Rural Development Loan Extended Until 2020

Today, I received this email from the National Rural Housing Coalition confirming the passage of the Farm Bill.

After three years of contentious negotiations, the Senate voted this afternoon 68 to 32 in favor of the Farm Bill, which includes a Rural Definition provision (Section 6208). The legislation now goes to the President for his signature, and the White House has said that he will sign the bill into law.

As we mentioned before, the provision extends current law through the 2020 Census and will increase the population threshold from 25,000 to 35,000 once it becomes effective on October 1, 2014. This will help ensure that low-income families–particularly those living in metro counties–will have access to critical USDA resources and programs. In addition, it will provide much-needed certainty to rural housing developers and organizations.

This is a HUGE win for the Baton Rouge Area, as we have been direct beneficiaries of the Rural Development loan program.  Not only does it extend the definition for another 6 years, but it expands the population requirement meaning even MORE areas could be open for homeowners to take advantage of it.

Now that we know the Rural Development loan is safe, how do we know if an area is eligible for a 100% RD loan?  Simply click here and type in an address!  Once you have found an RD eligible area, give me a call and we’ll get you qualified for a new home!


David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
Each office independently owned and operated

Biggert-Waters Flood Insurance Rates Delayed

In the last few days, Congress has come to an agreement to delay the implementation of the Biggert-Waters Act and the proposed rate hikes for those in flood prone areas.  The following article from the Insurance Journal details the story.

Bipartisan Deal Reached to Delay Flood Insurance Premium Hikes: Waters.

This is very good news for our friends in the low-lying parishes as well as us “up here” in the Baton Rouge area.  Ascension and Livingston had been seeing some effects of the proposed changes and while not widespread, some of the renewal rates were shocking.   With this deal, FEMA now has 4 years to conduct more appropriate feasibility and affordability studies to implement this in a responsible and fair manner.

What is more interesting about this legislative fix are who the opponents are.  Some taxpayer groups, are calling the delay “disastrous”, making the case that taxpayers should be furious over the delay in order to fund an insolvent program, essentially wasting tax dollars.   However, it is these same taxpayers that could be literally left out in the cold and sitting on un-sellable property if the original legislation progressed as planned.   Those taxpayers are actually getting what they pay for in the form of a subsidy to help them afford the homes they are in!

What are your thoughts – should we “rip off the band aid” and allow the flood insurance rate hikes to take affect swiftly to make the program solvent?  Or should we delay the implementation at the cost of more taxpayer dollars in order to work through the kinks?

 David Madaffari

Home Size vs. Lot Size – What Creates Value?

Everyone knows the old real estate adage of “location, location, location.”  But once you have the location, what do you do with it?  This is a question that buyers, sellers, Realtors, and developers all have an interest in answering and sometimes they are at odds with each other.   There have been trends in the last decade we have seen lot sizes getting smaller and the homes are getting larger.  The article below has some good suggestions on why this could be:

Home Trend Watch: Upsized Homes on Downsized Lots.

Certainly here in Baton Rouge, Ascension and Livingston parishes, new developments are following this trend as well.  The idea behind them is similar to what the article described, with highly-appropriated homes on small lots at an affordable price.   On the surface, this seems great for everyone involved.  But I do have some serious reservations about the long-term outlook on such developments and what exactly will create value over time.

My concern is that larger land sites in ideal locations will become extremely scarce.  In Ascension especially, even a 1 acre homesite in an existing area is tough to come by at a reasonable price.  Finding new construction on a 1/4 to 1/3 acre lots is becoming a challenge in the high-volume world of spec home building. In my opinion, developers have learned they can sell more homes in the same space as they once used to, and therefore generate more revenue for the same piece of land.  But as these homesites get smaller and smaller, will we see less aggressive rise in appreciation value as their larger-sized competition in a similar area?

Newly developed homes are larger and are featuring great amenities – granite countertops, stainless appliances, tankless water-heaters and other high-efficiency upgrades – at the expense of smaller lots, driveways, parking etc.  But will those things be enough, over a 20-30 year investment period, to make up for the lot size which have traditionally driven appreciation?  In other words, if we continue to create such homogenous developments to where there is little to discern among them, where is the value going to come from?

What do you think has been the biggest contributor to the decrease in lot sizes – buyer demand for smaller lots or developers maximizing returns by selling more homes at affordable prices?