The homebuilding industry is a major part of the Louisiana and U.S. economy, and to get the recovery fully under way the industry must be running at full throttle, an economist says. “This is too big of a section to be in neutral,” says Elliot Eisenberg, a senior economist with the National Association of Homebuilders. “Just like California, it is economically too big to be stuck in neutral.” Eisenberg was in Baton Rouge to speak at a luncheon today sponsored by the Capital Region Builders Association.
Eisenberg says too much regulation has hampered the recovery of the construction industry. “Why aren’t people building more homes? The issue comes down to regulation,” he says. He points to changes such as tighter bank lending standards for potential homebuyers and an effort by appraisers to push down home prices as practices hampering the market.
Wayne Dodge, president of the local builders association, says difficulties in getting home loans are “strangling the industry.” “It’s keeping viable housing markets like Baton Rouge and Louisiana from contributing to the recovery,” he says. Dodge says banks need to get back to the reasonable underwriting standards they used before the real estate boom of the mid-2000s.
Eisenberg says cities, towns, counties and parishes need to look at loosening regulatory standards in order to boost the homebuilding market. He notes “a couple of hundred cities and towns” are offering lower building fees. “These are deliberate attempts to lure some construction activity,” he says. “Every dollar you lower on the price of a house, it brings in people who are bumping up against credit constraints.” This isn’t a “silver bullet” to revive the market, but a reasonable approach to spur some activity, Eisenberg says. For the rest of Real Estate Weekly, click here.—Timothy Boone
