• CHANGE RESULTS VIEW
  • SORT BY

Email Post to a Friend: CBG's October Local Housing Market Update

The information you provide on this form will not be used for anything other then sending the email to your friend. This feature is not to be used for advertising or excessive self-promotion.
November
21

LAWRENCE YUN IS NOT TALKING ABOUT US
By Brad Gosslee, President, Coldwell Banker Gosslee

We are coming to a very special time of year as we celebrate Thanksgiving and the holidays with our friends and loved ones. And, of course, as a former football player who played at Byrd High School, I'm also pumped up that it's almost time for the Independence Bowl! I can't wait to see which teams and their fans are coming to Shreveport!

This is also a great time for me to take a moment and once again salute our Coldwell Banker Gosslee agents. For those of you who have worked with them, especially over the last couple of years during the pandemic-fueled real estate frenzy, you saw how dedicated and exceptional they are. Now with mortgage rates rising, their value will grow even more! As our company has been a fabric of the region for more than 60 years and the market leader for three-straight decades, our agents have been through numerous market changes. They are well-trained and ready to support buyers and sellers in a uniquely different market.

The story of rising mortgage rates is everywhere. It's obviously big news. But I came across a quote from National Association of Realtors Chief Economist Lawrence Yun that makes a lot of sense:

"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher. The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years."

Because our home prices are nowhere near San Jose's $1.4 million, Seattle's $750,000 or Austin's $550,000, the financial challenges may not be as severe for our buyers. While no one wants to pay more, Lawrence's point is valid. It's likely harder to pay $2,700 more a month for a loan than $400.

I say this because the median price for a home in Caddo, Bossier and Desoto Parishes is currently $212,000. Using Lawrence's views as a guide, here is a breakdown of what monthly loan payments would be in several markets – compared to earlier this year - assuming no extra fees or having a down payment.

Market

Median Price

Monthly Payment with 3.5% Mortgage

Monthly Payment with 6.76% Mortgage

Difference in Monthly Payment

San Jose

$1,400,000

$6,287

$9,034

+$2,747

Seattle

$750,000

$3,368

$4,840

+$1,472

Austin

$550,000

$2,470

$3,549

+$1,079

Northwest LA

$212,000

$952

$1,368

+$   416

 

His theory seems to be true in Northwest Louisiana judging by home sales too.

While the National Association of Realtors reports that home sales are down 28.3% in October nationally, we are down 24%. The reason it is so far off is because we were in blistering times a year ago. And to provide a comparison, I looked at some markets in uber-expensive California. The San Francisco market is off 37.5% and Los Angeles is down just about the same (39.8%).

Locally, for all of 2022 so far (not just October which I just described), there have been 4,475 home sales in our three parishes which is down 12% from the blistering pace of a year ago. But we are still up compared to more traditional times like 2018 (4,074) and 2019 (4,152) prior to the pandemic:

Price Range

YoY Number of Home Sales NW LOUISIANA
(% change over October 2021

YoY Number of Home Sales in Bossier Parish (% change over October 2021

YoY Number of Home Sales in Caddo Parish (% change over October 2021

YoY Number of Home Sales in Desoto Parish (% change over October 2021

Total

4,475 (-12%)

1,835 (-10%)

2,842 (-15%)

158 (+0%)

$100,000 & less

671 (-23%)

    166 (-1%)

479 (-16%)

26 (+4%)

$100,000-$200,000

1,407 (-10%)

436 (-26%)

925 (-22%)

    46 (-15%)

$200,000-$300,000

1,350 (-6%)

671 (-9%)

648 (-11%)

    31 (-3%)

$300,000-$400,000

578 (-1%)

351 (+1%)

198 (-5%)

29 (+12%)

$400,000-$500,000

251 (-3%)

138 (+8%)

99 (-14%)

14 (-13%)

$500,000-
$600,000

   1 04 (+25%)

    44 (+13%)

51 (+19%)

9 (+800%)

$600,000+

114 (+14%)

29 (+0%)

82 (+22%)

3 (0%)

 

As I said earlier, obviously higher interest rates are not what buyers or sellers want. Hopefully as the nation overcomes inflation, mortgage rates may come down. If you want to geek-out, pay attention to the 10-Year Treasury Note which is the greatest indicator of where mortgage rates are likely headed.

But in the meantime, our agents are working closely with our friends at Fairway Mortgage to show prospective buyers that 30-year-fixed rate loans are not the only option. In fact, here are some terms and loan options to understand:

  • You can refinance; "Marry the home…date the loan." I don't know who originally said this, but it's a brilliant line. The belief is that you can always re-finance your loan when they drop. Most economists predict this will likely occur in the middle of 2023.
  • Adjustable Rate Mortgages (ARMs): Because mortgage rates dropped so low during the pandemic, most took 30 or 15-year fixed rate mortgages. But ARMs give you a lower rate for a sizeable time period, usually 5, 7 or 10 years, before readjusting.
  • Buy Downs: Along with having a down payment to lower costs, you can also pay more upfront in your loan. This can lower your interest rate and thus the monthly payments.
  • Other options: There are several loans that aid buyers including those from the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).

We have to remember that the need for a home will always be there. This is because life events will dictate moves including happy occasions like engagements and marriages, children and growing families, job promotions and new jobs. If you are considering buying a home, you owe it to yourself to speak with one of our agents. Northwest Louisiana is a very different place than the rest of the nation and having someone who understands our current market conditions will be a huge help to you. I promise!

Let's now get into the nitty gritty of what IS occurring on the real estate front in our wonderful area.

The first thing we have to understand is that home prices are slowing their pace of appreciation. You may remember that I've always referred to Northwest Louisiana as a "Steady Eddie" market where we would usually see a 2-3% increase in home prices each year. But because of the recent historically-low mortgage rates, the ability to work from anywhere and our amazing affordability, we saw demand far exceed supply and therefore home prices went up locally in dramatic fashion over the last couple of years.

We are now starting to slow down. We have had back-to-back months where prices were less than they were at the same time a year ago. This could be expected because we could not sustain such a red-hot market and the price declines are off of record highs.

In fact, if you compare the median home price we had in October 2021 of $218,500 to this year of October-only sales, we are down 17%. But remember that even at this reduced price, we are still ahead of 2018's $165,000. While I don't have a crystal ball, I don't see prices dropping to those levels.

Even with the slowdown, our annual price appreciation is 7% for all of 2022

But here is the rub. We still do not have enough homes for active buyers to consider. Sure our buyer pool has decreased and we don't have multiple bids at the same levels we had last year and into the early part of 2022, but we still have only 1,072 homes on the market which is 51% less than we had available at this time in 2018.

While I am excited to see our inventory increase, we do need more homes to come on the market. This is why the monthly supply stat is valuable. We know that over the last 12 months we have been averaging 447 sales a month. Therefore, as you will see in the next chart, our 1,072 homes on the market would only last 2.4 months.

And while buyers don't have to choose a home at the same quick pace they did previously and have a little more negotiating wiggle room today, we are still in a sellers' market.  A balanced market locally – where neither buyer nor seller has a negotiating advantage – is about 5-6 months. You can see we are still a long way from that mark:

Price Range

October 2022 Available Homes/Month Supply

October 2018 Available Homes/Month Supply

Total

1,072/2.4

2,173/5.5

$100,000 & less

215/3.3

456/4.6

$100,000-$200,000

253/1.7

697/4.4

$200,000-$300,000

271/2.0

489/5.3

$300,000-$400,000

128/2.3

245/7.8

$400,000-$500,000

71/2.8

125/13.4

$500,000+

134/6.3

161/26.

 

We are especially tight in the mid-tier price ranges. And, if/when mortgage rates retreat and more buyers came back into the market, we would see our supply dwindle further. This is why we also encourage potential sellers to talk with one of our agents. While we have moved past the top of the market, you may be surprised to know how your home has maintained its value.

One of the reasons for the market's slowdown is that higher rates pull out buyers at the lower end of the market. Also buying power dwindles and therefore others are forced to purchase less expensive homes. That appears to be occurring in Northwest Louisiana.

We saw 95 October sales at the $100,000 or less price point, the strongest October in this range since 2019. We had 18 more homes sold in this price range this year than last year, which is one of the main drivers for our lower median sales price. Remember, the median is the middle of all 1,072 homes sold last month. We also had 11 fewer $500,000+ homes. Therefore, our median price may be a bit skewed.

Here is a look at how we compare to the overall U.S.

 

U.S.

(change over October '21)

Northwest LA

(change over October '21)

Median Price

$389,100/+6.5%

$181,500 /-17%

Number of Sales

4.43 million/-28.5%
(annualized)

401/-24%

Inventory

1.22 million/-0.8%

1,072/+18%

Month Supply

3.3/2.4

2.4/1.8

Median Days on Market

21/18

20/10

 

I want to close by reminding you that the last two months of the year are normally two of the slowest in real estate. And while many buyers will take advantage of less competition, this is normally a time where families don't make changes and instead plan for the following year. In this case, a potential move.

I encourage you not to overwhelm yourself with everything you read on the web, including what we see on the national sites like Zillow and Realtor.com. It might create "paralysis by analysis." Instead, I encourage you to spend time talking to one of our agents. Get comfortable with the buying and selling process and what is occurring in your neighborhood today.

If you want to get even more insight, you can click here to get our Coldwell Banker Gosslee October 2022 Monthly Market Report

Please reach out to one of our agents or feel free to reach out to me at bgosslee@cbgosslee.com.

Login to My Homefinder

Login to My Homefinder