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Coldwell Banker Gosslee's September 2020 Housing Market Update Main Photo

Coldwell Banker Gosslee's September 2020 Housing Market Update


2020 Continues to Amaze and Confuse
Posted: October 28, 2020 by Jessica Wimberly

2020 CONTINUES TO AMAZE…AND CONFUSE

2020 continues to amaze and confuse! This is one of the hardest columns I’ve had to write because we are seeing record real estate statistics at opposite ends of the spectrum – a record number of sales vs. a record low number of homes on the market. And this comes just six months after real estate was in one of the steepest declines ever. Take a look at what I wrote earlier this year about the U.S. market which was similar to Northwest Louisiana:

For April across the nation, sales were down 17.2% over last year to a rate of 4.33 million which was the lowest since 2010 and the Great Recession. It was also the single greatest monthly drop since July 2010.

And now that we near the Holiday season, things have swung the other way. Like I said, amazing and confusing!

The Coldwell Banker Gosslee Monthly Market Report  showed that there were 571 sales in Caddo, Bossier and Desoto Parishes in September, up a whopping 38% over last September. This is the third straight month we have set year-over-year records. Even with the early pandemic sales declines in April (and also May), we have definitely caught up. In fact, there have been nearly 4,000 homes sold through September. We are now up 7% from a year ago.

These Northwest Louisiana numbers are even more dramatic than the national scene. The National Association of Realtors (NAR) just shared its Existing Home Sales Report that showed American home sales were up 20.9% over last September. The real estate industry is on pace to sell 6.5 million homes nationally, a dramatic improvement from the COVID-impacted 3.91 million pace we were on in May.

While sales are at record high levels, inventory is at the other end of the spectrum. Record lows.

Here in Northwest Louisiana, we are at an all-time inventory low. In fact, in our three parishes, there are only 1,236 homes currently for sale, 40% below last year’s level. Think about this. A potential buyer has 40 percent fewer homes to look at today than last year.

We now have just a 2.9 month supply of homes. To put that in perspective, three years ago it was 6.2 months. This shows how drastic the shortage of available homes currently is.

Our 40% decline in inventory is more than double that of the entire U.S. NAR just reported that there are only 1.47 million homes available for sale nationally. This is a record low and 19% less than a year ago.

The inventory challenges – both here and nationally – is leading to home’s selling at a record-fast pace. NAR shared that the median time on market (the middle of all September homes sold) was 21 days, the fewest ever recorded. Incredibly, 71% of all U.S. homes sold came off the market in 30 days or less,

Comparably, we are at just 24 days on market compared to 39 last September.

This chart shows how drastic our inventory declines have been, especially at the lower end of the market. Also notice a bit of good news. We are really happy to see the upper end normalize. Prior to this sales boom, we simply had too many top tier homes for sale: 

Price Range

Number of Available Homes

Month Supply (September 2020 vs. September 2019)

Total

1,236 (record low)

2.9/5.2

Under $100,000

230

2.6/4.9

$100,000-$200,000

399

2.6/4.4

$200,000-$300,000

243

2.5/4.6

$300,000-$400,000

154

4.1/6.3

$400,000-$500,000

88

5.9/11.5

$500,000+

122

11.6/16.7

 

Now let’s address home prices, the one area where we are not way ahead of the national scene. NAR reported that the median existing sales price in September was $311,800, up 14.8% from a year ago. Thankfully, our median prices are stable at $196,458, up just $231 from last September.

This chart shows how we compare to the U.S. in the various reported categories:

 

U.S.

(change over September 2019)

Northwest LA

(change over September 2019)

Median Price

$311,800/+14.8%

$196,458/flat

Number of Sales

6.5 million/+20.9%

571/+38%

Inventory

1.47million/-19.2%

1,236/-40%

Months’ Supply

2.7/-33%

2.9/-44%

Days on Market

21/-34%

24/-38%

 

Most of the pressure on the market is at the lower price points where we are not seeing the same number of increased sales percentages as the higher priced sectors. This makes sense because the supply vs. demand struggles are greater in the $200,000-and-under ranges. If there were more available homes, there would likely be more sales.

Here is a local look at home sales at the different price points:

PricPrice Range

Year-to-Date Number of Home Sales in Caddo Parish (% change over 2019

Year-to-Date Number of Home Sales in Bossier Parish (% change over 2019

Year-to-Date Number of Home Sales in Desoto Parish (% change over 2019

Year-to-Date Number of Home Sales combined (% change over 2019

Total

2,217 (+7%)

1,602 (+7%)

165 (+7%)

3,984 (+7%)

$100,000 & less

581 (-1%)

182 (+2%)

32 (-18%)

795 (+7%)

$100,000-$200,000

904 (-1%)

543 (-1%)

44 (-10%)

1,491 (-2%)

$200,000-$300,000

460 (+12%)

588 (+14%)

51 (+31%)

1,099 (+14%)

$300,000-$400,000

140 (+12%)

186 (+13%)

29 (+53%)

355 (+15%)

$400,000-$500,000

68 (+24%)

67 (+52%)

8 (+14%)

143 (+35%)

$500,000 +

64 (+25%)

36 (-10%)

1 (+100%)

101 (+10%)

 

The $400,000-$500,000 is the most active by percentage increase. Likely led by move up buyers, this segment has seen so much activity that its inventory levels have dropped almost in half from a year ago from 11.5 month supply to 5.9. Bossier, up 52% in this price point, has recorded 67 of the 143 sales in this range for all of Northwest Louisiana.

Now that you see the numbers, I think it is important for us to catch a breath and figure out what is occurring.

First, 2020 started well in real estate and we were then hit with the pandemic. The initial slowdown, while scary, did not ultimately damper buyer activity. It only moved things further into the year. This included the traditional military activity as Barkesdale Air Force Base Permanent Change of Station (PCS) orders were delayed. Essentially, the spring buying season moved ahead a few months, through the summer and into the fall.

The historically low mortgage rates have been a huge driver of buy activity. First time buyers realized that for the same, a bit more, or sometimes even a bit less than what they pay for rent, they could own a home. This created increased demand and the number of available lower-priced homes were gobbled up. In many of our popular neighborhoods, sellers saw multiple bids.

And because most industry analysts project mortgage rates to remain at near-historically low levels, we should see demand stay strong.

But what about supply? Our market needs more homes to come on the market.

The hope is that those who have considered moving in the near future may realize that now may be the best time to do so. This includes those considering moving up where the opportunity is fantastic. Low mortgage rates essentially give them added funds to afford a more expensive home that may be larger, closer to family or friends or in a desired neighborhood.

These sellers would win on the sell side (price and speed of sale) AND on the buy side where there are still plenty of choices because the higher supply figures are in the $300,000-plus range and beyond.

And because of COVID-19 and the hybrid or all-online model of schooling today, many families are taking advantage of moving up into the late fall, something that usually doesn’t occur.

The downsizer, usually “empty nesters,” are another group to watch. Many in this category have lived in their home for quite a while and have netted equity. Like move up buyers, for downsizers who have considered selling, now could be the right time. If you are in this group and considering a move, you definitely should talk to one of our agents.

Here is an example of why that is important. I recently spoke to a woman who told me that she and her husband were thinking of moving closer to her kids and grandchildren out of state. But without ever talking to a real estate professional, those plans got put on hold because her daughter, who isn’t in real estate, told her that the market there is tight. So that ended the idea.

I encouraged her to consult with a full-time agent. Those in our offices are well connected and can get you the information you need to make an educated decision. For instance, is the condo/townhouse market as tight where you want to move as the single family home market? Or are entry level homes a greater concern that mid-tier homes? There are also all sorts of creative ways to make a move, including renting in your new community if things are really tight there. Our agents can help take some of the mystery away.

I hope I have explained what is occurring and taking some of the confusion away. As always, if you need more help or just want to talk things through, please ask any of our 150 agents in Shreveport and Bossier or reach out to me at jessica@cbgosslee.com.

Happy Halloween!

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