For four years now, real estate practitioners in and around Lafayette have been looking for signs of our market improving. Minor ups and downs and a tax credit here and there have provided for some fits and starts in the market, but overall it’s been flat for some time. That’s not necessarily a bad thing, particularly with what has been going on nationally and with the mortgage market mess still lingering.
In 2007 — the absolute peak of our local real estate market — the single-year record for residential sales in Lafayette Parish was $548 million. In the wake of Hurricane Katrina, the relocations of families and businesses first to Baton Rouge and then to Lafayette heated our market and insulated Acadiana from the wreckage going on around the rest of the country. Federal assistance to rebuild and repair from the storm trickled down to our area, as did tax incentives put in place to stimulate investment post-storm.
This activity carried our local momentum for a full two years after the storm’s landfall but proved to be the end of the hayride as the national recession, mortgage market mess and meltdown on Wall Street began to be felt here. Successively, our local real estate market began its steady retreat: 2008 sales came in at $451 million, 2009 at $442 million, 2010 at $436 million and 2011 at $426 million. The best thing we could say at the time was, “We’re not as bad off as the rest of the country.” While true, it was of little salve to those having difficulty selling their homes and seeing their values decline.
This year has been met with great expectations, an improving national economy, wonderful activity in the local oil and gas industry and almost record Lafayette Parish retail sales. These expectations gave way early on to the same sort wishful thinking that has been dashed so many times the last few years. Is this year any different? Is it the end of our decline or just another false start?
I am here to tell you that things are different this time around. A full quarter of solid sales growth is in the books, and I can say with confidence that it seems our market is improving steadily and looks to continue that way.
As you can see from the image at right, completed sales for both new and existing homes are up by double digits, and pending sales, those to close in the next 30 to 60 days, are up 33 percent and 23 percent, respectively. What a turnaround from the last few years in such a short time. I can confirm that, in addition to these numbers, the numbers for motivation and activity of buyers our office is currently working on have increased dramatically. This has been true for a longer period of time for the commercial market and continues today with a ton of activity and little inventory in some sectors of that market.
I would be more cautious if this were a one-month uptick or there were some external factors at work, but that’s not the case. For the first quarter of 2012, home sales in Lafayette Parish are up by 18 percent, $95.5 million this year compared to $80.9 million last year. What is even more encouraging is the big number of homes pending during this time — 756 this year compared with 590 last year. That’s a good sign that this trend is sure to continue through at least another two months.
New construction, while up more dramatically at the end of February, has seen more modest gains. Yet it is still up considerably. Through the end of March, that market increased 11 percent in total new homes sold — 139 so far this year compared to 125 last year. New construction pending sales are rising disproportionately to the entire market, showing gains of 33 percent compared to 23 percent for the entire market. This tells me that sold units in new construction will catch up with the rest of the market as these homes under construction are completed and closed in the coming months.
As I recently reported in my blog post titled “Youngsville & South Lafayette Parish Continue to Grow,” new subdivisions are in the offing and housing starts are on the rise. This can be a good news/bad news scenario if builders overbuild and create a glut of new homes on the market. So far, so good. While new home starts in Lafayette parish are way up — 354 in the first quarter, compared to 208 for the same period in 2011 — active inventory is still in check at 339 new homes on the market at the end of the quarter, compared to 324 at this time last year. It looks to be onward and upward for our local real estate market. And it’s nice to finally say it with confidence instead of wishful thinking.
Steven P. Hebert serves as COO at Coldwell Banker Pelican Real Estate. He writes the company blog at www.coldwellbankerpelican.com/blog, which regularly includes market reports, analysis of trends and general real estate news pertaining to the Lafayette Parish market.