtor

225-315-9003

Christiefarris@gmail.com

www.christiefarris.com

3 Questions to Ask Before Buying a Home

If you are thinking about purchasing a home right now, you are surely getting a lot of advice. Though your friends and family have your best interests at heart, they may not be fully aware of your needs and what is currently happening in real estate. Let’s look at whether or not now is actually a good time for you to buy a home.

There are three questions you should ask before purchasing in today’s market:

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:

• A good place to raise children and for them to get a good education
• A place where you and your family feel safe
• More space for you and your family
• Control of the space
  

What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

When looking at future housing values, we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.
Here is what the experts projected in the latest survey:

• Home values will appreciate by 4.3% in 2014.
• The cumulative appreciation will be 28% by 2018.
• Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 16.8% by 2018.
  

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates.
The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months.

Bottom Line

Only you and your family can know for certain the right time to purchase a home. Answering these questions will help you make that decision.

Congratulations Shawn! First Time Home Buyer

Congratulations to Shawn Ryan on purchasing your first home! I couldn't be happier for you!

 

4 Keys for Full Housing Recovery

 

4 Keys Identified for a Full Housing Recovery

In order to have a fully recovered housing market and economic recovery, economists point to the need for four positive indicators:

1. A healthy job market with low stable unemployment;

2. Mortgage delinquencies that have returned to historical averages;

3. Home prices consistent with an affordable mortgage payment–to–income ratio;

4. Home sales that are in the range of historical norms.

Boomerang Buyers

“Boomerang buyers” are former homeowners who have gone through a short sale, foreclosure, or bankruptcy in the past few years and are saving up for a down payment to purchase a home again.

Baton Rouge Area Home Sales Rise 15%

Baton Rouge metro area home sales increased by 15 percent during 2013, continuing a steady recovery from the national recession that followed a spike in sales after Hurricane Katrina.

According to figures provided by the Greater Baton Rouge Association of Realtors, there were 8,690 closed sales in 2013, compared with 7,483 in 2012.

Though 2013 doesn’t rival the Hurricane Katrina-aided years from 2005 to 2007, last year fell only 59 houses shy of the 8,749 sold pre-Katrina in 2004 in the Capital Region.

Sales fell from 2008 to 2010 before starting a recovery from the national recession.
Home sales picked back up really strong, interest rates are staying low, and that’s really helped the market. Locally, it remains a seller’s market because of the limited inventory.

At the end of 2013, there were 3,896 homes for sale, down 2.6 percent from the 3,999 listings at the end of 2012. That dropped the supply of homes from 6.1 months at the end of 2012 to 5.4 months in December 2013. For all of 2013, the number of days a home remained on the market dropped by 11.3 percent, from 97 to 86.

Annual sales increased by 18.5 percent in Livingston Parish, where there were 1,475 sales in 2013, compared with 1,245 in 2012. Not only have sales come up, quantity-wise, but the values of the homes sold have raised. Homebuyers have been attracted to moving into Livingston Parish because infrastructure improvements such as the widening of Interstate 12 and the Magnolia Bridge have made it easier to get to work at the chemical plants in north Baton Rouge and Ascension Parish.

Ascension Parish had a 17 percent increase in sales, going from 1,425 in 2012 to 1,667.

Ascension Parish had a good spring and a good summer and went through quite a bit of inventory. Gautreau said sales started to slump at the end of 2013 because of dwindling inventory, a slight increase in interest rates and concern about dramatic hikes in flood insurance rates.

East Baton Rouge Parish, the largest homebuying market, went from 4,124 sales in 2012 to 4,698, a 13.9 percent increase. Neighborhoods around LSU and Town Center remained popular with homebuyers, along with Central.

The median sale price for a home in metro Baton Rouge increased by 4.2 percent during the year, going up from $167,000 to $174,000. That’s a local record for the median sale price of a home, said Saiward Pharr Hromadka, a spokeswoman for the Greater Baton Rouge Association of Realtors.

The median means half the homes sold for more than that amount and half for less.
So far, 2014 is off to a good start, because historically low interest rates are continuing.

2013 East Baton Rouge Capital Region Home Sales Rise 15%

http://youtu.be/WhvBrRpR4Bc

2013 Capital Region Home Sales Rise 15%

Prediction: 2014 the 'Year of the Big Move'

Daily Real Estate News | Tuesday, January 14, 2014 

 

Charlie Young, president and CEO of ERA Real Estate, says that several factors in the housing market point to a growing trend of relocation in the new year. More people may be prompted to relocate to areas that offer better costs of living, making 2014 the “year of the big move,” he says.
Here are some factors he points to:

• Rising mortgage rates: Mortgage rates are expected to nudge higher this year from their historical lows as the Federal Reserve starts tapering its bond-buying stimulus program. “For many would-be homebuyers, an increase of 1 percentage point could make monthly mortgage and interest payments in their current area beyond their reach,” Young says. 

• Dropping affordability: Incomes are not keeping pace with the rises in home prices. “That means homes are getting more expensive faster than our wages can keep up,” Young says. With higher mortgage rates and higher home prices, affordability is falling in many higher-priced markets, he notes. 

• Returning equity: As home prices have risen, many home owners have seen equity return and are finally in a position where they can move again. More home owners may look at other states for a lower cost of living, better job opportunities, and better weather, too, Young says. 

• Rebuilding personal wealth: Many people faced a big hit to personal wealth during the recession and as they rebuild it, they may find that their current area has too high of a cost of living to rebuild comfortably.

#1 Reason You Should Sell Your Home Now

The price of any item (including residential real estate) is determined by ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.

According to the National Association of Realtors (NAR), the supply of homes for sale dramatically increasing every spring. Putting your home on the market now instead of waiting for the increased competition of the spring might make a lot of sense.
Buyers in the market during the winter months are truly motivated purchasers. They want to buy now. With limited inventory available in most markets currently, a seller will be in a great position to negotiate.

Predictions for 2014: Interest Rates Will Increase Significantly

Most experts are calling for an increase in mortgage interest rates in 2014. However, we believe the increase will be more dramatic than is being projected. We believe rates will be closer to 6% than 5% by year’s end.

The Fed announced last month that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years. This should come as no surprise as the KCM Blog has been warning of this likelihood over the last several months.



Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies. However, we believe that the government is not afraid to shoot right past these levels.

Doug Duncan, chief economist for Fannie Mae, this past summer announced:
“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”
And Frank Nothaft, Freddie Mac VP and chief economist, at virtually the same time explained:
"As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”
Only time will tell. However, we feel that rates will be in the 5.75-6% range by year’s end.

November/December 2013 Market Pulse

November/December 2013 Market Pulse

Pent-up buyer demand may lift the market soon, but for now interest rates and lending standards are holding down home sales as the year winds to a close.

 Rising interest rates and continuing tight underwriting could dampen sales as the year winds down. Still, 2013 sales will be up significantly from 2012. Appreciation remains robust, largely because of tight inventories. Interest rate concerns are reducing practitioner confidence. One bright spot: pent-up buyer demand by young households. As adults under 35 start to move out of their parents’ homes, home sales stand to benefit. All trend lines are from August 2012 to August 2013.

  

 Existing-home sales is a seasonally adjusted annual rate, which is the actual rate of sales for the month, multiplied by 12 and adjusted for seasonal sales differences. Pending home sales is an index that measures -housing contract activity. An index of 100 is equal to the level of activity during 2001, the benchmark year. Price indicates the national median. Inventory measures the number of existing homes on the market at the end of the month. Buyer and seller traffic, current conditions, six-month expectations, and time on market derive from a monthly REALTOR® Confidence Index. Results for August are based on 3,171 responses to 6,000 surveys sent to large and small real estate offices. The survey asks practitioners to indicate whether conditions are strong (100 points), moderate (50), or weak (0). Some data may be revised from previous issues.

Capital Region home sales up 3.6% in November

Home sales in the eight-parish Capital Region were up 3.6% in November compared to the same month last year, according to the latest monthly sales report from the Greater Baton Rouge Association of Realtors, released today. While the entire region tallied 20 more homes sold during November—for a total of 577—East Baton Rouge Parish recorded 52 fewer sales, or a decline of 15.2%. A total of 291 homes were sold in the parish last month. Livingston and Ascension parishes performed much better. The 119 sales recorded in Livingston represents a 38% increase over the 86 sold last November. In Ascension, sales in November totaled 108, a rise of 42% over the 76 sold during the month last year. Meanwhile, the average sales price in the Capital Region declined 3.7% in November to $197,848—down from $205,357 in November a year ago. The number of homes for sale in the eight-parish region dipped 5.2% on the month to 4,103; while pending sales rose 21% to 654. The months supply figure, or the number of months it would take to sell all of the homes for sale at the current sales pace, declined 15% to 5.7 months. Realtors generally view any reading under 6 months as reflective of a seller's market. Last November the months supply was 6.7.