Decoding the 2023 Real Estate Slowdown: Insights from Greater Baton Rouge Market

Greater Baton Rouge Housing Market 2022 vs 2023 Changes and a tip before local Realtors® put that sign in the yard…

There was a Huge decline in buyer activity, down 26.6% in 2023 as well as the Altos market action index down from 36 to 29, the lowest I’ve seen. Dollar sold volume down 26%. While inventory increased from 1.9 to 3.2 months, the median sold price increased by almost 2%. Historical High listing prices, High mortgage rates as well as Lack of inventory (3 causes) resulted in the listing-to-sales price ratio declining to 96.1% of original listing prices or -3.9%. The Advocate Newspaper, High-interest rates and lack of inventory cause Baton Rouge home sales to plunge to 2013 levels, cited high-interest rates and lack of inventory.

While some contracts were written in the last quarter of 2023, for the most part, this market was somewhat STALLED at the end of December 2023 with 485 pendings, the lowest since 2014. In 2023, there were 2,601 sales in prior 7-12-months vs only 1,042 from the current to 3-month period, a -60% change in the same year. A certain percentage of buyers were clearly on the sidelines in the last 4-months of 2023. Yes, I know Instagram is showing Agent pending listings, which I hope will last with the recent rise in mortgage rates.

NOTE: The foreclosure or distressed sales portion isn’t representative of actual distressed activity. It seems like most distressed dales now are disposed of as “Sheriff Sales” at the courthouse, which are not listed in MLS any longer. Therefore, MLS isn’t a reliable source for this data.

By “Greater Baton Rouge”, I’m referring to East BR, West BR, Ascension, and Livingston. Data Source: GBRAR ROAM MLS from 1/1/2022 to 12/31/2023.

A Baton Rouge Appraiser TIP before local Realtors® put that listing sign in the yard…
Understand competing market price trends using Infosparks and bracket your listing.

Don’t assume you know the home sold price trend in the market you’re listing in, especially where investor flips are concerned. Use Infosparks charts research, within MLS, first. Some micro markets have pulled back on sold prices. This happened in one (1) Denham Springs Subdivision investor flip in Q4 2023 where the Listing Agent didn’t know the market was declining in prices somewhat. The chart below shows Park Forest 70814 median sold price decreasing fairly significantly. Could this Park Forest chart impact a home appraisal value, the fact that median sold prices are declining? Absolutely and in the form a declining market time adjustment. It’s a fiduciary duty Appraisers have to clients, to report honest trends affecting the collateral or risk in the loan. The 70815 chart shows a pull-back in sold prices since mid-2023.

Park Forest median sold prices are showing a declining price trend beginning around April 2023

**70815 market showing a declining price trend since mid-2023**

**An example of competing sold prices showing a declining trend in the past 18-months, most importantly in the past 3-months from $246,500 to $240,000, along with the number of slowing sales**

MLS Search Criteria
By “Competing”, if the subject house being listed is 2,000 sqft, 7/3/2, 45-years old in Broadmoor 70815, I would start with a 12-month search of solds / active / contingent / pending, 10% smaller to larger of say 1,800 sqft to 2,200 sqft, 3 to maybe 4-bedrooms, similar age and most importantly similar condition. Then study the sales for condition differences as well as amenity differences, such was pool. If this doesn’t produce enough comp support, then expand to 15% smaller to larger of 1,700 sqft to 2,300 sqft. DEDUCT SELLER PAID CONCESSIONS, because Appraiser will. And, STUDY THE ACTIVE and PENDING LISTINGS, price changes off original listing price, for clues on where the market is heading.

GLA Size Range Calculator Excel via Appraiser Dave Towne

Mortgage rate direction IS NOT favoring an immediate better housing market for 2024
Based on continued strong labor market stats presented as well as today’s U.S. economy booms with 3.3% growth in final quarter of 2023 via Axios, mortgage rates appear to be trending higher off the 6.6% recent low and could jump right back into the low to 7% range. I’m certainly hoping this is not the case. Logan Mohtashami’s 2024 housing market and rate forecast on HousingWire stated mortgage rates are following the labor market’s cues. The hope is rates will improve into 2024.