The number of canceled listings has increased
The number of closed sales is stable; however,
this is expected since it typically takes 30-45 days for a property to close
after it has gone under contract
Covid-19 has caused a lot of disruptions in the Acadiana market area. Lots of individuals have lost their jobs due to businesses having to temporarily shut their doors. Other individuals who have not lost their job are being told to work from home. Interest rates have been jumping up and down over the last couple of weeks, and the price of oil had dropped to its lowest price in two decades. There is lots of uncertainty in the air. With all of this going on, how has the real estate market been affected over the past 4-8 weeks? Let’s take a look at the daily trends over the last two months in Lafayette Parish.
With people losing their jobs, oil prices decreasing, interest rates fluctuating, and a global pandemic, what has been the effect on the single-family housing market area in Lafayette Parish? Let’s look at the daily trends in Lafayette Parish in several charts that track new listings, closed sales, pending listings, withdrawn listings, and canceled listings over the last two months. Two dates are highlighted in each chart, March 12th and March 23rd. The date of 03/12/2020 is the day that most major sports put their seasons on hold. In my opinion, this is the day where coverage of the coronavirus really took off. The next date, 03/23/2020, is the day that Governor Edwards announced that the state of Louisiana would have a stay in place order effective the next day at 5:00 pm. The charts show the daily figures for the metrics below.
Daily New Listings:
The first chart shows the number of new listings on a daily
basis for the last two months.
The chart is showing that there has been a slowdown in new
listings. The peak for new listings in
the last two months was on 2/26/2020; however, there has been a downward trend
since then. In fact, over the past seven
days, there have been only 49 new listings. This is a 36% decrease from the prior
week of 76 new listings and a 47% decrease from the week before that of 92 new
listings. There is an obvious decline in
new listings over the past week which is when the governor’s order was
Daily Pending Listings:
The chart below shows the number of new pending listings on a daily basis for the last two months.
This chart shows an obvious decline in the number of pending
listings as well. In the weeks prior to
the day when most of the major sporting events got suspended, there were
several spikes in pending listings. We
have not seen spikes like those since the media coverage has increased for
Daily Withdrawn Listings:
The chart below shows the number of withdrawn listings on a
daily basis for the last two months.
This metric has been relatively stable over this time
period. On 03/09/2020, there was a
spike; however, this only amounted to three withdrawn listings in one day.
Daily Canceled Listings:
The chart below shows the number of canceled listings on a
daily basis for the last two months.
This chart shows a slight increase in canceled listings over
this time period. It is not a
significant increase in canceled listings, but it is something that we need to
keep an eye on.
Daily Closed Sales:
The chart below shows the number of closed sales on a daily
basis for the last two months.
The chart is showing that there has not been much of a
change in the number of closed sales over this time period, which is
expected. It takes approximately 30-45
days for a sale to close after it goes under contract. So while we started to see an impact on the
number of new listings, new pending listings, and canceled listings
approximately 30 days ago, we probably won’t see a change in the number of
closed sales for another week or two.
Another metric that will be worth keeping an eye on in the
future is the sales to list price ratio.
With fewer potential buyers out there due to people losing their jobs,
oil prices dropping, and the uncertainty with the coronavirus, we need to watch
to see how much properties are selling for versus what they were listed
for. This could be an indicator of a
declining market if the ratio starts to decrease.
I will continue to watch the daily trends in Lafayette Parish as time goes on. With all that is happening, it would not be a big surprise to see things slow down even more. It is still very early on, so it is important to keep a close watch to see which way the market is moving. As time goes on and more data comes in, I will start observing the market on a weekly basis. Most professionals in the Lafayette market area would have told you that the market was HOT 30 days ago. Now, things have slowed down due to a number of different reasons. I’m interested to hear what you have to say. What are your thoughts on the Lafayette real estate market? Realtors and Mortgage Lenders, have you seen a slowdown? Buyers and sellers, are you more hesitant to take action right now?
*A daily hot sheet was run in the Realtors Association of Acadiana Multiple Listings Search. The daily hot sheet tracked the number of new listings, new pending listings, new withdrawn listings, new canceled listings, and closed sales on a daily basis from 01/27/2020 to 03/29/2020.
Typically when homeowners talk about the characteristics that affect the value of their home, they are referring to the physical features of the home. Such features include counters, cabinets, flooring, total living area, etc. While all of these items do affect the value of a home, there are also external influences that can affect value.
There can be positive external influences as well as negative external influences, and both types can affect the value of a property. Favorable external influences can include a view of the mountains, river, ocean, bay, or skyline. Buyers in some markets are willing to pay more (sometimes much more) for favorable views. The view could also consist of unfavorable external influences such as a junkyard or commercial properties.
When the external influence is negative, it is called external obsolescence. External obsolescence (defined by Appraising Residential Properties Fourth Edition on pg. 279) “is an element of depreciation, a defect, usually, incurable caused by negative influences outside a site and generally incurable on the part of the owner, landlord, or tenant.” So, for example, a location on a busy road or having a view of commercial properties could actually have a negative impact on the value of a residential property.
EFFECTS ON VALUE
The question during an appraisal becomes how much do external influences affect the value of the property. The answer is it depends. Not every market is the same. A buyer looking for water frontage property in River Ranch, which is in the middle of Lafayette Parish, is probably willing to pay much more for a view of the river than someone in Vermilion Parish would be willing to pay. Therefore, the adjustment for a water view or location would be different in these areas. External features affect specific markets differently.
To determine how much an external factor has on the value of a property, the appraiser must study the market. An appraiser will report how buyers and sellers in a specific market are reacting to certain features. It is extremely important to know how the external factors influence the value of your property. If a property is overpriced when it goes up for sale, you run the risk of scaring potential buyers off. If you price your home too low, then you risk not making your maximum profit on your home.
CONSULT A PROFESSIONAL
External influences can significantly complex the valuation of your property. It is important that you find a qualified expert to help solve your valuation needs. At Duplechin Appraisals, we are trained to complete complex assignments in Lafayette Parish, as well as most of the Acadiana Parishes. If we can be of assistance in the future, please reach out to us at 337.254.2215 or firstname.lastname@example.org.