A positive external influence in Lafayette Parish is having a property with water frontage.
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.
POSITIVE INFLUENCES
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.
External Obsolescence
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 lduple4@gmail.com.
An updated look at the Lafayette Parish Market indicates the market is still stable; however, slight changes are being observed.
Was January a busy month for you? Based on the number of properties sold, it most likely was for Realtors and Lenders in the Lafayette Parish Market. Sales in Lafayette Parish for the month of January are up BIG TIME from last year. In fact, there were more sales in January 2020 than there have been in the month of January for the last 10 years.
Last month, I took an in-depth look at the overall market
trends for Lafayette Parish. The overall
market was considered stable; however, there were some favorable
statistics. This month continues the
favorable trend.
The number of sales in January 2020 increased by 73% in comparison to January 2019.
The sales volume was 91% higher this January as compared to January 2019.
Year over year trends continues to see favorable changes.
If you’re interested in some of the details and data, take
a look below.
Monthly
Data for January:
The chart below shows how the market was performing for January 2019 vs. January 2020. In this chart, the median sales price, average sales price, and average price per square foot all have favorable statistics. The median and average sold price is actually indicating that sales prices increased by a significant amount this January as compared to last January. Average prices can be affected by outliers such as a couple of $1 million+ properties, so the median sales price is often a better indicator.
Year to
Date Sales Volume (Jan 1 – Feb 6):
In the chart below, you can see 2020 has a much higher sales volume than in previous years. In fact, sales volume is up 91% from last year. For both 2019 and 2018, there was a decrease in sales volume from the previous year. Interest rates could have something to do with this. For November 2018, the 30-year interest rate was (4.94%) the highest that they had been since February 2011 (5.05%). Since then, there has been a steady decline in interest rates. In January 2020, interest rates were mostly between 3.50% and 3.75%. This is making homes more affordable for consumers.
The chart below shows the number of sales in the area.
Again, in January 2020, there were more sales than in the previous 10 years for
the month of January. There was a 73%
increase in the number of sales for 2020 as compared to 2019. Again, this is a favorable indicator for the
market area.
Trending
12 Months Sales Volume (Ending on 1/31/2020):
In last month’s market update, the trending 12 months statistics were all favorable. The trend continues this month. In fact, the median sales price, average sales price, and the average price per square foot are all up from last month’s analysis. Although the analysis is indicating values are stable, the statistics continue to move in a favorable direction. This is good for sellers who are trying to sell their homes because it is taking less time to sell their homes and the sales prices are increasing.
Conclusion:
So far it has been a strong start in the real estate market
for 2020. The trend is expected to
continue in the near future. At the end
of January 2020, there were 307 pending properties in Lafayette Parish. This is a 16.7% increase from January 2019
that had 263 pending properties. With
interest rates at a three year low, it is reasonable to expect this trend to
continue for the first quarter of 2020.
If you have any appraisal related questions, please do not hesitate to contact me. 337-254-2215 or Lduple4@gmail.com
I hope everyone enjoys the Mardi Gras festivities over the next few weeks. Until next month, laissez les bons temps rouler!!!
Data Source: MLS, detached single-family homes sold in
Lafayette Parish
Although Lafayette is losing some of its local college graduates to out of state employers, the city is also attracting college graduates from other metropolitan areas in the state.
An updated
look at the Lafayette Parish market indicates the market is still stable;
however, slight changes are being observed.
In November, I last took an in-depth look at the overall market trends for the Parish. The overall market at that time was indicating relatively stable trends. A couple of months later, we still see stability, but some metrics are indicating some minimal improvements.
Sales prices in December 2019 similar to those
in December 2018, but the number of closed sales increased by 6% and the days
on the market decreased by almost 11 days
Very minimal, but positive, movement in overall
sale prices for the year of 2019 as compared to the year of 2018
During 2019, some pickup in sales prices for
homes priced in the $300 thousands while other price ranges remained relatively
the same
2020 is showing a good start for the year. Sales prices and the number of sales are up
quite a bit as compared to what was seen in 2019.
December 2019:
The first chart shows how the market was performing for December
2018 vs. December 2019. The median sales
price rose by 4.7%, while the average sales price declined by 3.4%. The statistics differ because the average is
affected by outliers, while the median is not.
So, in this data set, the lower-priced outliers are affecting the
average sales price.
The number of closed sales and the days on the market have
both had favorable changes. The number
of closed sales increased by almost 6% in December 2018. The chart is showing that there was a
negative change in the days on the market, the fewer days on the market the
better in real estate.
Year over Year:
The next chart shows the year over year trends for Lafayette Parish Market. The market is still considered stable because the changes in the median sales price, average sales price, and average price per square foot all have minimal change. The change is not enough to classify the market as increasing. Although most of the statistics are indicating a stable market, they are still moving in a favorable direction.
The only statistic that is showing an unfavorable result is
the months of housing supply. The months
of housing supply represents how long it will take to sell properties that are
currently active. The number of active
listings is growing faster than the number of houses that are being sold.
Percentage of Sales
by Price:
Below is an interesting chart that shows the percentage of sales by price range over the past few years. What stands out here is that the majority of properties that are being sold have a sales price from $100,000 to $300,000. Also, properties that have sold from $300,000 to $1,000,000 have had an increasing portion of the market share in the past couple of years. As you can see, the number of sales of $1,000,000+ homes is so small that it does not even register on the chart.
Pie Chart
The pie chart below shows similar information as the chart
above, but instead of showing the data as percentages, it shows the total
number of sales in each price range for 2019. The largest price ranges are
$100,000-$300,000 (75.04%). As you can see, the higher end price range takes up
a small percentage of the total market.
Percentage of Sales
by Age Range:
This next chart shows the percentage of homes in each age range. The age ranges are the ones used in MLS. What’s interesting here is that New Construction and 1 -3-year-old homes decreased from 2017 to 2019 in the Lafayette Parish Market. New construction has slowed down slightly over this time, which is consistent with the number of permits pulled over this time period. Although the percentage of sales decreased during this time period, they still take up the largest percentage of sales over this time.
Percentage of Sales
by Square Foot:
This next chart shows the percentage of sales for homes
grouped by the living area square footage.
As you can see from the chart, homes sold in Lafayette Parish are
typically between 1,200 sqft and 2,000 sqft.
The chart also shows that after 1,600 sqft, the larger the living area
of the home, the less of a percentage it takes up in the market place. While there are plenty of homes that have
over 2,800 square feet of living area, the number is minimal when compared to
the rest of the market. This is why the
chart shows homes with 2,800 square feet as having 0.0% of the sales.
2020 So Far…
The next chart is showing year to date sales. Although there is a limited amount of time in
this analysis because we just started the New Year, it is still interesting to
look at. Does anything stand out in the
chart below?
I noticed a huge increase in the average sales price (62.9%),
with only a 5.5% increase in the median sales price. Could this be right? Well looking at the data a little more
closely, this year in Lafayette Parish there has been a sale for $1,408,486 and
one for $2,900,000. Last year the
highest sales price in the first 8 days of the year was only $479,000. This illustrates a little more clearly how
outliers affect averages, while typically, they do not affect the median.
The high sales have also affected the average price per
square foot in 2019. It shows that there
has been a 23.4% increase in using this metric.
Another positive factor is that the number of closed sales
has continued to increase from this time last year, which was also true for the
previous month.
I hope that this analysis was informative for how the overall Lafayette Parish is performing. Hopefully, you have a more in-depth view of how the market is performing going into this New Year. I would like to hear your thoughts about the Lafayette Parish Market.
Remember that this analysis includes all sales in Lafayette Parish Market. If you are in the market to sell or purchase a home, it is important to look and see how your specific sub-market is performing. If I can be of assistance to you in the future for any real estate appraisal needs, please do not hesitate to contact me at 337.254.2215 or Lduple4@gmail.com.
Data Source: MLS, detached single-family homes sold in
Lafayette Parish
Here is my monthly Lafayette market analysis update for October 2019. The purpose of this article is to describe how the overall Lafayette Parish real estate market is performing.
When I am working on an appraisal, I typically do a thorough
market analysis for each market segment on every property. This analysis represents how competitive
sales in the market are performing over time.
However, it is also necessary to know how the larger market is
performing. The larger market that I am
referring to is the Parish that each property is located in. For
this article, I will analyze sales for Lafayette Parish. The data analyzed is strictly from the
Realtors Association of Acadiana Multiple Listing Service (RAA-MLS). Most “For Sale By Owner” Sales or Sheriff
Sales are not included in the analysis.
I have sought out the advice from other appraisers locally and nationally to develop the charts and graphs for the Lafayette market analysis in this report. For the analysis, a series of charts and graphs are included with a brief explanation.
Year over Year
statistics:
The chart above shows the year over year statistics for
several metrics. There is a subtle
change in the metrics used in this chart.
The median sales price is indicating less than a 1% decrease in prices,
while the average sales price has increased by 1%. Additionally, the average price per square
foot has only decreased by 0.1%. I
typically do not classify the market as changing, whether that be increasing or
decreasing, unless the change is more than 3%.
The reason that I have a margin of error of 3% is that each buyer and
seller has slightly different motivations in each transaction. A house could be listed for sale for
$200,000. One buyer may be willing to
pay full price for the house, while the next buyer may only pay $195,000. Each willing participant has their own
motivation; therefore, I only determine the market as increasing or decreasing
after the change is greater than 3%.
The months of
housing supply has also increased over this time period by 10.2%. This is primarily because the active number
of listings has been steadily increasing, as will be shown later. Also, the number of closed sales and the
absorption rate has increased by 21.2%.
This is a positive factor in the market because it shows that more homes
have been purchased. Lastly, the days on
market has increased slightly, but only be 2.2%, or two days.
Year to Date
Statistics:
The chart above is similar to the year over year chart;
however, it is showing the statistics for the year to date sales. So, it is showing the statistics for each
year as of January 1 until the end of October.
As you can see, the year to date statistics is very similar to the year
over year statistics. Most of the metrics
are within the 3% margin of error; therefore, the metrics are indicating that
property values in Lafayette Parish are stable.
One area where change is occurring is in the months of supply. Last year
there were 3.88 months of supply, while this year, there is 4.28 months of
supply. This is a 10.2% increase. As you will see later on, this is due to the
rising number of active listings in the market over the past few years.
Monthly Data:
This chart is showing a comparison between sales from
October 2018 versus October 2019. The median sales price and the average
sales price are in sync with the
year over year statistics. However, the
average price per square foot has changed by 2.2%. While this is still within the 3% margin of
error, it is more change than in the year over year statistics. It is worth keeping an eye on in the coming
months to see if it continually increases.
The chart
above tracts the median sales prices and the average sales prices in
Lafayette during the month of October over the past few years. As you can see,
the median sales price has declined
over the past two years, while the average sales price has gone up. The average sales price could be affected by
higher-end homes in the area that is driving the average price up. The median sales price is less affected by
extremely high or low sales; therefore, it is different from the average sales
price.
Scatter Plot:
The chart above shows a scatter plot for all sales in
Lafayette Parish over the past four years.
The y-axis has been decreased to only show the sales under $1,000,000 to
show the trend line better. The trend
line shows a very slight uptick
in values. However, the change is very
small, and it is essentially flat. Lafayette
Parish sales have been stable for several years now.
Price Metrics:
The chart above trends the median sales price, the average
sales price, and the average price per square foot over time. This graph confirms the previous charts and
graphs that values are mostly stable over time.
There is, however, a recent uptick over the past 6 months. I will continue to analyze this over the
coming months to see if values continue to rise or if they stay in line with
the historical ranges.
Market Inventory:
The chart above shows the number of active listings, sold
listings, and months of inventory over time.
The blue line represents the active listings, which has been steadily
increasing over the last three years.
Because of this increase, the months of inventory (as shown in the year
over year statistics) has also increased.
The number of sold properties has been fairly stable for the past eight
months. The chart shows that there was a
slow down last year, starting around August and lasting until March. This is when interest rates rose. They have since gone down, and the number of
sales has increased since. Although this
chart does not show the months of inventory too well, the one below shows how
the months of housing supply has changed over time. Currently, there are slightly over 4 months
of inventory. As you can see, during
winter months over the past two years, the months of inventory has risen due to
less activity in the market.
Conclusion:
Based on the metrics included in this analysis, values are
stable in Lafayette Parish. There is
some change, as is expected in real estate; however, the change is within a 3%
margin of error. Recently, there has
been an uptick in sales prices, but active listings also continue to
increase. It will be interesting to see
how prices continue to change in the future.
Next time I hope to include additional graphs to give more insight into how the market is performing. Again, this market analysis is showing all properties in Lafayette Parish. It is important to know how your specific market segment is performing when you are considering purchasing or selling a home. If I can be of assistance to you in the future, please do not hesitate to contact me (c. 337.254.2215, email: Lduple4@gmail.com)
I hope that this was insightful, and I look forward to the next Lafayette market analysis update in December. If you are interested in other articles that I have written, you can check them out at www.acadianaappraisals.com or on my Linkedin page.
Determining the living area of a home can be somewhat challenging in real estate. Currently, there is not one nationally-recognized standard for measurement that every appraiser must follow. This can create challenges when measuring a home to list for sale, or when measuring for the appraisal after the home has a contract on it. While there is not a single set of rules that every appraiser must follow, one standard that is widely known and used is the American National Standard Institute (ANSI). Additionally, Fannie Mae and FHA each have specific guidelines that appraisers are required to follow for loans that go through those agencies.
While there is no one standard that appraisers must follow when it comes to measuring single-family homes, there is one standard that is well know; the American National Institute (ANSI).
ANSI
ANSI
has several guidelines for what is considered living area and what is not. One area that these guidelines cover is
ceiling height, which often creates confusion when it comes to calculating
gross living area. ANSI says that any
part of a room that has less than 5 feet from the floor to the ceiling is NOT
included in the living area. It also
says that for a room to be included in the gross living area, at least half of
the space in the room must have a ceiling height of at least 7 feet. This is important when measuring homes that have
a second or third level. There are
instances where the ceiling can be sloped in some areas with a height of less
than 5 feet. It is important that the
correct measurements are taken so that an accurate gross living area can be
calculated. Ceiling height can also be
an issue in A-frame houses. Since the
exterior walls have a slope all the way (or almost all the way) to the ground
level, appraisers must be careful when measuring A-frame homes.
The
following is an illustration from the ANSI standards to help clarify which
areas can be included in the GLA. (Figure 4 from The American National Standard
For Single-Family Residential Buildings)
Another area that ANSI guidelines covers is the
stairway. ANSI says that, “the area of
both stair treads and landings proceeding to the floor below is included in the
finished area of the floor from which the stairs descend, not to exceed the
area of the opening in the floor.” This
means that if you have a home with a second level, the stairs are included in
the gross living area of the second floor as long as the area of the stairs does
not exceed the opening above. ANSI also
goes on to say that, “areas beneath stairs are included in the finished square
footage regardless of the distance between the stairs and the floor below or of the degree of finish of that
area.” Although the area beneath the
stairs may be less than five feet, ANSI says that it is included in the square
footage of the space below the stairs.
FHA
If
a loan is insured by FHA, appraisers must comply with their standards. One of these standards specifies how living
area is measured. According to the FHA
guidelines, the gross living area (GLA) is defined as “the total area of finished,
above-grade residential space calculated by measuring the outside perimeter of
the structure. It includes only finished, habitable, above-grade living
space.” FHA also says that the appraiser
must:
identify non-contiguous living area and analyze its
effect on functional utility;
ensure that finished basements and unfinished attic areas
are not included in the total GLA; and
use the same measurement techniques for the subject and
comparable sales, and report the building dimensions in a consistent manner.
According
to FHA, it is important that only above-grade finished areas are included in
the GLA. Also, finished areas not
accessible directly from the main dwelling are not to be included in the GLA;
i.e., a bonus room above the garage that can only be accessed through the garage. While basements are not typically part of
homes in South Louisiana, it is important for appraisers in other areas of the
country to be aware of this guideline.
FHA
also talks about “Additions and Converted Spaces.” For additions or converted space to be
considered living area, it must be:
accessible from the interior of the main dwelling in a
functional manner;
has a permanent and sufficient heat source; and
was built in keeping with the design, appeal, and quality
of construction of the main dwelling.
It
is important that the addition or conversion meet all three requirements. If any one requirement is missing, then it is
not considered part of the living area.
For example, an attic above a garage that is finished as the rest of the
dwelling is not part of the gross living area if you must walk through the
garage to access the conversion. For
these such additions or conversions that do not meet the criteria, the
appraiser must analyze the effects of the area and account for it in the
appraisal.
Fannie Mae
Fannie
Mae also has their own guidelines on what constitutes living area. Their guidelines state that when calculating
living area, appraisers must use exterior building measurements per floor for
above-grade areas. They also state that
living area includes only finished areas that are above grade. Areas that are finished, but not included as
living area, must be considered by the appraiser by analyzing the market to
determine its effect on value.
In addition to these
guidelines, there are many more rules for calculating the living square footage
of residential properties. To get the most
accurate measurement of your home, be sure to contact a qualified appraiser who
is knowledgeable of the rules and guidelines that must be followed. If I can assist you in your measurements, you
can contact me by email at Lduple4@gmail.com
or on my phone at 337.254.2215.
I’m sure you’ve heard the question, “What are the first three rules of real estate?” The answer that many real estate professionals will tell you is “Location, Location, Location.” While this may be true, when it comes to valuing your home, appraisers typically use comparable homes with similar locations. When the comparables have similar locations, what else factors in to a home’s value and differentiates the value of one home from the next?
Living square footage:
Several factors come into play when valuing a home. One of the most important features of your home that affects value is the living square footage. Basically, the more living square feet you have, the more your home is worth. There are some instances where a home can be over-built and have too much square footage. However, most of the time, the more square footage you have equals more value.
Renovations and updates:
Another factor that can increase the value of your home is updates. Renovations can improve both the quality of your home and the condition of your home. I have seen investors purchase old, outdated homes and completely renovate them. Originally the homes would have linoleum and carpet flooring, wood paneling walls, formica counters, stock built cabinets, etc. After renovations, the homes have wood and tile flooring, sheetrock walls, granite or quartz counters, custom cabinets, etc. So, the renovations not only improve the condition of the homes (new materials) but the quality of the homes too (higher end finishes).
Other important factors:
Several other factors can affect the value of your homes: lot size, views, bedroom and bathroom counts, covered parking, amenities, etc.
Ultimately, the local market decides what factors influence the value and by how much. It is important to have the assistance of a local real estate professional to analyze the market and to determine which factors are/are not important in your market area. If you are considering buying or selling a home and want a reliable opinion of value, contact me at 337-254-2215.
Lane Duplechin, AGA
Candidate for Designation with the Appraisal Institute
One thing that I hear sellers say often is, the house down the street sold for “X”, therefore the value of my house is worth “X”, or something very close to “X”. While this statement could hold some truth in a newer cookie cutter subdivision, it is almost never true in most other subdivisions. Even in an older cookie cutter subdivision this statement most likely would not be true. The condition of a house has a big affect on the value of a home. Homes suffer different degrees of depreciation based on how a home owner maintains the home and the kind of updates that are made over the years. What if the home down the street has been remodeled? Instead of having the original tile or formica counters and tile and carpet flooring, maybe the owners updated the counters to granite, replaced the original floors with wood and new ceramic tile, and updated the bathrooms. So if your home hasn’t had any updates, then it most likely would not have a similar value to the home down the street, assuming that all other features are the same. Likewise, the house down the street may have been neglected and is in poor condition. Do you still think your property is worth the same as the one down the street? Probably not!
In a more custom built subdivision, your property most likely has other differences from the house down the street. Maybe your living square footage is significantly larger/smaller, the lot sizes could be much different, and/or the quality of your home could be superior/ inferior to the house down the street. Other differences include number of bedrooms and bathrooms, the type of covered parking (carport vs. garage), or the amenities that come with a property (covered patio/porch, fence, storage buildings, workshops, outdoor kitchen, pool, etc.) The living square footage, often referred to as Gross Living Area (GLA), is one of the most important characteristics that affect value. If the house down the street is 500 sf larger then yours, then this property might be worth a lot more than yours. If your property has a much smaller lot size than the property down the street, wouldn’t you think that your property is worth less? All of these property characteristics could play a role in the value of your home. They need to be analyzed by a professional to determine what kind of effect on value they have.
The truth is, is that every property is different and every market is different. If you are thinking of listing your property for sale, it is important that all of the relevant characteristics of your property are analyzed by an expert in your market. A certified appraiser has the training, education, and experience necessary to provide you with an accurate value of your home, which gives you a valuable tool in listing your property and in your negotiating efforts once the property is under contract.
The
real estate market is constantly changing. There are some sub markets
in the Lafayette area that have declined in the last few years, while
others have remained stable. If you are thinking about listing your
property for sale, it is important to know how your market is
performing to know the true value of your home. You should hire a
qualified real estate appraiser to assist you in determining your home’s
value. I’d be happy to assist you in your valuation needs.
