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!

Pending Home Sales Highest in September 2019

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The National Association of Home Builders (NAHB) reported a 21-month high for pending home sales in the month of September.

The catalyst for this spike stems from lower mortgage rates. National buying power has increased by 6% due to improved interest rates.  The National Association of Realtors (NAR) believes this is the case for the two consecutive gains in sales reported.

Pending home sales are based on The Pending Home Sales Index (PHSI) data from the National Association of Realtors (NAR). The PHSI is an indicator that looks ahead based on signed contracts. The National Association of Realtors reported the highest PHSI since December of 2017 last month. It rose from 1.5% from 107.1 in August to 108.7 in September 2019. Looking at sales from a year-over-year basis, they were up 3.9% higher than reported just a year ago in 2018.

Looking at the September PHSI it was mixed regionally. In the Midwest it measured at 3.1%, in the South it was 2.6% higher, Northeast fell 0.4% and in the West it fell 1.3%. Although there were some regions that fell, the year-over-year Pending Home Sales Index (PHSI) grew in all four major regions which include the Northeast, South, Midwest and West. The increase ranged from 1.3% in the Northeast all the way to 5.7% in the South.

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Covington Library Grand Opening

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The St. Tammany Parish Library in Covington’s $2 million-plus renovation is almost complete. The grand opening is planned for February 2020.

The original grand opening date was set in January of 2020. Delays in the window installation have caused the month set back. During renovations the contractor discovered that water had been leaking into the 31-year-old building through the windows. It was decided to replace all the windows in the building with better sealed new windows which would better protect from the outdoor elements.

Along with the new windows, the branch located at 310 W. 21st Ave. will have a new roof, air conditioning, lighting, flooring, furniture, new ADA-compliant restrooms and the conversion of 3,000 square feet of administrative space to public use.

More improvements will come for many St. Tammany library as three new capital improvement expenditures were approved in the last library board meeting. The expenditures total $255,800 which include $115,000 for roof work on Mandeville and South Slidell branches and $140,800 in exterior work on the Covington branch.

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The Fourth-Largest Tourism Economy in the State Goes to St. Tammany

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The University of New Orleans Hospitality Research Center, known for its economic analysis and forecast, conducted a study regarding the forecast of tourism indicators. According to their recent analysis St. Tammany Parish has the fourth-largest tourism economy in Louisiana.

The study, done on behalf of the Louisiana Department of Culture, Recreation and Tourism, found that visitors to the parish spent $804.72 million in 2018. This is 12% higher from the figure reported in 2016 and 7% up from 2017.

The study was shared at the St. Tammany Parish Tourist and Convention Commission’s monthly meeting at the Harbor Center near Slidell by chief executive officer Donna O’Daniels.

In the meeting it was shared that the parish tourism employment was also up 8% from the year before. It was reported that 1,149 jobs generated $274.59 million in earnings in 2018. The parish also generated $45.95 million in state taxes and $37.67 million in local taxes.

The positive findings will be shared in the new edition of the visitor’s guide and also on the commission’s website www.louisiananorthshore.com.

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Fed’s Rate Cuts Will Help Home Buyers

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Mortgage Rates have dropped to near 3-year lows and only adds incentive to the already flourishing housing market. Wednesday the Federal Reserve cut interest rates for the first time since the downfall in 2008. The federal fund rate (the rate the banks charge on another for short-term borrowing) will now stay between 2% and 2.25%.

“These low interest rates will partly help with housing affordability over the short-term. Both rents and home prices have been consistently outpacing income growth. The only way to mitigate housing-cost challenges as a long-term solution is to bring more supply of both multifamily and single-family homes to the market,” adds Lawrence Yun, chief economist for the National Association of REALTORS®.

According to Yun those that will see a benefit from the Fed’s move will be types of financing other than the 30-year loans. The 30-year loan is already at a low 4% making the rate change cause very little difference in mortgage savings. Those with adjustable-rate mortgages and commercial real estate loans will most likely see the major benefits.

The change will help home buyers with the rising home prices. A buyer who can spend $1,500 on a monthly mortgage payment can now afford a purchase price of $402,500 instead of the $367,500 home price with last years rates.

“Last year, buyers would have needed an additional $145 a month on top of the $1,500 to afford a $402,500 home,” says Danielle Hale, realtor.com®’s chief economist.

This is great news for today’s home buyer. There are some parts of the country where this decision will give a buyer an extra $35,0000 in purchasing power. With home prices up 6% nationally that increase in purchase power will help keep the threat of another economic downturn.

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Cash Is Not The Only Way To Buy A Home

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Many home buyers today use cash to purchase a piece of residential real estate. However in recent years the trend for all cash payments is on the decline. Since 2014 all-cash home buyers have trended down because of the less competitive current housing market and lower mortgage rates.

In June of this year, 16% of home buyers paid all cash compared to the 23% reported in February of this year. The National Association of Realtors reported most home buyers are purchasing by taking out a mortgage. The Mortgage Bankers Association reported that home loan applications are 9.5% higher than this time last year.

Bidding wars are starting to be a thing of the past. Redfin reported seeing just 12% of purchase offers in competitive bids in 2019 wherein 2018 51.7% of purchase offers were in a bidding war. When bidding wars were the rage, people would pull out cash to purchase homes enticing sellers over other offers they might have on the table.

Investors have also started too cool off in the housing market. The National Association of Realtors concluded that investor purchases have declined to 11.1% from 11.3% within the past year. Investors are not as inclined to purchase homes because many believe that the prices have peaked. According to CoreLogic the average home price has risen 55.2% in the past six years. Not only that but prices are 12.6% above their pre-housing crash peak.

“Investors naturally have become more cautious,” says Lawrence Yun, chief economist of the National Association of Realtors.

The stock market has also played a roll in all-cash deals. The big sell-off in stocks might have scared many all-cash home buyers. In the past, a drop in share values has been a catalyst for a coming recession.

Mortgage rates have plummeted making it a great time to apply for a loan. Home loans have become much more affordable. Freddie Mac reported that the 30-year fixed mortgage rate is down to 3.75% where this same exact time last year it was a 4.54%.

“Making a cash purchase means the buyer is exposed dollar for dollar to any decline in home prices,” says Ian Shepherdson, chief economist of Pantheon Macroeconomics.

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Potential Bikeshare Program for the Northshore

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New Orleans Blue Bikes program began in 2017 and is still very popular within the community.  St. Tammany Parish is drastically growing and a bikeshare program would be very successful in the Northshore area.

“We hope and think people will (support this) because of our transportation challenges over here,” Northshore Community Foundation CEO Susan Bonnett Bourgeois said.

A proposed bikeshare program along the Tammany Trace would start with a fleet of 187 smart bikes. They would be parked at 53 hub locations along the trail from Covington to Slidell. Bourgeois states that the program will grow within the the first three years, adding another 88 bikes and 25 more hubs.

The nonprofit Northshore Community Foundation plans to procure a company to run the program. The program will not rely on government money but will run off user fees and corporate sponsorships. In fact, many health care focused companies have already shown interest in corporate sponsorships.

The program also has a potential of bringing in $100,000 to $150,000 to a local St. Tammany business and will bring jobs to the area for local residents. An experienced bikeshare operator would create a partnership with a local bicycle shop to supply the bikes.

The bikes will be for rent along the trail and will rely on electric motors to ease the pedaling for all to enjoy. The nonprofit hopes to have the program up an running by the Spring of 2020.

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