So, you’re looking to buy a house in Louisiana, but the market has you apprehensive? We get it. According to the Greater Baton Rouge Association of Realtors (GBRAR), the number of homes sold in Baton Rouge is down nearly 20% compared to pre-COVID levels. However, hope isn’t lost for prospective buyers. Brandon Richoux, Broker and Co-owner of Smart Move Real Estate, tells why now might actually be the perfect time to buy a house in Louisiana.
“Is now the right time to purchase a house? Though market conditions are changing,” Brandon states, “an assessment of financial and market conditions from a qualified realtor is key to answering this question.”
National Mortgage Rates at a Glance
If you’re hesitant in buying a house, it’s mostly likely because of mortgage rates. According to data from the Federal Reserve, mortgage rates are the highest they’ve ever been in well over a decade. Mortgage rates met historic lows (bottoming out at 2.67%) in 2020 during the COVID-19 Pandemic. Since then, rates have been volatile, bouncing between the 6-7% range.
Baton Rouge Housing Market at A Glance
Sales price:
According to the Greater Baton Rouge Association of Realtors, the August median sales price for a home in Baton Rouge is $269,500. It’s approximately an 8% increase from last month. Much like national mortgage rates, the prices of homes in Baton Rouge have been volatile within the past year. Prices have hovered around $260,000-270,000 since the start of 2023.
Inventory:
Fortunately, inventory has been increasing in Baton Rouge, giving buyers more negotiating power. In August 2023, Baton Rouge had approximately 3.4 months of houses on the market. This is a leap from the 2022 housing shortage, which reported historic lows of 1.2 months of homes on the market. However, there is still time to go until it reaches the 5–6 month range where buyers and sellers share equal negotiating power.
Benefits of Buying Now
However, by investing now, you can begin building home equity. Turning your debts into assets can also give you more financial stability. This can be incredibly beneficial for first-time homeowners who might not have many forms of assets. You can then leverage your home equity for more favorable interest rates at the bank.
In addition, you can also avoid further mortgage increases. Since the start of 2020, the Average 30-year fixed-rate mortgage has shot up 4.6%. However, by locking in your mortgage rates now, you can get ahead of the uncertainty of further interest rate surges.
When mortgage rates drop, more buyers are likely to storm the market. The surge can lead to even higher housing prices since sellers will have more negotiating power. Despite the rise in mortgage rates, now might actually be the right time to purchase your dream home.
What If I Bought Today?
The current rise in mortgage rates has made many people hesitant about buying a house in Baton Rouge. Though this hesitation is rational, Brandon shines a light on how to deal with these mortgage changes.
“If you bought a house today, there are ultimately three results that will happen. Rates can rise, fall, or stay the same.” Brandon states, “We can’t control what happens to mortgage rates, however, we can control our response to these changes.”
Brandon goes into more detail below:
- Rates go up: Purchasing before mortgage rates rise is the preferred outcome. With the Fed’s efforts to fight unemployment, it’s not unlikely that the mortgage rates will continue to rise. That said, there’s no way to predict where future mortgage rates will be. However, you can meet with a realtor to see whether you’re in the best position to purchase a home.
- Rates go down: This scenario strikes fear into the hearts of many potential homebuyers at the moment. However, you don’t have to miss out if mortgage rates decrease after you buy. If your credit is in order, there are refinancing options that can help you score a better rate after you purchase your home.
- Rates stay the same: It’s easy to think there’s no loss if mortgage rates stay the same. However, you might be missing the negotiating power resulting from there being few buyers in the market
What’s Next?
It’s easy to become discouraged in your journey toward home ownership. However, you’re not out of options if you’re looking to buy a home in Baton Rouge. Brandon Richoux states, “Though we can’t control economic conditions, we can prepare ourselves to adapt to these changes. Additionally, you can talk with an experienced local real estate agent to have confidence in your decision moving forward.”
We understand that a new home purchase is among the largest financial decisions most of us will ever make. Smart Move Real Estate ensures all clients understand each step and nuance of the real estate transaction. If you would like to buy a home in Baton Rouge confidently, send us a message or call us at 225-448-2850. Our agents look forward to hearing from you!