Lafayette is running out of starter homes as real estate market prices out first-time buyers
Tamara Chance and her husband, Douglas, were a year into searching for their first home, with a son on the way, when they landed on a pre-war fixer-upper in Lafayette’s McComb-Veazey neighborhood.
They had been renting an apartment when they decided to look into buying a home to get away from rising rent and service fees, but they found a slew of new challenges trying to break into Lafayette’s housing market. It was 2018.
“At that point, the price we were looking at was in the $150,000 to $160,000 range. We were trying to find something where our monthly payment wouldn’t necessarily go up a ton, and that was just really hard to do,” Chance says. “There was a limited supply of houses that were available at that price range.”
It’s an issue that has only gotten worse in recent years, as starter homes, generally those that sell for less than $200,000 in Lafayette Parish, have become increasingly harder to find — and the costs to buy them have grown substantially.
With an aging stock of existing homes, and effectively no new construction below $200,000, Lafayette’s first-time homebuyers are being shut out of the market.
Just 26% of homes sold in the parish last year went for less than $200,000, compared to 47% — or nearly half of all homes — sold in 2020.
Meanwhile, rising costs and interest rates pushed the average cost of 30-year mortgages issued in the parish up 30% — just shy of $300 per month — from 2021, according to The Current’s analysis of Consumer Financial Protection Bureau data.
It’s a pair of trends that have made finding a starter home an uphill battle for many and that raise questions about the flexibility of Lafayette’s housing market and the affordability of its housing supply.
It’s not just that homes are becoming more expensive because of market forces or inflation. Lafayette is building far fewer starter homes.
In 2020, new construction accounted for just over one in every six homes that sold for less than $200,000. Last year, less than one in 50 fell within that price range, according to long-time local real estate expert Bill Bacqué, whose firm Market Scope Consulting compiles monthly reports on Lafayette’s housing market from the Realtor Association of Acadiana’s Multiple Listing Service.
“The problem is the inventory has not increased enough to allow for adjustment downward of prices, which will ultimately have to happen … When demand ebbs, assuming supply stays constant, you will ultimately get an oversupply,” Bacqué says. “The crux of the problem here is we haven’t been seeing the level of new listings actually stay level. They’ve dropped.”
The lack of inventory and high prices have pushed buyers out of Lafayette Parish, Bacque says, and into areas where new developments are sprouting rapidly.
“As things become less available in Lafayette, people are looking outside of Lafayette for some of that savings,” says Bacqué. “You’re seeing that particularly in new construction, where some of the affordable new construction is now moving into the Maurice area, the Scott area, somewhat up into the Church Point (or) Cankton area in Acadia Parish. I believe the main reason for that is ultimately the difference in cost.