Answer To Email Question About Buying A Home In Zachary's Copper Mill Golf Community.
I recently received an email from an out-of-state resident currently renting a home in South Baton Rouge. Here's their question:
"We are looking to buy a home and have looked at Copper Mill in Zachary. From looking at the history of the resale homes that are currently for sale, and the comparables sold recently, it would appear that quite a few of the homes have lost value since being built or purchased. In your opinion, is this a reflection of the current state of the economy and therefore values should come back around as the economy recovers, or is this a reflection of the development itself? We like the area and may look at other neighborhoods, but we just want to be sure we understand what we are seeing in the numbers."
My Answer is below and is based on the fact that buying a high end home is a very serious matter and that once you buy one and have paid too much, it's not easy to get out from under those homes, as some in Copper Mill are possibly finding out, those that paid $160/sf in 2007. See 1595 Royal Troon below. AND, my answer is based on the past 5 years of appraising some local high end foreclosures where paying too much in the beginning spelled doom for local home purchasers .
My opinion of Copper Mill is based on market reaction to this development, the obvious decline in values and the extremely long time it takes to sell homes in there. I have relatives that built 3 spec homes to sell in Copper Mill and have their personal experience to speak from as well. They did well on the first 2 but didn't on the 3rd home, which took over 22 months to sell.
I think it has to do with the economy in general, the absolutely insane housing market that Hurricane Katrina created after August 2005 and the fact that it's located in Zachary. Zachary is a fine place to raise a family and has THE TOP Public school district in the State. However, it's a small town with little industry or business base. I've often wondered how Zachary became to be what it is today based on all of those that have to commute to and from it without many jobs in the local community there. What I'm trying to say is that housing in Zachary is priced very high in my opinion for the location and the lack of economic base in Zachary.
POSITIVES IN COPPER MILL. Copper Mill is an absolutely outstanding development where locals are proud to call home and the development is kept up very well. The championship golf course is a plus for Zachary market. And, the Positives are that the average and median sales prices are at all time highs of $476,500 and marketing time is at 115 days, the lowest in many years. However, this is ONLY based on 2 total sales in 2012. And, 6 of the 22 current listings are pending and these have listing prices of $354,900, $359,900, $399,900, $415,000 and $639,900. You see, the buying trend is being tamed in Copper Mill to purchase smaller, more affordable new to newer homes in there as opposed to $500K+ larger homes.
CURRENT LISTINGS. There are 22 current MLS listings in Copper Mill from $299,900 up to $639,900, from $122/sf up to $186/sf. Eight Listings are priced above 2012 support of $145/sf, priced at $149, $152, $158, $160, $182 and $186/sf. On these listing priced over $145/sf, I saw "BUYER BEWARE"!
Copper Mill is a fine development, no doubt. However, those that bought early and financed nearly 100% are upside on their mortgages and will be for many years. Zachary and Copper Mill never were a sustainable $161/sf market and $161/sf was the high back in 2007. It's been downhill ever since then from such lofty heights and I don't expect values to climb that high again in Copper Mill. I attached the current chart showing support in 2012 for $145/sf BUT only based on 2 sales.....and there used to be 19 sales in a year in there.
I shot this video here http://www.hdhathomes.com/tours/699_tourb.html for 1595 Royal Troon I think in 2009 and that home is still be on the market, over 1227 days. Can you imagine if you were a buyer of such a home like this one at the peak of the market $161/sf in the $600's, needed to sell it and after 1227 days on the market, it was still yours and you couldn't sell it?
I wouldn't recommend the purchase of a home in Copper Mill unless it's at a discounted price in case prices fall even further in there. In 2011, support was at $141.76/sf, the lowest since before Hurricane Katrina. These listings in the $158/sf to $186/sf are not supportable in this market, regardless if that's just how much it cost to build a new home in there.....cost doesn't always equal market value. Or, buy one of the smaller, less pricey homes in there, which should hold it's value better even if there's another correction, those homes in the $300,000 to $415,000 range.
My Answer Is:
Yes, buy a Copper Mill home but be ever so cautious of the price you pay for a home in there and DON'T trust that these listing prices over $145/sf are truly market value. These could be home owners that paid too much during the highs, are upside on mortgages and now need to sell, not exactly sure. 5 of these listings over $145/sf are resales of existing homes. For these homes listed over $145/sf, the question becomes "why" are they and what extraordinary features do they have that would warrant paying $13/sf more than $145/sf? Large Outdoor Kitchen? $75,000 Gunite Pool? There could be some extraordinary feature that might warrant higher pricing but perhaps not as high as $152/sf to $186/sf.
And, now that the Robosigning $25 Billiion lawsuit has been settled, any homes that weren't foreclosed on because of this suit, can now be. I don't know if this will impact any homes in Copper Mill, but it could.
Is 2012 the year of recovery for Copper Mill or do we need to correct our thinking into a new lower reality that $145/sf is a more sane level of pricing for the high end Zachary market? I doubt a full recovery, but we've already witnessed a +$4/sf +/- increase so far in 2012. I think any recovery back to $161/sf, if that's what's expected, will take years to take place and that $141 to $147/sf is a much more realistic pricing level for this market. We know that "Cost Doesn't Necessarily Equal Market Value" and this has been made very evident in outlying markets such as Zachary and Denham Springs.
MY ADVICE FOR COPPER MILL BUYERS. My advice would be to scale it down in Copper Mill, just as the newest filing is offering smaller, more affordable high quality homes (smaller lots, smaller homes, same quality). It appears $300,000 to $400,000 is more realistic for Zachary buyers AND the new sign on Main Street now touts homes starting in the $300's. This is also taking place in Lexington Estates in 70810 where it's been difficult to sell high end homes (New Phase is offering more affordable lots with smaller home sizes).
Greater Baton Rouge Housing is still overpriced and I would highly recommend a Pre-Listing Appraisal before your purchase. I generally charge around $275 for these in the over $400K range: http://www.gbrprelistingappraisals.com/
NOTE: Based on information from the Greater Baton Rouge Association of REALTORS®\MLS for the period of January 1, 2006 to April 04, 2012. This information was extracted on 04/04/2012.
Hope this somehow helps you.
Bill Cobb, Appraiser
Answer To Email Question About Buying A Home In Zachary's Copper Mill Golf Community