As you listen to the national news it is important to remember that real estate markets are local. Though changing, the Baton Rouge market continues to be strong. Our local economy is growing, interest rates are low, and banks and mortgage brokers have money to lend. We are not in California, Nevada, Florida, New York, Chicago, or DC. And, the likelihood is that we will not see their declines. There are, however, lessons to be learned from their experience.
"Irrational exuberance."It's one of my favorite Alan Greenspan expressions. For the past two years we have had some of that in Baton Rouge. Prices have gone up and everywhere you look there is new construction. Sellers have been elated and buyers frustrated; in some areas of town you just couldn't buy a home fast enough.
After periods of rapid appreciation it is reasonable to experience a market adjustment. Our market is changing. The number of homes sold in East Baton Rouge parish in August 2007 is down almost 18% vs. the same time a year ago. Inventory - the number of homes available for sale - is also rising.
But does that mean the sky is falling? I don't think so. In East Baton Rouge parish the average price of a sold home went up 25% between August 2005 and August 2007. In light of what our community has experienced, I think that's pretty reasonable. However, with rising inventory, the likelihood is that prices will start of level off. In some neighborhoods where prices have gone up the most, they may start to go down.
It's time to dispell some myths and change our expectations. My favorite, of course, is that you don't need a realtor. All you need to do is put a sign in your front yard and your home will sell. There was a time when some people were successful with that approach. Those days have passed. If you want to sell your home, you need to be realistic about the price and its condition. You also need to have a marketing plan. It's about getting back to basics as well as understanding the habits and behaviors of today's home buyer.
What do you think?
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