If you’ve been thinking about making that change and moving to a retirement community like Christwood, you may have been keeping an eye on the local Northshore real estate market. If so, then you know that it’s definitely a “seller’s market,” like most other markets across the country.
So how long do you have to take advantage of this window of opportunity? To get a feel for how long the current trend may continue, we talked with Steve “Skip” Scoggin.
Skip is not only Secretary and a member of the Executive Committee here at Christwood. He’s also a partner and managing broker at Mauti, Schroder, Scoggin Properties, a full-service commercial/residential/property management real estate company in Mandeville. He’s a certified general real estate appraiser as well.
Here’s what we found out.
The Northshore Real Estate Market Mirrors Markets Across the U.S.
The trends that began in 2020 and picked up steam in the spring of this year have resulted in a tight market. According to Skip, a healthy real estate market has a four to six months’ supply. That refers to the number of months it would take for the existing inventory of homes on the market to sell, given the current pace of sales.
In St. Tammany Parish, for the second quarter of this year, there was about a 2.6 months’ supply for homes in the price range from $180,000 to just under $400,000.
Go a bit higher, into the range of $400,000 to $500,000, and there’s just a 2.4 months’ supply, which Skip said is “kind of unheard of.” For homes valued at more than half a million dollars, there’s a 3.72 months’ supply.
As we mentioned, the Northshore real estate market is in line with what’s been happening throughout the country. Nationwide, Skip said, there were nearly 40% fewer listings on the market earlier this year than in 2020.
That’s only part of the picture, though.
“The data is skewed right now because homes are selling so fast that the listings are not really hitting the market. Or they’re hitting so fast that they’re not showing up in the statistics,” Skip pointed out.
As a result, on a year-over-year basis, the statistics are showing more sales even though there are fewer listings.
What’s Fueling the Trend?
The limited supply of homes for sale is only one factor that is driving this nationwide real estate trend, according to Skip.
Interest rates that are at or near historic lows are another factor. When mortgages are available at such low rates, that’s when people who wouldn’t otherwise think about buying a home change course and start shopping around.
“We’re seeing many instances where there are multiple offers on the same property. A lot of homes are selling over the asking price — sometimes significantly over the asking price — because there’s sort of a bidding war,” Skip said.
A third factor that’s influencing the trend is that lenders are making money available. During the Great Recession, when foreclosures were extremely common and “money was very, very tight,” Skip said, “everything came to a screeching halt. And people just sort of stopped buying. We don’t think that’s going to happen in this case — even after they’ve lifted the foreclosure moratorium.”
Skip offered several reasons for why prognosticators believe the trend is likely to continue:
- Mitigation by lenders. In cases where people are extremely behind on their mortgage payments but still have a reliable source of income, lenders may mitigate the situation by putting the overdue payments on the back end of the payment schedule.
- Home equity. Many people have seen their home equity increase because of the rise in home prices. So, even if they do need to sell, they’ll still benefit from the equity they have in their home. Plus, they may be able to get a mortgage at a considerably lower rate than the one they currently have.
- Market supply. As we’ve already stated, the months’ supply figures are quite low. It will take time to build up inventory to the point where it has reached the levels we’d normally see in a healthy market, much less go beyond that.
How the Great Recession — and COVID-19 — Influenced the Current Trend
Skip describes the mix of circumstances that led to the trend we’re seeing now as “a perfect storm that’s been brewing for a while.” In addition to the lower interest rates that have existed for several years, and the low inventory of homes for sale, the Great Recession played a role.
Countless families lost their homes during the Great Recession. The children in those families saw the pain their parents went through and, consequently, wanted nothing to do with homeownership.
But, more than a decade later, most of those children are adults. Many are married and either have or are starting families of their own. They no longer hold the same views of homeownership. They’re ready to buy.
This is especially true here in the Northshore area, Skip said. People in their late teens and into their twenties came to New Orleans after Katrina to help rebuild. They ended up staying. Homes in the Northshore are typically more affordable than those in New Orleans.
But like elsewhere, the supply of homes for sale is limited. Builders are behind the curve as they scramble to find affordable land on which to build. And, construction costs have increased significantly for virtually all types of materials.
COVID-19 has exacerbated the issue, Skip noted. When the pandemic first hit, he said, people “sort of hunkered down. They were just waiting it out.” But they only stopped showing their homes and having open houses for a few months and then people started buying again.
The longer-term effect of the pandemic has been on the supply side, in terms of both labor and materials.
“This will all work itself out, but it could take a few years,” Skip said.
Will Hurricane Ida Affect the Local Northshore Real Estate Market?
Although it’s still too early to say with certainty, Skip said he doesn’t think that the damage from Ida will hit the Northshore real estate market too heavily.
“This was not like Katrina,” he said. “Around here there was some flooding, but most of it was tree damage.”
For now, the largest effect locally has been on the rental market. People are looking for homes they can lease while their own home is being repaired.
How Long Will the Trend Last?
Taking into consideration the present set of circumstances and the events over the last couple of years that have led up to them — low-interest rates, the pandemic, supply shortages, changing demographics, the availability of financing and more — Skip said it’s a good time to sell.
“It’s really an abnormal market, and it won’t last forever,” he said. “But it’s not going to just all of a sudden turn.
“Bottom line is, if you’re thinking about selling any time in the next five years, I would do it in the next two and a half rather than wait for five.”
Recommendations Specifically for Older Home Sellers
It’s not unusual for people to be more resistant to selling a house they’ve lived in for many years (and sometimes several decades) because they’ve developed an emotional attachment. That’s true no matter what the real estate market is like.
Add to that the likelihood that both the marketplace and the house have changed over time, and you can easily see why Skip made the following suggestions for older adults who are contemplating selling their house.
Plan ahead and get started early.
Even if you think you won’t be putting your house on the market for a couple of years, it’s still a good idea to set the wheels in motion now. Time goes by quickly, and preparing ahead of time means you’ll have less stress later on.
These are some steps you can take right away:
- Get your home inspected. An inspection will reveal any problems that need to be addressed. It’s far better to find out now than when you’re trying to negotiate the sales price for your house.
- Make any necessary repairs. Given the current labor shortage stemming from the pandemic, it’s taking longer to have home repairs done. Hurricane Ida has compounded the problem because construction workers and handymen are busy repairing storm damage. It could take many months longer than it would under normal circumstances.
- Consider home improvements. This can be a challenging decision to make. Should you only make basic repairs to your house, or should you upgrade it in ways that will make it more likely to sell for top dollar? Consulting with a real estate professional can shed some light on what might be best for your situation.
- Get information about the people you’ll hire. It’s important to be able to trust the people you’ll be working with as you prepare your home for the market and plan your move. That includes everyone from the home inspector and workers who’ll be repairing or making improvements to your house to the real estate professionals, moving planners and movers who’ll be assisting you with selling your house and moving to your new home. Get references and check out their reviews.
- Create a timeline. As you start taking the steps above, you’ll get a sense of how long the various phases of the process will take. By creating a timeline, you’ll be able to set some realistic expectations for putting your house on the market and moving. It’s always a good idea to build in some “buffer” time along the way. All the planning in the world may not be enough to avoid every potential surprise.
We’re Here to Help You
Selling your house and moving can seem overwhelming, but it doesn’t have to be. Know that many resources are available that can make each step easier.
Here at Christwood, we help people through the home-selling and moving process all the time. We can provide all kinds of useful information and point you toward other helpful resources.
You can also request a complimentary retirement guide to help you start preparing. To see how your current living expenses compare with the cost of living at Christwood, check out our cost calculator.
If you’re ready to see what it would be like to live in our community, we invite you to schedule a tour.
We know this is a big decision. These are just a few of the ways we can help as you make your choice and follow through.