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Bill Cobb

Are Baton Rouge Homes Appraising Less Than Original PurchasePrices?

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Real Estate Appraiser with Accurate Valuations Group, LLC LA St Certified 851

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December 02, 2013 10:12 PM

BATON ROUGE REAL ESTATE HOME PRICES QUESTION:

As a mortgage loan officer, I've had a couple of recent loans in which properties have appraised for less thanborrowers actually paid for property. This was surprising because properties were in 70816 and 70817 zip codes instable areas. Do you find this to be a trend?

MY BATON ROUGE HOME APPRAISER ANSWER:

IMPORTANT NOTE ON MARKET PERCEPTION: The perception is that the 2013 Baton Rouge HousingMarket is Fantastic and that’s true if just based on theimproving # of home sales. However, home pricesare not necessarily going up evenly as would beexpected.

GBRAR representatives are on the radio talking aboutan improving market, and based on # of home sales,it’s an improving market. We can ALL say that ingeneral, 2013 is a better housing market than 2012or 2011. BUT, many of the markets they cite are longtime HOT markets of 70806, 70808, 70809, 70810.What's not being reported are these old market leaders like Sherwood Forest / Broadmoor and Park Forest and howthese markets are struggling. In Park Forest in 2007, the median sales price was $147,900 and today it's closer to$116,500. In Sherwood Forest in 2010, the median sales price was $183,400 and today it's closer to $157,700. Themarkets in the above zip codes are the direct opposite of what's taking place in zip codes 70714, 70811, 70812,70814, 70815, 70819, etc.. The rising tide of somewhat better home prices in hot zip codes is not necessarilyraising home prices as a whole in ALL of Baton Rouge Real Estate.

I haven’t necessarily witnessed this as a trend, BUT it’s not all that uncommon either. And, it depends on IF theoriginal purchase was made before or after Hurricane Katrina. 70817 is generally stronger than 70816 and itdepends on if the buyers originally paid too much after Katrina only to have the market correct in 2011, which was the

year of correction for GBR Home Prices. There are absolutely those that bought after Katrina that are upside downright now on those purchases in 2013, despite the market improvement. Not ALL Zip Codes are sharing in the good2013 Baton Rouge Real Estate improvement. And, some that bought in the right markets after Katrina haveexperienced increasing home prices. By "right markets" I'm referring to zip codes 70806, 70808, 70809, 70810 or inNorth Ascension Parish (Prairieville, Gonzales, Geismar markets).

THREE BATON ROUGE SUBDIVISIONS IN 70816 & 70817 WITH LOWER 2013 PRICES

Did you know that Shenandoah Estates 70817 with 2,800+/- homes sales prices are DOWN in 2013 comparedto 2012?

In 2012 in Shenandoah Estates, the average sales price per square foot was $91.29 with median sales price of$188,250. In 2013 in Shenandoah Estates, average sales price is $86.86 with median sales price of $184,750. Thisrepresents a correction of -4.85% for average sales price per sq. ft. and -1.9% decline for median sales price.Shenandoah is so large, Google calls it a City and it’s certainly a bellwether or barometer of Baton Rouge RealEstate home prices.

Woodland Ridge Subdivision 70816 is experiencing a similar downward trendonly not as severe. In 2012 in Woodland Ridge, $88.33/sf with median sales price $250,000 versus in2013 $87.42/sf with median sales price $216,000.

Sedona Pines 70816 is experiencing a similar downward trend. In 2011-2102 in Sedona Pines, $99.36/sf with median sales price $129,500versus in 2013 $97.06/sf with median sales price $122,000. That's a -5.8%correction in median sales prices.

OTHER FACTORS THAT INFLUENCE BATON ROUGE HOME PRICES:

1.) It depends on if their home’s condition isn’t as updated as it used to be at time ofpurchase. Katrina was 8 years ago and over 8 years, a home can become somewhatdated. And, we’ve weathered 3-4 major hurricanes plus 1 major hail storm since thenas well. There’s a significant number of homes in Baton Rouge needing new roofs.

2.) It depends on subdivision home is located in and if HOA for that subdivision isdoing its job to maintain a standard.

I’m seeing some home prices deteriorate over time become the broad appearance /condition of homes is declining in some subdivisions.

3.) FLOOD ZONE. In late 2013, it matters BIG TIME as to if home is located in aFlood Zone. I’m advising ALL buyers not to buy in a known flood zone as I believehomes in flood zones will DECLINE in value and homes not in flood zones willINCREASE in value. Any “Fix” by Feds is only a bandaid and there’s no guarantee this 4 yr delay will come up for avote.

Hope thishelps. Bill Cobb,Appraiser

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REAL ESTATE DATA NOTE:

Based on information from Greater Baton Rouge Association of REALTORS®\MLS for period 01/01/2017 to12/02/2013, extracted on 12/02/2013.

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