Hurricanes helped some areas while hurting others; housing sags but rentals revive
New reports on the impacts of Hurricanes Katrina and Rita by location show there some areas that are growing, some rebounding, and others struggling. As the Rockefeller Institute of Government (www.rockinst.org/gulfgov) put it, “What Katrina and Rita took away from the coastal areas, they gave in abundance to communities farther inland. In Louisiana, East Baton Rouge and St. Tammany parishes are thriving. Because of their proximity to New Orleans, both parishes were logical choices for businesses and residents seeking first to evacuate and then to relocate as close to the city as possible until they could return home….Tax revenues—particularly sales tax revenues---are up, jobs are available, and new construction projects are underway. In Mississippi, the cities of Jackson, Hattiesburg, and Laurel also have benefitted from population and revenue increases spurred by Katrina, as has Gulf Shores, Alabama. The communities that fall into the rebounding category all suffered significant damage in the storms, but enough of their infrastructure and business capacity survived to help propel their recovery forward. Thus, Pascagoula…has benefitted immensely by being able to get its port back online so quickly, while Lake Charles and Jefferson Parish in Louisiana and Mobile…have been helped out by the quick return of most of their residents and businesses….Rebuilding plans: New Orleans has no plan at the moment, and the excruciatingly slow pace of the recovery bears witness to that. Conversely, Cameron and St. Tammany parishes…and Bayou La Batre in Alabama have rebuilding plans in place thanks to local leaders who forged ahead.
The Bureau of Labor Statistics (BLS) devoted the August issue of its Monthly Labor Review (www.bls.gov) to the labor market impact of Katrina. In “Worker Mobility before and after Hurricane Katrina,” Richard Clayton and James Spletzer found that both hires and separations (layoffs, firings, voluntary quits, and retirements) increased statewide in Louisiana during the second half of 2005, while the number of hires in the New Orleans metropolitan statistical area (MSA) remained constant: “Although this article present no statistical evidence for this supposition, this…is indicative of increased job churning within the state—exactly what one would suspect if persons displaced out of the New Orleans MSA were finding jobs in other parts of Louisiana, and construction workers were moving into the New Orleans MSA from elsewhere in the state.” Texas also gained: an estimated 17,000 workers who had been employed in the New Orleans MSA in the second or third quarter of 2005 were working in Texas one or two quarters later, up from 3,000 one year earlier. BLS employment data show that nonfarm payroll employment by MSA in July 2006 compared to July 2005 changed by -9% statewide in Louisiana, with gains in Alexandria, 5%; Baton Rouge, Shreveport and Lafayette, 3%; Houma-Bayou Cane-Thibodaux and Monroe, 1%; and losses in Lake Charles, -1%; and New Orleans-Metairie-Kenner, -28%. In Misssissippi, July-to-July employment was virtually unchanged statewide, rising 5% in Hattiesburg and 2% in Jackson and Pascagoula, but falling 18% in Gulfport-Biloxi.
New- and existing-home sales plunged in July, while the outlook worsened for single-family and condo construction but improved for rentals. On Thursday, the Census Bureau reported that sales of new one-family houses dropped 4% from the June rate, seasonally adjusted, and 22% from July 2005. The number of homes for sale at the end of July climbed 22% from the year-ago total, and the inventory-sales ratio soared 55% to 6.5 months at current sales rates. On Wednesday, the National Association of Realtors reported that sales of both single-family homes and condos and co-ops fell 11% from the July 2005 level, and the inventory-sales ratio jumped to 7.3 months. Compared to June, existing condo and co-op sales were up 3%, seasonally adjusted, while existing single-family home sales were down 5%. On Tuesday, the National Association of Home Builders reported, “Builder confidence in the condominium housing market weakened significantly in the second quarter…The index gauging builder sentiment about condo production over the next six months [declined] to 34. The scale is from 0 to 100.” In contrast, “Builder confidence in current rental apartment conditions climbed to a new high in the second quarter of 2006, and their expecations for the next six months are even higher amid rising occupancy rates, rising rents, and increased traffic at all classes of rental apartments.”
One rental niche that appears poised to attract more construction is college-student housing. The New York Times reported on August 20, “College enrollments have been on the rise as the baby boomers’ children…come of age. This group, born between 1982 and 1995, is about 80 million strong. Yet the supply of on-campus housing is becoming increasingly limited. At some state univeristies, like the University of New Mexico in Albuquerque and the University of Nevada in Las Vegas, fewer than 10% of the students live on campus, accoridng to Michael Zaransky [of Prime Property Investors in Northbrook, Illinois]. At Boise State University…, the ratio of beds to enrolled students was just 4.6%, according to data he collected two years ago.”
Vol. 6, No. 33 · August 21-28, 2006
The Data DIGest: Ken Simonson, Chief Economist, Associated General Contractors of America
Phone: 703-837-5313 · simonsonk@agc.org
