Despite real estate slump, new homes still selling

By KEVIN CHIRI

Editor and Publisher LAPLACE - While the real estate slowdown in the River Region has hit existing home sales very hard, the new construction business seems to be holding its own, although also feeling the effects of the drop in the market.

L'Observateur reported in its first report on the region's real estate market last week, noting that current Multiple Listing Service numbers show almost 300 existing homes for sale on the local market. That is more than double what the average amount is, according to top real estate experts in the area.

The new home market has also felt the effects of the regional slowdown, but top builders locally say they have made business adjustments to compensate, and expect to see things come back by early next year.

Joey Scontrino, owner of the biggest St. John homebuilding company Landcraft Homes, still sees the year ending with the continual growth in St. John of 8 to 10 percent of the Metropolitan housing sales.

He agreed that the new home market has slowed considerably, but his company has “throttled back on new homes” for the current period of time until the demand gets hot again.

But even with the slowdown, Scontrino said he has hardly seen the market fall on its face, and has even seen an increase in interest in the last few weeks.

“I would say this is not a banner year for us, but we have been steady, and things are even showing the expected increase after the summer of late,” he noted. “The fact is that the market slowdown in housing is nationwide, and definitely in effect for the entire Southeast Louisiana region, including the North Shore.”

Ray Leach, owner of Ray Leach Construction, called the first six months of 2007 the slowest he has seen in 10 years.

“The custom housing market for us in St. John is presently non-existent, but our lower end priced homes in The Grove have not come to a halt with sales,” he said of his LaPlace subdivision just off Airline Highway, where prices for new homes are between $150,000 and $225,000.

Leach said he did 25 custom homes in St. John last year, but has only done seven or eight so far this year.

He also has scaled back his operation to compensate for the drop in business, but said he has been getting contracts in New Orleans to help out.

Scontrino thinks that some of the reason for the market having an abundance of houses for sale is that many builders saw the big money potential after Katrina, and have continued to build far too many homes.

“The zealous attitude to make a lot of money after Katrina is what caused a lot of this,” Scontrino said. “And we were all part of that.”

Scontrino continues to have steady interest in his five developments in the region. Cole's Landing on Airline Highway near Reserve has sold out Phase II and is seeking approval from the parish for Phase III, which will be 75 more homes. Sumerlin Lakes is nearing the finish of a large subdivision on Highway 51 with only 30 lots left. Highland Oaks in St. Rose is half-way finished with 125 homes, and he has had good success doing spec homes in Bellevue Lakes in St. James Parish. Woodland Villas, a townhome development in LaPlace, is offering smaller units for $119,000 and had five weekend sales.

“The biggest place we see the slowdown is in the higher priced market, around $300,000 to $350,000,” Scontrino added. “Most of our developments are in the upper $100,000 range, and people are still buying them.”

Leach also agrees that he has only had to scale back his operation to adjust for the slowdown, noting “I would say I was at Stage 5 of five levels in terms of how strong we were building, but now we are at Stage 3. But contrary to what some people may think, we're still doing business here and in the region.”

Both builders, who rank in the top two in St. John Parish, say they expect the overall slowdown to work itself out as 2008 begins.

“I'm hoping you might even see things improve by the end of '07, but I definitely think the market will get better by early 2008,” Leach said.

Scontrino, who has carefully tracked growth for the region for 15 years, said he also thinks the slowdown is nothing more than a downside to the normal real estate cycle.

“For 15 years, St. John growth has been steady. We still have certain things that are attractive here. Low crime, getting out of the big city but still being near New Orleans and Baton Rouge, and an overall good appeal for people to move to this area are all things that are going to attract people to this area,” he said.