We have compiled a year’s end market review and market trend summary for Tangipahoa Parish
As we review this information know that this is a high-level overview of the area as pockets of different areas on the macro level could show different results
There’s no doubt about it, the 2018 housing market has seen its ups and downs. The year started with rising home prices due to the increase in cost to build, low inventory, historically low mortgage rates and a definitive upper hand for sellers. In recent months though, home price growth has faltered, rates have risen to their highest point in nearly eight years, the cost to build has not declined, and favor has started to shift from seller to the buyer.
Will these trends continue? Will housing experience the same wild ride in the new year?
Most of the growth that is happening continues to be in the south end of the parish. The maps below show the general location of the sales over the last 5 years.
Prices have continued to increase for Tangipahoa Parish over the last 5 years. As Tangipahoa Parish continues to grow so has the Median Sales Price overall for the parish. The Median Sales prices have increased from $149,500 in 2013 to $172,500 in 2018.
Market times were typically low in this market, as reported by the MLS. Since 2014 days on the market has been decreasing; however, in 2018 the DOM stabilized.
As we have reviewed the data over the last 5 years let’s take a closer look at the last 12 months in 2018.
2018 started out reasonably strong; however, After July the data would indicate that the median sales price was in decline except for September. The overall trend line indicates that the sale prices have been on a slight decline in 2018
In our appraisal research, we have identified slightly increasing marketing times; however, they are still within a very low period of fewer than 50 days for 2018.
Median List prices are indicating a slight decline but have been basically flat for 2018.
The number of sales tends to follow the seasonal market of buying and selling. The spring and summer months tend to be busier than the “winter” months.
As this market has experienced increases in value over the last 5 years, it appears that the market may be peaking at this time. I personally foresee some stabilization in 2019. The uncertainty of what will happen with interest rates and cost to build will have an impact as increases in wages do not appear to be keeping pace. Again, this would be affected mainly by the interest rates, the cost to build and stabilization of demand.
New Construction- What’s the Trend?
As we review housing needs, the U.S. Census indicates that the average U.S. household is 24 percent smaller than it was in the early 1960s. Although last year saw a slight uptick perhaps caused by millennials finally getting married. Still, there are fewer Americans per house or apartment than there were a few decades ago. Despite this, the median new single-family house completed in the U.S. in 2018 was 59 percent bigger than it was in 1973. American Households Have Gotten Smaller Persons per household.
Source: U.S. Census Bureau
Despite this, the median new single-family house completed in the U.S. in 2017 was 59 percent bigger than it was in 1973.
The number of new homes being built in Tangipahoa Parish has been increasing over the last 5 years, and after reviewing the sale of 404 new home sales in 2018, the Average Home Size was 1800 square feet with an average Price Per Square foot of $108 per square foot overall.
The median price per square foot overall has increased over the last 2 years but so has the cost to build.
Does Lot Size Matter?
None of the indicators above should shock anyone who has driven by any of the new subdivisions in the last couple years in South Tangipahoa Parish. It is interesting to see that the house size has been relatively stable; however the lot sizes have been decreasing. This partly due to the demand of the market but also the cost to build in materials, workforce and development costs.
The cost to build versus the price to buy is approaching a point that may push some builders out of the market due to the cost to develop and build as well as the number of buyers available to purchase also decreases due to the median income for residents in the area. Tangipahoa Parish is feeling the growing pains of this, and the market is reacting by wanting smaller lots and homes with upgraded amenities.
Below you will find an example of the cost to build from a respected Cost Index CoreLogic Swift Estimator. As the Median Home Price ranges from $166,000 to $172,000 over the last two years, it leaves very little room for builder profit. As the cost to develop continues to drive the cost to build new homes upward this directly impacts the potential home buyers in the market.
The data from the Tangipahoa Parish Planning Department indicates the number of new construction permits was slightly down from 2017. I know it seems like the number of houses being built in South Tangipahoa Parish is in the multiple thousands the permits say something different. For a Parish the size of Tangipahoa Parish these permit numbers are great numbers.
Will Mortgage rates continue rising?
Despite steady climbing for the past two years, mortgage rates remain lower than they were during most of the recession and below average for the type of strong economic growth we’ve been experiencing. That may change in 2019, as the 30-year, fixed rate mortgage reaches for the 5+% territory. However, at the time of this blog post interest rates were declining to 4.44% for a 30 year fixed mortgage.
Overall the housing market in Tangipahoa Parish was healthy in 2018 and as 2019 approaches, I am anticipating home sale prices to remain stable. I think it will be a slightly slower year as the market continues to wrangle with possible higher mortgage rates after contending with several years of rapid price growth and the increased cost to build but not dramatically slow. This appears to be the trend for the Northshore area overall.
The medium and long-term prospects for housing are good because demographics are going to continue to support demand. Tangipahoa Parish has a number of developments in different phases of starting and building. As the market slows the price appreciation, incomes will have an opportunity to catch up. With slower sales, inventory has an opportunity to normalize.
If you have been on the fence about selling it appears that the market is peaking so now may be the time. All in all, housing appears to be set for a little bit of a slow-down in 2019, as the public responds to the market and the economy and the cost of construction finds its sweet spot.
If you have any questions, we would be happy to assist you with your real estate appraisal needs or real estate consulting. Please feel free to leave your comments below or contact our firm for assistance.
We wish everyone a healthy and prosperous 2019, Happy New Year!!!!
- The above statistics were taken from the local MLS/Gulf South Real Estate Network via my personal defined and mapped market areas. Keep in mind these statistics may not include total market data and times, due to prior listings via canceled or expired then possibly reissued and for sale by owners, but give a general idea of statistics if a single-family property is actively and reasonably marketed or priced. This is not to be taken as financial advice or legal advice but is only for information purposes only.
Great year end recap Joe. This should be very helpful to those living in your area.