Permit Activity Down, But Improving in Shreveport
Single family residential permit valuations in Shreveport and Bossier City, La., combined were down 21.1 percent year-to-date through March, according to the Shreveport Times.
Valuations were down 23.8 percent in Shreveport and 16.7 percent in Bossier City. The number of permits issued in the two cities combined, at 262, was 28 percent less than the 364 through March of 2006.
The number of permits is down 38.1 percent in Shreveport and is down 12.1 percent in Bossier City.
These figures appear bleak compared to the 7.5 percent increase in annual permit valuations in 2006 and the 12.6 percent increase in annual number of permits issued in 2006 over 2005.
In reality, however, these percentages have been steadily improving during the first three months of 2007. January 2007 saw a 47.1 percent decrease in permit valuations for the two cities combined compared to January 2006.
So the 23.8 percent decrease in valuations through March 2007 is definitely an improvement in this statistic, showing that the Louisiana housing market may be poised for a rebound yet.
The percent decrease in the number of permits issued has also been changing for the better. January saw a 49.6 percent decrease over January of 2006 while February saw a 38.8 percent decrease year-to-date over 2006.
As with permit valuations, the 28 percent decrease in number of permits issued through March 2007 is a distinct improvement by comparison, and continued low Louisiana mortgage rates should only help matters.
Interestingly, the average Shreveport permit valuation of $212,924 through March is 23 percent greater than the $172,837 average for the same period last year. The average permit valuation Bossier City of $155,525, is 5 percent less than the $164,279 average for the same period last year.
This area contradicted national trends in single family housing permits throughout 2006. Currently this is area in line with national trends.
A major reason for the current decline in residential permitting is the problems with the subprime, or bad credit mortgage market.
As predicted for at least five years, the “housing bubble” began leaking air about 12 months ago nationally and is now doing the same in this area.
Subprime lenders had been bringing buyers to the table who traditionally would not have the ability to secure a Louisiana mortgage.
Now that the subprime lending market has been curtailed, there are fewer buyers for both existing homes as well as new homes.
This is not to say the Shreveport-Bossier City market will be impacted to the same degree as the more aggressive subprime markets in Las Vegas, and parts of Arizona and Florida. It is to say that the housing market locally, as well as nationally will be softer than past performance.
The soft home construction market is likely to help keep mortgage rates relatively stable. The soft market will also contribute to much more stable housing prices in this part of the country.
The fact that the average valuation for houses permitted in Shreveport through March of this year is 23 percent greater than the average for the same period last year does not necessarily mean home prices have increased. It can also signal a current desire for larger houses and/or houses with higher priced amenities.
Time will tell whether the Shreveport-Bossier City housing market trails, tracks, or exceeds the level set in 2007.
SOURCE: Shreveport Times