Your Market Update; Interest Rates & Economic Update

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Foreclosures have increased by over 40% year over year. Is the market crashing? Stay tuned to find out.

Hi, my name is Jim Keaty with Keaty Real Estate and this is your weekly Lafayette Market Update brought to you by Levi Kastner at Thimmesch Kastner Insurance.

Hi, my name is Jim Keaty with Keaty Real Estate and this is your weekly Lafayette Market Update brought to you by Levi Kastner at Thimmesch Kastner Insurance.

So, what’s happening in the foreclosure market? As you can see, we are seeing a trend upward in the number of foreclosed homes. We actually saw a 41% increase in REO sales year over year. I think we’re seeing a delayed response from the oil prices falling in 2015. I would not be surprised if those numbers continues to rise. But it’s not a very big number. We’re only actually talking about 50 sales per quarter. It’s not the end of the world. I don’t see anything trending there.

Now we always want to keep a close eye out on interest rates, so let’s dive right into the interest rates. Interest rates have been a big surprise this year and they’ve been trending downwards and hovering around 4.3%. When we look at Fannie Mae, Freddie Mac, Mortgage Broker Association and National Association of Realtors, their forecast of interest rates, it looks like the tone has changed and they’re actually predicting a more stable interest rate for the rest of the year with a slight increase. So, why are these interest rates trending downwards?

According to Freddie Mac’s chief economist, Sam Khater explains that the low point is a crucial indicator that the economy is growing at a slower pace while there are many global headwinds to consider. The US economy continues to churn out jobs which is actually great for housing and demand. We have recently seen home sales start to recover. And with this week’s rate drop, we expect continued rise in the purchase and demand.

But when you look at Lafayette’s unemployment rate, it is actually trending downwards. We reported the lowest unemployment since 2009 which is a very good sign for Lafayette and the housing market because less unemployment equals more home purchases.

Mike Fratantoni, the chief economist at the Mortgage Broker Association, stated the spring home buying season is almost upon us. And if rates stay lower, inventory continues to grow and the job market maintains it’s strength, we do expect to see a solid spring market. Lafayette is still an oil town, so always want to keep an eye on what’s happening in the oil business. The cost oil per barrel has been rising for three straight months and recently hit a high above $70 a barrel. And you can see from these graphs that the Louisiana Rig Count is rising, the drilling permits are up from 2016, natural gas prices are up. Morgan Stanley forecasted the oil market will soon swing into an undersupply supporting Brent crude above $75 a barrel. And OPEC’s supply cuts and the US sanctions against Iran and Venezuela will push the oil market into an undersupply and boost the cost of crude oil in the coming months.

The investment bank previously said oil prices were more likely to fall after Brent crude topped $65 a barrel last month. But Morgan Stanley now sees the international benchmark for the oil price rising to $75 by the third quarter. And OPEC Alliance aims to keep $1.2 million barrel per day off the market during the next six months of 2019.

This month, Saudi Energy Minister said, “The kingdom plans to produce 9.8 million barrels a day in March. About a half a million barrels below levels Saudis agreed to and down from the 11.1 million of barrels per day in November. I’m hopeful and it really looks like Lawrence Scott was right, that hope does lie ahead. And 2019 and 2020 could be our rebound years.

To summarize Lafayette Parish market, our sales are up 2.4% overall, our volume is up 2% overall. But our average sale price is down, but just a tad. And our average days on the market is also down by four days. Our pendings are up which is a great indicator that we should have a very good and strong spring. One of the biggest surprises of the year is the increase in sales in outlying parishes.

St. Landry Parish sales increased by 48% year over year. Iberia Parish increased by 28% year over year. St. Martin Parish increased by 21% year over year. Acadia Parish increased by 19% and Vermilion Parish increased by 24% year over year. I’m not sure why we’re seeing such a drastic change in the outlying parishes, but I like what I’m seeing. I hope it continues.

As always, we want to keep track of all the price ranges. So I want to encourage you to review our Market Update stats on a monthly basis where we breakdown all of the sales by price range. You can access this Market Update by going to www.lafayettemarketreports.com (that’s with an ‘s’) or just email me at jim@keatyreaestate.com and I will make sure that you get the market updates sent to you by email.

I’m Jim Keaty with Keaty Real Estate and this week’s Market Update has been brought to you by Levi Kastner at Thimmesch Kastner Insurance. I’ll see you next week.

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