Stonecipher: Shreveport Will Never Have a Housing Boom in our Lifetimes
While home prices improve across the country, more people are looking to buy or sell, and mortgage interest rates are still relatively low, how does Shreveport’s housing market compare? Two local experts say Shreveport is pretty steady.
“You look, our average sales price in 2012 and 2013 is about the low to mid $170,000 range,” realtor Chris Hayes at Keller Williams NWLA told 710 KEEL. ”In 2012, typically about 66 days was the average of the successful rates of homes sold in the market. It did increase nine days in 2013, it took 75 days from the point of listing to the date of contract.”
What Hayes sees is a lot people taking advantage of the lower interest rates and ‘moving up’ into more expensive neighborhoods.
“I see a general trend of folks moving from the west side of Interstate 49 to the east side when they are doing move ups,” noted Hayes.
Demographer Elliott Stonecipher agrees.
“I tend to think as tumultuous as the mortgage markets were in 2013, a lot of what’s going on, the whole shift from a buyer’s market to a seller’s market, is about mortgage rates,” noted Stonecipher. ”In early May, the 30-year fixed mortgage was still 3.5 percent and two and a half months later, it was 122 basis points higher than that, 4.74, which is where it peaked in 2013. That has such an incredible thump built into it for anyone’s housing market that I’m going to assume it’s just that.”
A lot of buyers and sellers may also be noticing that current interest rates may be a one-time anomaly.
“Some of us remember what it was like when mortgage rates peaked in fall 1981 at 18.2%,” Stonecipher explained. ”We went to 3.5% in these new lows as I say back in May. That’s a 15 percentage point difference in the lives of a lot of people that are still in this housing market. My point being, everyone that got used to the 4.5 and the 3.5 percent interest rate are going to be reeducated in this process because those were no more real than was the 18% in 1981.”
Right now, the problem looks to be in the higher priced housing market.
“We saw in the data we have an extraordinary inventory of houses, especially houses at the top, over $400,000,” Stonecipher told 710 KEEL. ”We almost have a year and a half inventory of these houses and more and more people who want to sell their houses.”
But it’s not that these houses aren’t of great quality.
“There’s still cheap money to borrow, but when you are borrowing $300,000 or $400,000 and deciding you overbought, those people tend to put their houses on the market,” Hayes noted.
While it looks like our housing market right now is just a matter of some home buyers overextending on their purchases, Stonecipher said this just proves Shreveport is what it is.
“Shreveport doesn’t have the demography to ever believe in our lifetimes we’re going to have some housing boom. That’s not who we are,” the Shreveport demographer explained. ”There is nothing in those numbers that tells us Shreveport is going to have some ‘typical for other areas of the country where population is growing’ kind of explosion. It’s not going to happen.”
Which if you are looking to play it safe buying a property in Shreveport-Bossier, not having that explosion may be a good thing.
“Back when we had the downturn, and a lot of the rest of the country was taking a hit, we were pretty stable and that has a lot to do with some of our industries and the oil industry especially,” Hayes stated. ”Shreveport-Bossier doesn’t have those radical increases or decreases, but at least we’ve maintained stability and didn’t take any major hits.”
But Stonecipher counters, saying the bust of the Haynesville Shale gas industry has had a longer term negative effect on Shreveport-Bossier.
“The big hit to us came when so many of the employees living here who were part of the Haynesville Shale phenomenon left. Most of that has already happened,” Stonecipher said. ”If we ever get a real and seasoned and stable gas market, we might actually see people here who do have production, Haynesville Shale-related gas production, waiting for better prices, when that happens, and we don’t know when that’s going to be, but certainly the signs are looking much, much better, and that’s all about America’s energy independence by 2020.”
And while that would help home prices, the bigger winner would be the area’s economy.
“I don’t think the new steel plant is going to anywhere near offset the drain and hit to the economy,” Stonecipher added. ”It will help over a longer period of time but not in this year or next year, or even 2020 we expect.”
Looking at how the nation recovers from the 2008 economic collapse, Stonecipher says Shreveport-Bossier will likely not be on the same train as the rest of the country.
“It’s hard to think of how our economy can do the kinds of things we associate with a lot of economies we hear about in other parts of the country that are so robust,” Stonecipher said. ”That’s not in the cards for us, even when this energy independence push really comes home with really higher natural gas prices.”
But when it does happen, Stonecipher predicted, “We’re going to have a lot more spendable income here in the hands of some people, if they don’t leave between now and then.”
If you’re planning to buy or sell a house in Shreveport-Bossier in 2014, Hayes predicts, “Pretty much a flat year. Interest rates are really, really competitive money to borrow out there. If folks are staying in the market and they are looking to make a move, this is a great time to do it because the affordability factor for real estate right now is higher than it’s historically been in years and years and years and decades, in fact.”