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The local economic slowdown has led economists from Nationwide Insurance to rank the Houma-Thibodaux area’s housing market among the weakest in the country.
Nationwide’s Health of Housing Markets Report (HoHM) ranked the housing climate of 400 metropolitan statistical areas in the United States.
The Houma-Thibodaux MSA ranked in the country’s bottom 10, with a ranking of 391.
Ben Ayers, senior economist at Nationwide, said the report was designed to look at the fundamental economic, demographic and mortgage market drivers of what his team deems a healthy housing environment.
“We’re not necessarily looking for areas that would have the strongest house price gains or the strongest house sale gains over the next couple years, but how sustainable will this market continue growing at a good pace for a long time,” Ayers said.
However, the report does not imply that Houma’s housing market is in a downturn so much as its growth is not keeping pace with the rest of the nation. Nearly half of all MSAs graded as having “very healthy housing markets.” While a large majority of the areas listed earned positive performance scores, Houma-Thibodaux received a neutral performance ranking.
“If you look at a neutral rating, which is where Houma is right now, really what we define that to mean is probably limited to little housing expansion over the next year. Things will probably stay at about as they are now, probably not get worse, but they’ll probably stay at about the same kind of activity level that we see right now,” Ayers said.
The report itself ties the bottom 10’s relatively weak rankings to the oil and gas industry downturn.
Ranked below the Bayou Region were the Hammond and New Orleans- Metairie MSAs.
“MSAs in energy-intensive states (including Louisiana, Texas, Wyoming, and South Dakota) dominate the bottom 10 list, although most are rated neutral, suggesting limited housing expansion in the near term,” the report stated.
Pat Gordon, CEO of Terrebonne Economic Development Authority, said that the report’s findings line up with the region’s current employment malaise.
“We see the same thing with our unemployment rate at this time. The rest of the state of Louisiana, unemployment rate is dropping while Houma and the Lafayette area has increased,” Gordon said.
According to both Gordon and Ayers, the most critical policy to buttress the housing market against the downturn is diversification, which has been happening since the 1980s.
In terms of short-term support, Gordon said his department has not been looking at grants or assistance programs aimed specifically at the housing market. However, TEDA
has been working with local companies to get assistance for workforce training, which Gordon said could help housing.
“We are definitely looking at the workforce. And if the workforce increases, the housing will follow,” he said.
Terrebonne’s housing permit figures from this year also reveal a lack of growth in the region. Geoffrey Large, assistant director of zoning and planning for Terrebonne, provided the number of residential housing permits to build single-family homes over the last four years. In 2013, the parish hit a high mark of 258 permits valued at $74 million. In 2014, the parish issued 242 permits at a value of $66 million. In 2015 through November, Terrebonne has doled out 208 permits at $56 million.
Commercial building permits have also declined over the last three years. Terrebonne gave out 134 commercial permits for $142 million in 2013, before coming down to 131 for $100 million in 2014. This year through November, the parish has handed out 92 permits for $60 million.
However, Large said that while the housing market has slowed down, the effects have not been as vicious as expected.
“Yes, there has been an impact on private housing within the economy over this four year period, but it has not been as stark as one might expect with some of the cutbacks in different sectors of the economy that particularly affect us here in the Gulf Coast area,” Large said.
According to Large, the same drivers that helped bring the housing market down in the region also help keep it up because of “turnaround factors.”
While the low oil price now harms Houma and Thibodaux, investors know that
the fossil fuel’s price will start climbing again. They can build now and wait until the price comes up to make the region robust again.
“Yes, OK, it’s dropped off, now we’re going to have some lean times, we’re going to have to pull our belts in. But we know darn well the price of oil is not going to stay down where it is right now,” Large said. “It’s going to go back up. And as it does so, the industry will come back to life with it, because you cannot separate the Gulf Coast oil industry from the health of the oil industry in general.”
“As one goes up, so the other moves with it,” he said.
Another factor promoting health in the region is the continued affordability of housing, which should mean growth when the energy sector bounces back, according to Ayers.
“That’s certainly a trend, that’s certainly helping keep things a little more positive for the area. Housing is very affordable down there. You’ve seen positive house price gains, but very sustainable level, not surpassing income. It’s right about the same level of income,” he said.
According to Large, Terrebonne’s recent push to provide more low-cost housing has benefitted its pursuit of new investment opportunities in the area.
“One of the things we are always conscious of is when you are trying to attract new business into the area, one of the first things they’re always looking for is affordable housing for those who are going to work for them,” Large said. •
