Lafayette Market Analysis

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.

Living Area for Single-Family Homes

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.


FindMyAppraiser.com is a national source for finding local appraisers.  It is a network of trusted, knowledgeable local appraisers, that are dedicated to delivering accurate, quality valuations for your home.  Whether you are purchasing a home, refinancing a home, listing your home for sale, or going through a divorse,  a local appraiser is an important part of the valuation process. 

Local appraisers research, analyse, and report local market conditions, which is an important piece of the appraisal.  It is important for consumers to know if property values are increasing, decreasing, or stable.  Consumers also need to know if the market is over supplied or under supplied.  These findings can help a homeowner decide where they want to list their house at.  It could also help a buyer decide on what price that they want to offer on a house. 

Duplechin Appraisals, LLC is a proud member of this organization.  If we can be of service to you, please do not hesitate to contact us at 337.254.2215 or Lduple4@gmail.com.

Appraisal Services

Do you have questions about how the Acadiana Market is performing? Do you need to know the value of your property? Contact Duplechin Appraisals, LLC to find out how we can assist you.