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BR home prices up 27% for year

Katrina-fueled growth rate the highest in the country, report says

By CHRIS GAUTREAU
Advocate business writer
Published: Aug 16, 2006


A national report confirmed Tuesday what many Baton Rouge residents have seen firsthand over the past several months: Prices for homes in the local real estate market are skyrocketing — at the fastest pace in the country.

The National Association of Realtors said that in the second-quarter, the median price for existing single-family homes in the Baton Rouge market hit $172,300, a 27 percent — or $36,900 — increase from the April-to-June period in 2005.

That growth rate was the highest of all 151 U.S. metro areas measured quarterly by the Realtors association. The next highest was Ocala, Fla., where prices jumped by 25 percent to an average $169,500.

Experts attributed the Baton Rouge figures to the lingering effects from Hurricane Katrina.

Walter Molony, a spokesman for the national Realtors association, said the population shifts created by Katrina have been unparalleled.

“We’ve looked at other disasters, hurricanes and earthquakes,” Molony said Tuesday. “We typically see a temporary disruption, but we’ve never seen this level of displacement. We don’t have anything exactly to compare it with.”

Ever since the devastating storm one year ago displaced much of the New Orleans area, the tens of thousands of residents who landed in Baton Rouge have revved up the local real estate market as they put down new roots.

In the first few months after the storm, the number of homes sold in the Baton Rouge market have seen double-digit growth. The growth rate has slowed in recent months, but numerous local experts have said dwindling inventories have kept sales in check.

The demand remains strong and prices have followed accordingly, Baton Rouge residential appraiser Tommy Wallace said.

“There is still a number of people moving in,” Wallace said.

Dan Derbes, another residential appraiser, agreed that lower inventories remain pressured by higher demand. But he also cautioned that the local market is more complex than broad measures may indicate.

Nationally, the median price for existing single-family homes was $227,500 in the second quarter, up 3.7 percent from a year earlier, when the median price was $219,400.

The median is a typical market price indicator, where half of the homes sold for more and half sold for less.

Two other Louisiana markets appeared in the measure of median prices. In the New Orleans-Metairie-Kenner area, prices rose 16.6 percent to $178,000. Prices rose 8.8 percent in the Shreveport-Bossier City market to $136,100.

In the Realtors’ report, 37 U.S. metro areas were still enjoying double-digit price increases, while 26 saw prices drop.

The biggest price drops in terms of percentage terms were in Danville, Ill., which saw an 11.2 decline compared with the spring of 2005, and the Detroit area, where home prices dipped by 8 percent.