If you feel like considerably more new homes are going up in and around Baton Rouge than usual, you’re not wrong.
Builders say a combination of pent-up demand for new housing, increased consumer confidence in the economy, easier financing options and an influx of new jobs has sent the number of new housing starts in East Baton Rouge Parish through the roof this spring.
Not even six months into the year, city-parish data show that 725 new residential building permits have been issued in Baton Rouge. That’s only 28 fewer than were issued in all of 2013, and it’s well beyond the halfway mark of the 961 issued in 2014.
While one may be inclined to credit the rise to the pending increase on interest rates expected later this year, Tyler Watson of Distinctive Homes by Watson says the recent recession taught him that low interest rates do not always go hand in hand with increased demand for housing. He thinks the increased starts are due to higher levels of consumer confidence.
“We had really low interest rates, but the demand was not there because I think people were afraid of losing their jobs,” Watson says. “I think the real link is when people are confident they will keep their jobs and have confidence they will move up and then they make the investment in a house.”
The largest amount of new housing starts this year occurred in April, when 287 new single and multifamily residential building permits were issued—more than double the 120 permits issued in April last year.
“It feels good, and a lot of the other builders are friends of mine and I know their businesses are doing well also. I guess we are in the up part of the business cycle,” Watson says.
Capital Region Builders Association President Robert Carroll says years of pent-up demand for housing started to break loose earlier this year.
“The numbers we’re looking at are close to 2001 levels of new construction. The immediate Baton Rouge area probably had a delayed peak in mid-April because this has been one of the wettest years,” Carrol says. “Not only that, but we are starting to see a loosening of credit availability. We previously had an extreme pinch of what financing was available, but the banks are willing to lend a little more.”
Penni Aulds, associate vice president of the Louisiana Home Builders Association, says the permit increase seen in Baton Rouge is reflected across the state as more businesses relocate and expand operations in the state.
“In north Louisiana, CenturyLink is bringing in 500 new employees,” Aulds notes as just one example. “So you’ve got high paid employees coming in and building houses, and in Lake Charles they are having housing problems because they have a lot of industry growing there and not enough housing either.”
See a graph of residential building permits issued in Baton Rouge by month since 2013.
—Deanna Narveson
