Luxury homes aren’t moving off the market like they once did, report says

Luxury home market sales in Terrebonne and Lafourche have taken a slight decline over the past year, according to developers and realtors.

However, luxury home prices have not fallen locally as they have in most American cities.

“Anything under $200,000 is doing well right now,” said V.J. Caro of V.J. Caro Jr. Building Contractors Inc. “Anything above has slowed down, but the prices haven’t dropped.”

The beginning cost for what defines a “luxury” home depends on who one asks. Some start at $300,000, others say $500,000. Either way, the definition of luxury hime has changed significantly.

“Higher-end today is no longer $250,000. Especially in this market, $350,000 has become the new starter home,” said Mona Martin Christen, owner/broker of Mona & Company, Inc.

Luxury home construction continues to be active, especially in the subdivisions along the La Highway 311 – Sugar Mill Point, Clark Estates and South Ellendale. But the cost per square foot has some potential buyers rethinking how much they are willing to spend.

“In some instances they are redesigning, going for a little smaller unit, still high quality custom unit, so they can lower the total price,” said Joey Esso, co-owner of The Wood Doctor. “Still there are some who just won’t spend that kind of money and are pulling projects.”

The cost per square foot for luxury homes can range from $200 to $250 depeding on the types of amenities added – commercial kitchen, gold faucets and trim, natural stone, exotic hardwood.

With the strong local economy and influx of professionals into the area, contractors and realtors expect this market to proceed in a positive direction.

“We’re one of the better economies in the United States pretaining to oil and gas, the medical community, retail outlets,” boasted S.P. LaRussa, owner/broker of LaRussa Real Estate. “It looks like it’s going to be like this as long as the oil and gas business is booming.”

Esso has projects going on in Thibodaux and one that will start in next year near Ardoyne Plantation. He predicts other areas in Lafourche Parish will see a luxury home boom.

“Out towards Napoleonville and Labadieville will be the next available land for us to build,” he said. “On these larger projects, you need at least half-an-acre of property to build on.”

Industry professionals have various opinions as to why the market has soften recently. One major concern is the coverage of the national housing market slowdown effecting how people view the local market.

“People have gotten nervous about buying because of the hype on TV,” said Christen. “Louisiana is not suffering nearly as much the national media is reporting. We have barely been affected. We haven’t had nearly the number of foreclosures or loan failures. It’s unreal how Louisiana has floated to the top this time around.”

Another problem is the crackdown on certain lending practices has made mortage companies more cautious about whom they lend money.

This has most affected first time home buyers trying to purchase a luxury home.

“For a long while many of the mortgage companies were doing 100 percent financing with no money down. That’s all gone now,” Randolph A. Bazet, III co-owner of Bazet Reality & Associates, Inc. “Unless you have money to put down or have a substantial credit score, it’s going to be difficult to finance the purchase of a higher-end home.”

“Zero-down lending created an artificial market called the mid-market,” said Esso. “Ten years ago, once you got past $300,000, that was a custom unit. Now that’s moved up to $500,000 and a $200,000 to $400,000 unit became a spec house. That was artificial created by a miracle of financing.”

As long as the local economy does well, contractors and realtors are confident the luxury home market will stay strong. They see the recent sales decline as a minor hiccup and not a sign of trouble ahead.

“It’s just a little slow down in sales. They’re not popping like they use to,” Christen said. “I remain optimistic though.”

Luxury homes, like this one being constructed in Sugarwood Estates continue to be built even as a slight decline has occurred in the local market. * Photo by KEYON K. JEFF