House sales settle after post-storm boom

Although the real estate market showed signs of slowing in 2009, it appears to be the result of market normalization after an area-wide boom following Hurricane Katrina.

“The pendulum is swinging back to the middle,” said Synde Devillier, president of the Bayou Board of Realtors.

The Tri-parish area was flooded with money from FEMA, insurance payouts and private investment after the area was hit hard by hurricanes Katrina, Rita, Ike and Gustav. Now that most of the recovery efforts have been completed and that money has been spent, things are returning to what Devillier called “a truer market.”

The residential real estate market is slower than it has been in the past, but it’s not seeing the same major downturn devastating some parts of the country.

“We’re still moving. Prices haven’t dropped, and we haven’t had too many foreclosures,” said Devillier. “Market time is longer than it has been in the past, but that’s mostly on more expensive homes.”

According to Devillier, the homes priced in the $100,000 to $200,000 range are moving the fastest, while more expensive homes remain on the market longer. This is partially due to an overall market slowdown and tightness in the financial lending markets.

“The people that are buying (homes) right now are the ones that need to buy,” said Devillier.

Entry level homes appear to be moving the fastest because the demand for housing is greater than the availability of inexpensive homes, which is caused by a lack of new development in that price range.

Devillier said, “We have more people trying to get affordable housing and less of it.”

Given increased development costs in the area, building entry-level homes is not profitable enough for most developers. The area is also starting to run short of easily developable land, she said.

Carroll Parr, a developer with Matherne Realty Partnership in Houma, said, “Land around here is getting to be such a premium that almost the only thing you can do is upscale developments. The numbers just don’t work otherwise.”

He also cited increased labor and materials cost as a major factor on the issue.

“I think after Hurricane Katrina everything just jumped,” said Parr. “I know it’s not exponential but it seemed that way, and it never really came down.”

The lack of affordable housing and the difficulty some consumers are finding getting home loans are causing a continued upward trend for rental apartments in the area.

“Since the storms we’ve gotten a lot of hotels and apartments because it’s more cost effective,” said Devillier. “Apartments are easy, and some people aren’t sure if they want to make the financial commitment or if they want to stay that long.”

Sid Seymour, chief examiner for the state Board of Financial Institutions, believes the Louisiana market as a whole has not been subject to the boom and bust cycle seen throughout much of the country.

“We didn’t see a significant run-up in property value, so we’ve not had the falloff that they’ve experienced in other parts of the country,” he said.

A recent extension of the federal first-time homebuyers tax credit may also aid lagging sales in the residential market. According to a press release from the National Association of Realtors, an $8,000 tax credit for first-time buyers has been extended from Nov. 30 of this year to April 30, 2010. The income limit for the program has also been raised from $150,000 to $225,000 for a married couple and the individual cap has been raised from $75,000 to $125,000. Current homeowners may also be eligible for a tax credit of up to $6,500. Devillier believes this may help nudge the market upward in the coming year.

Things have been slower on the commercial real estate side for many of the same reasons.

“Business is not bad, it’s just slowed down from where it was,” said Parr, “but business was so robust after Katrina that anything right now would seem slow.”

One of the biggest projects currently under way is the Enterprise Drive Extension. Once complete, the road will be extended from its current terminus at Corporate Drive to La. Highway 311 near Equity Boulevard.

“There will be lots of new commercial property available once we extend the road,” said Parr.

Both Devillier and Parr believe that the market will start to pick up again after the start of 2010.

“I talk to a lot of people all the time,” said Parr, “and most people expect that after the first of the year things will start picking up again.”

Devillier also believes that things are looking up for 2010, but doesn’t think we’ll return to the high volumes seen after the recent spate of hurricanes.

“I think it will pick up, but it won’t be as loose or flowing as it had been,” he said.