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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.
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It’s been a similar trend within Lafayette Parish as well. Since 2010, the city of Lafayette has seen basically no increase in its population of people under 35 years old. Meanwhile, the rest of the parish has seen that demographic grow by 4.2%, even as the state population experienced a 4.7% drop in that range, according to data from the U.S. Census Bureau.
Chance and her husband considered moving out of Lafayette themselves when the couple sought to buy their first home, particularly with her husband working in New Iberia at the time. But the threat of flooding in areas that had been recently developed into neighborhoods and the appeal of being close to Downtown Lafayette kept them looking for something central to the city.
“That was a consideration, but we really liked being in Lafayette. We really wanted to be close to the things we enjoy doing. We like being around the Downtown area,” Chance says. “That’s one of the things that we still love about this neighborhood. We’re five minutes to all the things that we enjoy about being in the city.”
At one point, after a purchase fell through, the couple decided to buy a lot to build a new home on — a quarter-acre lot by the Bayou Vermilion. But they soon discovered they couldn’t find anyone willing to design or build a new house in their desired starter home range of around 1,200 square feet.
“We weren’t looking for a 2,500-square-foot house to live in,” she says. “We were just looking for something affordable, something small, something like a starter home.”
“We could not find anyone who would design a home from home for us,” she adds. “We struggled to find anyone who would be willing to design a home that was that small. They’re just not incentivized to do it.”
Ultimately, the pair found an older home in need of widespread repairs in 2019. The couple, who at that point were expecting their son, paid $35,000 for the 800-square-foot, pre-war house and put roughly another $25,000 into redoing the entire interior.
“It was in rough condition, but … for the cost of a down payment on a modern house on a normal, normal house, they were asking for that cash, so we just decided to go through with it,” Chance says. “We bought that house, and we decided to do the repairs ourselves.”
Four years after buying their first home, the couple still has hopes of building a new house on their riverfront lot as they look to upgrade. But now they face even more challenges posed by Lafayette’s housing market with the climbing costs of flood and homeowners insurance, plus rising interest rates, that have raised questions about the viability of that goal.
“We still want to build on that lot that we bought, but it’s in an area where there is flooding … so to build there requires a certain elevation, and it’s just more difficult. The costs associated with building there are high. The costs associated with insuring it are high,” Chance says.
“We were planning to build on that lot and have that be our next house,” she adds. “But the more we look at it, the more we’re like ‘Is it worth it to do that?’”