Residential Real Estate Report:
Why aren’t homeowners selling? What do buyers want? Experts weigh in.
Buyers want efficient closets, multiple workspaces, and plenty of room for the whole family to be comfortable.
Marty Brantley, CEO Engel & Volkers New Orleans
Residential real estate during the pandemic is a tale of two cities.
While some renters and homeowners are struggling to make ends meet and relying on federal aid and mortgage forbearance to stay in their homes, those fortunate to have sufficient resources are finding this real estate market to be a land of opportunity.It’s a buyer’s market and a seller’s market rolled into one.
“Because of low housing inventory, homeowners are selling at higher prices than we have seen in a while, with many listings resulting in multiple offer scenarios within hours of hitting the market” said real estate agent Stacie Carubba.
So, what are buyers looking for during this unprecedented year? According to experts, they want … everything.
“Buyers want a turnkey property,” said Carubba. “House hunting, browsing for properties and scrolling through pretty listing photos on popular real estate apps has become a favorite pastime of many. Many buyers also have unrealistic expectations due to social media and HGTV.”
Carubba said it’s important for sellers to make the best first impression possible when hitting the market since there are so many high expectations. She provides light staging and decluttering services for all her sellers and has a pre-listing and photo prep process that ensures listings are eye-catching when they hit the market.
Marty Brantley, license partner and CEO of Engel & Völkers New Orleans, said buyers’ priorities have changed.
“It used to be all about stainless appliances and granite counters,” he said. “Now, real estate agents are seeing a greater emphasis placed on how the home functions. Buyers want efficient closets, multiple workspaces, and plenty of room for the whole family to be comfortable.” He added that interestingly, there are as many buyers looking for highly functional smaller spaces as for bigger homes.
Bron Hebert, with the Francher Perrin Group, said there’s been a dramatic increase in buyers looking for enhanced outdoor spaces: large backyards, swimming pools and front porches. Home offices and bonus rooms, of course, have become highly desirable features as well.
Bill Baker, a broker at RE/MAX, said that new construction is hot right now in many areas of the market.
“When buyers have the option of purchasing a home with brand-new systems, the most up-to-date finishes and features and appliances, they often forgo the renovated home or fixer-upper,” he said.
In addition, he said, buyers appreciate the peace of mind of the Louisiana Home Warranty Act, which requires the builder to warrant certain aspects of the construction for up to five years.
According to Brantley, in-demand neighborhoods include the usual suspects: In Jefferson Parish, the greater Old Metairie area and Old Jefferson near Ochsner’s main campus are hot. In Orleans Parish, Uptown remains as sought-after as ever, followed by the Lakeview/Lakefront communities. Hebert adds Gentilly to the list — especially for new construction and first-time homebuyers.
Buyers have also shown a willingness to expand their search, since the office commute has become less of an issue.
The Northshore is becoming increasingly popular due to the volume of affordable homes with larger back yards and in-ground pools, said Hebert. And buyers looking for a great deal on a historic home are expanding their search to include Algiers Point.
Belle Alliance Estate in Donaldsonville, meanwhile, is a great example of the distance buyers are willing to go to find what they’re looking for, Hebert said.
“It features a meticulously restored center-hall style home, which sits on 10.5 acres of land and includes a glass-enclosed greenhouse for the horticulture enthusiasts,” he said. “Buyers can work from home in Donaldsonville, and they’re only an hour away from New Orleans and 30 minutes to Baton Rouge.”
Brantley said this newfound freedom of movement doesn’t only lead buyers farther from the center of town. A recent purchase made by one of his clients is a great example.
“She’s an employee of one of the many businesses situated in the office parks on the Northshore,” he said, “but now she has the ability to live and work from a condo in the Warehouse District without the long commute.”
Boom Will Continue
Most experts agree with Stacie Carubba that “the real estate market is going to continue to boom through 2021, but may level off next year as rates continue to increase and buyer demand slows.”
“We are sorely lacking inventory at this time,” said Brantley. “That’s the reason the market should remain active through the remainder of this year. The biggest threat is a prolonged pandemic, more job losses or an unexpected and significant rise in rates.”
“Evidence suggests that as long as the interest rates remain low, we will continue to see sustained activity in the local market,” said Hebert. “While mortgage rates have slightly trended upward this last week, consumer confidence increased for the first time in four months and rates remain in a historically low range, so I think we’ll continue to see a thriving market as long as rates remain low.”
“Interest rates have crept up over the 3% mark in the past few days, and have seen some isolated one-day spikes over the last several months,” said Baker. “However, these numbers are still the lowest since Freddie Mac started tracking rates in 1971.”
For a variety of reasons, homeowners just aren’t selling right now.
Many are fearful about letting strangers in their home in the middle of a pandemic. Others are overwhelmed by the thought of moving. And some are just scraping by and are staying in their homes thanks to programs offering them mortgage forbearance, so they aren’t in a position to make big plans.
The average age of homeowners is another factor, said Baker.
“The largest number of homeowners are Baby Boomers or older,” he said. “During the pandemic, these potential sellers are less likely to allow access to their homes or sell to move into assisted living or nursing homes. With inventory so scarce, sellers may fear that they will not be able to find a new home.”
Brantley thinks vaccinations will increase consumer confidence and encourage more sellers to enter the market.
“There are certainly homeowners who under normal circumstances may have considered moving over the last year or this year but chose not to in order to further limit potential exposure to COVID-19,” he said. “Those homeowners are not going to appear as sellers until we have the pandemic in the rearview mirror.”
The real estate market is going to continue to boom through 2021, but may level off next year as rates continue to increase and buyer demand slows.
Real Estate Agent Stacie Carubba