Find out about the latest news in Madisonville, Louisiana as well as St. Tammany Parish. We will keep you “tuned in” to all of the information about Southeast Louisiana as well as the real estate industry in general. Many new home buyers are concerned about the market, mortgage information, and builder trends. We plan on keeping you as up to date as possible on these and many more topics. There is a lot going on in the Greater New Orleans area, so you will have plenty to read!

Understanding Home Market Value vs. Rebuild Value in Homeowner Insurance

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When discussing homeowner insurance, you might encounter unfamiliar terms such as home market value and rebuild value. Understanding the difference between these terms is crucial for adequately protecting your property.

Market Value vs. Rebuild Value: What Do They Mean?

The market value of your house is the price it would fetch in today’s real estate market. This is the amount you would pay to purchase the home or what you would ask for if you were selling it. Conversely, the rebuild value is the cost to reconstruct your home from scratch if it were destroyed.

The rebuild value can often be higher than the market value. This discrepancy arises because rebuilding a home involves additional costs such as demolition of the existing structure, individual labor, and supplies which are not purchased in bulk like they are during the construction of a whole neighborhood. Furthermore, inflation can increase the cost of materials needed for repairs.

Why Rebuild Value is Important for Insurance

While both market value and rebuild value may come up during the homeowner insurance policy process, the coverage amount on your insurance policy is generally based on the rebuild value. This approach ensures that you can fully restore your home in the event of a total loss covered by your policy.

It’s important to note that land value is not included in the rebuild cost because the land itself isn’t rebuilt or insured. However, market value does reflect land value, as it considers the location, size, and specifics of the land.

Calculating the Cost to Rebuild

Insurance companies use sophisticated tools to calculate the rebuild value, factoring in location, construction quality, square footage, and the cost of supplies and labor. Rebuilding also takes time, and costs can vary significantly based on location and the nature of the rebuild. For instance, after the 2017 wildfires in Northern California, rebuilds took between 12 and 24 months, with costs ranging from $160 to $800 per square foot depending on the home’s standards and location.

Ensuring Adequate Coverage

It is essential to keep your insurance company informed about any updates or additions to your home, especially those that increase square footage or add significant value. This ensures that your insurance policy reflects the updated rebuild value, protecting you from being underinsured.

At Armed Forces Insurance (AFI), our experienced agents can help you determine if your homeowner coverage amount is adequate to protect your family and future. We are dedicated to serving you throughout your time in your home and beyond.

About Armed Forces Insurance

Armed Forces Insurance has been a trusted advisor to American armed forces service members and veterans for over 135 years. Based near Fort Leavenworth in Kansas, we pride ourselves on providing personalized service and straightforward advice. If you’re looking for someone you can trust to protect your home and property, visit our homeowner insurance page to learn more.

 

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Real Estate Tops List of Long-Term Investment Choices for Americans

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Real estate continues to be Americans’ preferred long-term investment, according to Gallup’s annual economy and personal finance survey.

In the survey conducted in April, 36% of respondents chose real estate as their top investment choice, a figure consistent with last year. Stocks or mutual funds were the second most popular choice at 22%, followed by gold at 18%, and savings accounts or certificates of deposit at 13%.

Bonds and cryptocurrency lagged far behind, with only 4% and 3% of respondents, respectively, naming them as the best long-term investments.

Gallup attributed the high ranking of real estate and stocks to their recent strong performance. Although U.S. real estate values have dipped from their peak in the fourth quarter of 2022, they remain significantly above early 2021 levels. Stock values have also hit new highs this year.

Since 2014, real estate has consistently been the top choice, with 30% to 45% of respondents selecting it each year. In 2013, real estate tied with gold and stocks for first place; in the previous two years, it trailed gold.

Americans’ preference for real estate aligns with their expectations of rising local home values, according to the report.

Income and Political Differences

The survey revealed that Americans at all income levels view real estate as the best investment, but their preferences for other investments vary by income and political affiliation.

Among upper-income Americans (incomes of at least $100,000), 31% named stocks as the best investment, compared to 14% of lower-income Americans (incomes of less than $40,000). Lower-income respondents favored gold (23%) and savings accounts (20%) more than their upper-income counterparts, of whom only 7% considered savings accounts the best investment.

Political affiliation also influenced investment preferences, particularly regarding gold. Twenty-seven percent of Republicans chose gold as the best investment, compared to 7% of Democrats and 18% of independents. Last year, 38% of Republicans named gold as their top choice, versus 12% of Democrats and 27% of independents.

Since 2013, Republicans have consistently been more likely than Democrats to view gold as the best investment. This gap has widened significantly since 2020. Over the past five years, Republicans have also increasingly diverged from independents in their views on gold.

Most subgroups are now more likely than a year ago to favor stocks as the best investment and less likely to favor gold. The notable exception is respondents aged 55 and older, whose opinions have remained unchanged.

Stock Ownership Remains High

The survey found that 62% of U.S. adults have money invested in the stock market, through individual stocks, stock mutual funds, or retirement savings accounts. This percentage is essentially unchanged from last year and marks a return to pre-2008 recession levels when 60% or more Americans owned stock.

Stock values reaching record levels earlier this year likely contribute to the increased preference for stocks as a top investment choice. Stock ownership is highly correlated with income: 87% of upper-income Americans own stock, compared to 25% of lower-income Americans and 65% of middle-income Americans (incomes between $40,000 and $100,000).

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Single-Family Built-for-Rent Construction Sees Significant Growth in Early 2024

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Single-family built-for-rent (SFBFR) construction saw substantial year-over-year gains in the first quarter of 2024, as builders aimed to increase rental housing options in a market burdened by high mortgage interest rates.

According to the National Association of Home Builders (NAHB), which analyzed data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, there were approximately 18,000 SFBFR starts in the first quarter of 2024. This figure represents a 20% increase compared to the first quarter of 2023, though it’s worth noting that the comparison benefits from a particularly weak start in 2023. Over the past four quarters, 80,000 such homes began construction, marking a nearly 16% rise from the 69,000 SFBFR starts in the previous four quarters.

The SFBFR market provides much-needed inventory amid ongoing challenges related to housing affordability and down payment requirements in the for-sale market. This is particularly relevant as more people seek additional space and prefer single-family structures. SFBFR homes often have different structural characteristics compared to other newly built single-family homes, especially regarding size.

Despite a cooling investor demand for both existing and new single-family homes due to higher interest rates, builders continue to pursue smaller SFBFR projects for their own operations. Given the affordability issues in the for-sale market, the SFBFR sector is expected to maintain a significant market share, even if the sector experiences some cooling in the upcoming quarters.

 

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Key Insights and Tips to Navigating the Spring Home Buying Season

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The spring home buying season, typically the most active time of year for home shopping, is about to begin in earnest. This year, the market promises to be relatively calmer, offering more options for buyers compared to last year. Although the boost in newly listed homes is expected to be modest, it should translate to increased choices for home shoppers. Those prepared to move quickly may even find some relief in price reductions in their market.

“Affordability is still a major challenge, but those shopping now should see early-season price cuts on leftover or mispriced inventory,” says Zillow® Chief Economist Skylar Olsen. “However, that may dry up fast as the weather and housing market warms with the season.”

Key Factors in the 2024 Spring Housing Market

1. When Does the Spring Home-Buying Season Begin?

The spring home shopping season generally runs from April through June in most of the country. Warmer climates tend to start earlier, while colder regions may have shorter seasons starting later. Warmer weather and school schedules, especially for families planning to move during summer break, drive the seasonal shopping boost.

The busyness of any given market depends on various factors, including the economy, local wages, and the availability of homes for sale. Despite a persistent shortage of listings and high home prices, sellers are expected to list homes in greater numbers this spring, as buyers and sellers adjust to the higher interest rate environment.

2. A Seller’s Market with Buyer Leverage

Nationally, it’s still a seller’s market due to competition for the limited number of listings. However, sellers must price their homes appropriately to meet buyers’ affordability constraints. Buyers are stretched thin, and sellers need to be realistic about pricing to sell quickly and at the desired price.

Keep an eye on mortgage interest rates, which can significantly impact home affordability. If rates rise sharply, as they did in October 2023, it could push homes further out of buyers’ reach and lead to more price cuts.

3. Inventory Trends

January listings show a slight improvement from last year, with new listings up nearly 6% and total listings rising more than 3%. Although there are more homes for sale than last year, the increase is not yet enough to shift the market in buyers’ favor. Sellers remain in a strong position, holding a record amount of home equity that they may look to cash in.

4. Home Price Stability

Home values are finally leveling off after significant increases during the pandemic. Nationally, U.S. home values rose 3.6% last year, and about 26% of homes sold above their list price in January, three percentage points less than the previous month.

Most of the largest metros showed slight declines in home values in January, with New Orleans, Minneapolis, Buffalo, Cleveland, and Pittsburgh experiencing the largest month-over-month dips. Year-over-year, however, home values have increased in 47 of the 50 largest metro areas.

Zillow economists predict that homes nationally will appreciate by 3.5% in 2024, maintaining a similar pace to last year.

5. Volatile Interest Rates

Interest rates remain volatile as the Federal Reserve continues its efforts to control inflation. Mortgage rates can significantly affect monthly payments, so it’s crucial to stay informed about rate changes and consider locking in rates or buying down the rate to lower monthly payments.

6. Fast-Moving Market

The typical time for a home to go from listing to under contract was 29 days in January, slightly less than a month earlier and two days shorter than a year ago. Competitively priced homes are selling in about two weeks.

Tips to Prepare for the Spring Home Buying Season

1. Get Pre-Approved

Getting pre-approved for a mortgage helps you understand what you can afford and positions you as a serious buyer. It also allows you to move quickly when you find the right home.

2. Talk to a Local Agent

Discuss your wants and needs with a local agent to understand market conditions in your desired neighborhoods. An experienced agent can provide valuable insights and help you navigate the buying process.

3. Use Zillow’s Search Filters

Zillow’s search filters can help you find homes that have been on the market for more than a month, potentially leading to deals or concessions. Filtering by monthly payment ensures you focus on homes within your budget.

4. Monitor Mortgage Rates

Stay informed about mortgage rates and explore options for locking in rates or buying down the rate to reduce your monthly payments.

The market continues to evolve, and, as it does, we’ll share the latest information and analysis at our Learning Center. Remember, there is no universally “good” time to buy a home; the best time is when it aligns with your personal circumstances and financial readiness. Hang in there and stay prepared!

New Home Sales Flat in February Due to Slight Rise in Mortgage Rates

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A slight increase in mortgage rates in February led to a stagnant reading for new home sales.

Sales of newly built, single-family homes in February edged 0.3% lower to a seasonally adjusted annual rate of 662,000, according to data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Despite the monthly dip, the pace of new home sales in February is up 5.9% from the same period last year.

“While new home sales remained flat in February, our latest home builder surveys show increased levels of confidence driven by the ongoing lean levels of existing home inventory,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kansas. “As interest rates subside over the course of 2024, additional home buyers will be priced into the market and new construction will be needed to meet this demand.”

NAHB Chief Economist Robert Dietz added, “A slight uptick in mortgage rates held back the pace of new home sales in February. Our latest builder surveys show that roughly one-quarter of builders reported cutting home prices in March. The price cuts, in combination with building slightly smaller homes, can be seen in today’s data that show a 7.6% year-over-year decline for median new home prices.”

Mortgage rates averaged 6.78% in February, up from 6.64% in January, according to Freddie Mac.

A new home sale is recorded when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. The February reading of 662,000 units represents the number of homes that would sell if this pace continued for the next 12 months, adjusted for seasonal effects.

The inventory of new single-family homes in February remained elevated at 463,000 units, up 1.3% from January. This represents an 8.4 months’ supply at the current building pace. A 6 months’ supply is typically considered balanced. However, with only a 2.9 months’ supply of existing homes for sale, new home inventory can remain above this balanced measure.

The median new home sale price in February was $400,500, down 3.5% from January and 7.6% lower compared to a year ago.

Regionally, on a year-to-date basis, new home sales have seen significant increases in the Northeast (up 47.0%), the Midwest (up 29.7%), and the West (up 41.0%). In contrast, new home sales in the South have decreased by 13.4%.

As the housing market continues to adapt to fluctuating interest rates and inventory levels, builders and buyers alike are navigating a complex landscape. However, with the potential for interest rates to decrease over the course of 2024, there is optimism that more buyers will enter the market, necessitating further new home construction to meet demand.

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Agile Cold Storage to Build $46 Million Facility in Pearl River, Creating 100 Jobs

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A storage and logistics company, Agile Cold Storage, is set to build a $46 million, 150,000-square-foot cold storage facility in Pearl River. This development will create 100 new jobs and aligns with St. Tammany Parish’s economic development strategy of attracting logistics and distribution companies, economic development officials announced on Tuesday.

Agile Cold Storage, which serves food manufacturers, processors, and growers across the U.S., will construct the facility on 10 acres at the St. Joe Brick Works site, according to Chris Masingill, head of St. Tammany Corporation, the parish’s economic development agency.

Strategic Location

The new Agile warehouse will be strategically located near the Associated Wholesale Grocers distribution facility and Rooms To Go Outlet, just off Interstate 59. This location is expected to enhance logistical efficiency for the company.

Job Creation and Economic Impact

The 100 new direct jobs created by the facility will offer salaries around $53,000, according to a news release from St. Tammany Corporation. Additionally, Louisiana Economic Development (LED) estimates that the project will generate 95 new indirect jobs, further boosting the local economy.

“Agile Cold Storage’s investment in St. Tammany Parish demonstrates the unique logistical advantages Louisiana has to offer businesses that keep America’s supply chains flowing smoothly,” said LED Secretary Susan Bonnett Bourgeois, who resides in Covington. “This project is a win for the Northshore, the state economy, and the workers of Louisiana.”

Incentives and Support

The state has offered Agile Cold Storage an incentives package that includes a $1.5 million performance-based grant. This grant will reimburse the company for site improvement expenditures, contingent on board approval and the company meeting specific investment and payroll targets, according to the news release.

In addition to state incentives, Agile Cold Storage will benefit from workforce training through the LED FastStart program, which aims to provide customized recruitment, screening, and training solutions for businesses in Louisiana.

Masingill also mentioned that the company will take advantage of a St. Tammany Parish incentive, which reduces about two-thirds of the company’s parish property taxes for 10 years. In return, the company commits to reinvest that money into construction and other costs. The company is expected to have an annual payroll of $5.4 million.

Operations and Future Plans

Based in Gainesville, Georgia, Agile Cold Storage specializes in blast-freezing and packing food for shipping. The new Pearl River facility is expected to handle about 100 containers of food shipments per week, which will be sent to the Port of New Orleans for export, according to the news release.

“Agile Cold Storage’s investment is a testament to the robust infrastructure and economic potential of St. Tammany Parish,” Masingill said. “This facility will not only create jobs but also strengthen our position as a key player in the logistics and distribution sector.”

Site work for the new facility is expected to begin soon, with construction projected to take between eight to 14 months. Once completed, the facility will enhance the region’s capacity to handle and export food products efficiently, contributing to the local and state economy.

The new Agile Cold Storage facility marks a significant investment in St. Tammany Parish, reflecting the region’s growing appeal as a hub for logistics and distribution. This project is poised to provide substantial economic benefits and job opportunities for the local community while reinforcing Louisiana’s role in America’s supply chain infrastructure.

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