The safe bet is on 2010 ending up much like 2009, where new home construction sales and average sales price were up slightly. We're OK with that.
It looks like the Acadiana real estate market has settled into a post-Katrina sales pattern, as the last two years have produced similar types of sales activity. Not having participated completely in the national real estate collapse, our market has sought its level with slow, steady sales. What's left in the wake of the Katrina-stimulated run-up is a return to a normal pace of sales, but with solid values and a broader market.
This certainly wasn't the case in June of 2009. With the national real estate industry in shambles and credit tight for home buyers, our market was off by double digits at midyear as compared to 2008. A slide that began in the last quarter of 2008 persisted, and it appeared our local market hadn't seen the worst yet. It wasn't until July that 2009 sales bested 2008 for any single month. Fortunately, that trend continued: Every month in the last half of the year, except August, was better than 2008. By the end of the year, units, sales volume and average prices were all within 1 or 2 percent of 2008.
We have indeed come a long way, and there are some encouraging signs heading into 2010. Most notably, active inventory has remained stable, prices held or increased, and new construction is up. One bellwether indicator is active inventory - the more homes on the market, the more downward pressure on prices, resulting in fewer sales. Inventory has remained low all through 2009 as compared to the prior year and remains steady into 2010. While I would like to see our inventory a bit lower, the number stabilizing is a good first step.
When compared with 2008, the entire Acadiana area's average sales price was actually slightly up in 2009. Average price for the Acadiana Multiple Listing Service was also up by a full 2 percent. Not many markets in the country can make that claim.
Another encouraging sign is our new construction market. After spending most of 2008 on the sidelines while existing inventory dried up, many builders reinvented and targeted new buyer demand. Anything under a $200,000 sales price is now in high demand, as first-time home buyers, armed with tax credits and low interest rates, pace this market with a particular desire for new construction. The total number of new construction sales were up in 2009 compared to 2008, a trend that will continue in 2010.
Challenges certainly remain. It has never been more difficult to complete a real estate transaction than it is right now. Even if you have a willing, qualified buyer and seller, new and constantly changing national lending requirements from Fannie Mae and FHA present roadblock after roadblock. What is approved in the morning is not approved in the afternoon. This causes delays, increased expense and all around frustration for everyone involved in the transaction. The rule of the day is for all parties to anticipate this, be patient and work through the process. Crossing the finish line does result in a good buy for most, as well as low interest rates and a tax credit in the mail.
While our overall economy has fared quite well, there is still caution in the oilfield industry. Yes, we have diversified, but we are still an oil town. While there appears to be some optimism in regard to prices headed into this year, most of the industry is holding its collective breath with expected new regulations coming from Congress. Optimism in the oilfield usually translates into spending and investment in Acadiana, but right now people are being cautious.
With all of that said, we actually have very little to complain about. Our real estate market and economy are in much better shape than most around the country and around the state. Should we get any wind in our sails, many buyers are on the sidelines waiting for the right signals to invest. Waiting for them is a great selection of homes, historically low interest rates and tax credits for both first-time and repeat buyers.
As we look forward, the safe bet is on 2010 ending up much like 2009. Expect more of the same. We do expect to see some improvement in the first half of the year with tax credits expiring prior to midyear, but dependency upon those credits and news from the oilfield will likely determine what happens after June.
Steven Hebert has been in real estate and construction all of his life, having begun cleanup work on his father's construction sites at age 6. He is now the COO of Coldwell Banker Pelican Real Estate, a nationally franchised, full service real estate firm.