Home sales are spiking in Lafayette Parish and the overall housing market looks relatively stable, according to a new report from a leading Lafayette real estate company.
But the stability only reflects the health of the mid-range market as sharp supply-demand mismatches continue to afflict the low and high ends, according to Van Eaton and Romero’s monthly report on the Acadiana residential real estate market.
Increased sales in the plus-$300,000 range aren’t keeping up with the glut of new listings, particularly when it comes to resales. Year-over-year sales in the high-end range were up 13 percent in May, but new resale listings, which far outnumbered those for new construction, were up 31 percent.
“The problem has been in that there has been too much supply coming on the market, and that is particularly exacerbated in the upper end resale market,” said William Bacque, president of Van Eaton and Romero, who is retiring next week. “To a certain degree that may be the tale of Lafayette since 2014, since we started into a downturn in the economy, led by the oil and gas industry.”
The low-end market, meanwhile, has the opposite problem: not enough inventory to satisfy the demand. And while the overall percentage increases in April and May were in the double digits, sales last month in the sub-$150,000 market were down by 10 percent.
New construction in the bottom tier is virtually non-existent, with two new homes sold and three actively listed for the year through May.
“At some point when your demand is much greater than the supply of product, it can ultimately just frustrate buyers to a point where they aren’t going to buy,” Bacque said.
Housing economists measure the health of a market by calculating the number of months it would take to sell off homes on the market, with six months being the ideal “equilibrium” point, Bacque said.
The overall Lafayette Parish market was almost exactly at the equilibrium point in May, with a 6.2-month supply of inventory. That’s because high and low-end sales combined for only 39 percent of all sales in May, with those in the $150,000 to $299,999 range making up the rest.
The Van Eaton and Romero monthly report relies on data reported to the Multiple Listing Service supplied by real estate agents, so the report doesn’t capture every type of transaction.
For example, Habitat for Humanity recently sold 13 new homes in the McComb-Veazey neighborhood – two of which are still being built – in the lower-end price range to pre-selected buyers, without the involvement of real estate agents.
Habitat, which relies in part on federal grant money for its construction projects, typically sells at below-market prices to buyers with incomes between 30 and 60 percent of the area median income. The Lafayette chapter of Habitat is swamped with applications from interested buyers, said Executive Director Melinda Taylor.
“We are trying to narrow it down right now because I think we are going to have more qualified people than we can actually reasonably expect to build with in the next 12 to 18 months,” Taylor said.