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Navigating the challenging housing market

Published: Jun. 28, 2021 at 6:15 PM CDT
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Lake Charles, LA (KPLC) - It’s a challenging time right now for anyone looking to buy a home, especially in Southwest Louisiana.

With all the home construction in the Lake Area, it’s hard to believe there’s a housing shortage pushing the price of homes through the roof.

High demand and low inventory have made for a lot of competition between realtors and homeowners.

”In Southwest Louisiana, we typically have between 1,100 and 1,300 active listings. Right now, we have consistently less than 500,” realtor Deborah Anderson said.

Nationwide, there’s a growing housing shortage.

”But Lake Charles area, Southwest Louisiana, made it much worse by having two hurricanes and a freeze and a flood,” Anderson said.

She said low inventory is driving up the cost and competition of most homes on the market.

”Right now, if you’re looking for a home, you have to be pre-approved and ready to pull the trigger that moment,” Anderson said.

It’s something homeowner Sarah Wilson can attest to.

”So, we listed at 10:30 on a Wednesday. The offer came in Thursday, and we had until noon Friday to accept. So, by noon Friday, we were under contract,” Wilson said.

The average length of time a house is staying on the market is 33 days faster than of the same time a year ago. That number was at 39 in May and 43 in April, according to realtor.com.

Wilson said selling her home to a first-time buyer was a quick process but pricing in a market that has been through everything the Lake Area has was the real challenge.

“Because the market is so hot, the pricing hasn’t, in some cases, caught up,” Wilson said. “We took a number of different parameters.”

READ MORE: Metros where homes are selling the fastest

Low mortgage rates helped stoke home-buying interest. But on the supply side, the number of homes for sale in spring 2021 has dropped by more than 28% from last year, according to industry figures. Many homeowners, especially older people, have been reluctant to put their houses on the market during a global health crisis. New construction, meanwhile, has been stymied by a rise in lumber prices—up a whopping 180% over last year—and a shortage of labor under the restrictions of protective COVID-19 protocols.

With such a skewed imbalance of supply and demand, sellers find themselves inundated at open houses and getting multiple offers for their homes within hours.

According to a report from the National Association of Realtors, the median existing-home price in May was a little over $350,000. That’s up 24% from last May and the highest price on record.

Anderson says given mother nature, the current labor shortage, and other factors, the Lake Area is breaking its own records.

”The market is changing here. It’s always been tight. But now, in these last 12 months, it’s gotten even tighter,” Anderson said.

She estimates that it will take the local housing market about two years to catch up with the rest of the country.

While overall inventory is down 42% compared to last year, new listings rose 4% compared to the same week last year, which opened up some inventory and reduced some prices, giving buyers more options.

Another plus is lumber prices beginning to stabilize. After skyrocketing to record highs in May, futures for July delivery dropped more than 40%. At its peak, the cost of lumber added $36,000 to the price of a new home.

Experts believe a true slowdown in the market will begin when interest rates go up. Right now, they are at the lowest in decades - about 3% for a 30-year mortgage. The lowest was 2% last year.

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