That was a very quick 12 months in 2019!!
I think we have to start by taking a look at what our 2019 Forecast Indicated…
“As 2019 approaches, I am anticipating home sales to slow down slightly and stabilize. I think it will be a somewhat slower year as buyers continue to wrangle with higher mortgage rates after contending with several years of rapid price growth and the price to purchase new homes due to the increased cost. This appears to the trend for the Northshore area overall.
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 may reach the 5+% territory. However, at the time of this blog post, interest rates were declining to a low of 4.44%.
The medium and long-term prospects for housing are good because demographics are going to continue to support demand. As the market slows the price appreciation, incomes will have an opportunity to catch up. With slower sales, inventory has a chance to normalize. A bit of slowdown in 2019 creates a healthier housing market going forward.“
Looking back I think that was a pretty good forecast for 2019!! I think the thing that drove the number of sales was that interest rates did not increase as many predicted and additional new homes was built in the area.
Now Let’s Review the 2019 Housing Activity
We have compiled a 2019 year’s end market review and market trend summary for St. Tammany Parish. If you have additional questions, or are in need of a real estate appraisal or consultation please reach out to us at 985-230-0730 or online at http://www.jmappraisers.com
As we review this information know that this is a high-level overview of the entire parish as pockets of different areas on the macro level could show different results
2019 was a busy year of home sales in St. Tammany Parish seven out of the twelve months in 2019 exceeded the number of total sales compared to the months in the previous five years.
May and June was the busiest months with over 450 homes sold in those months. This is typical for the market as spring and summer are the active months.
The Average Sales Price for a Residential Home in 2018 for St. Tammany Parish was $258,800 and $260,400 for 2019 which indicates a 1.4% increase in the last 12 months. This is an indication of prices stabilizing when compared to the previous 2 years.
The average list price for homes in St. Tammany Parish average $295, 800 for 2018 and $300,800 or an increase of 1.7%
Housing Inventory for St. Tammany Parish for 2019
Housing inventory ranged from 5 to 7 months of available inventory. This is an indication that the supply and demand is near equilibrium and it is a stable housing market.
The days on market to sell homes was very good at an average of 67 days in 2019.
Home Builders will keep on building…
Home builders are closed out 2019 on a high. The National Association of Home Builders reported that builder confidence has reached the highest level since 1999. And housing starts and permitting activity continued to increase through the year of the year.
According to the Parish Permit office issued 1212 new construction permits were issued in 2018 and 1479 permits in 2019 or a 22% increase. The municipalities in the parish issued an additional 176 permits.
The next three charts are based on the latest data available as of 2018 and was provided by a housing impact study completed by Southeastern University. As you can see below the unincorporated areas are where the bulk of new construction is happening. (These numbers are reflecting 2018 on chart below.)(This data is from a recent report completed by SLU Business Center *2)
The Residential Construction Value for the Northshore for 2018 was over 1/2 of Billion Dollars ($530,800,000.00)
How does our Home Sales compared to the other Regions of the United States?
The South is still the leader in Existing Home Sales for the last 20 years!
How Does The Housing Industry Impact The Parish Economy
According to the latest available data (2018) The Housing Sector has a major impact for the entire parish. 2,587 jobs are directly supported by the Residential construction sector in St. Tammany Parish in 2018. This would rank between Finance & Insurance jobs (2,956) and Transportation & Warehousing (2,955). The total employee compensation and proprietor income equaled an estimated 231 millions dollars in St. Tammany Parish. The estimated local sales taxes generated for 2018 by new residential construction equaled $1719 million dollars in St. Tammany Parish.
Included in these estimates sales tax totals are estimated allocations of $11.3 million for schools, 6.8 million for municipalities, $5.7 million for general parish government and public works and 1 million for law enforcement. When you review the estimated economic impact of the residential construction activities for 2018 the number is quite impressive.
The direct impact is $349,381,940, Indirect impact (supplies, goods and services) $123,090,867 and induced impact (Consumer spending) $129,243,840 for a total of $601,372,465 just from the residential construction activities in St. Tammany Parish Parish. (This excludes property tax impacts) *2
The final indicator we will review is total volume of sales in St. Tammany Parish. 2019 had an increase of 13.8% or $78,126,890 of total sales. This would indicate approximately 4.7 million dollars (based on 6%) of commissions paid to real estate professionals that would be return to the community in spending dollars in St. Tammany Parish! The Housing Industry provides jobs and so much more for the region.
There is a lot of discussion taking place at the parish level to slow down growth and development. Some groups are calling for a moratorium on ALL new construction. This is a discussion that you (the public) must be engaged in as the Housing industry, as stated above, has a tremendous impact on the overall economy of the parish. Placing a moratorium on all new construction would impact all sectors of the parish from schools, police, government services and more; therefore, there needs to be a plan B to address concerns of those that have issues with the growth taking place in St. Tammany Parish.
Who will be the buyers in 2020 and going Forward?
Millennials Will Get Aggressive About Buying Homes
Realtor.com notes that one demographic will be big buyers in 2020 – even if inventories are thin. That’s the millennials.
Apparently, younger buyers are eschewing inner-city living and have their sights set on 1,800 square-foot homes in the suburbs, with good neighborhoods and decent schools. Millennials will take more mortgages than baby boomers and gen-x’ers in 2020, the company predicts. Down payments from millennial buyers will also likely be bigger than ever.
Will these trends continue? What will happen in 2020?
Well, if I knew 100% for sure I think I would buy a lottery ticket; however, after reviewing this information and looking at the market indicators like low unemployment, wages increasing and the number of developments that are currently under construction it appears that 2020 will be another good year for the housing and real estate market in St. Tammany Parish.
Final Forecast For St. Tammany Parish
Though the housing market has been lifted this year by lower mortgage rates and continuing job expansion, the growth has also been curbed by a lower housing inventory and elevated home prices. As economic conditions are expected to remain favorable for homebuyers in 2020.
If there are no major changes caused by national economic issues home price growth will continue to stabilized, with a modest increase of just 0.8 to 1.5% percent
– Inventory will remain constrained, especially at the entry-level price segment of existing homes
– Mortgage rates are likely to bump up to 3.5 to 3.9 percent by the end of the year
– Low mortgage rates will lead to steady sales and a sellers market
– Buyers will continue to move to affordability, benefiting mid-sized market
Joseph Mier & Associates has served the Northshore Region for over 20 years and enjoys sharing information with the community on the real estate market. 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. http://www.joemier.com
As you review this information know that this is a high-level overview of the entire parish as pockets of different areas on the macro level could show different results. All data used is from the Gulf South Real Estate Network Multiple Listing Services. This data does not include any for sale by owner data. This preview of data is for informational purposes only and should not be used for investing purposes.
*2. Portions of data in this report is from the “Economic Impacts of New Residential Construction on the Northshore 2018 report” completed by Southeastern Louisiana University Business Research Center as of 12/2019 https://www.jmappraisers.com/localhousingnews