According to local real estate brokers, the current Shreveport-Bossier City real estate market has some sweet spots as well as some dry ones.

Consider:

The market has a six-month supply of residential homes for sale but has demonstrated an upward trend since the beginning of 2014.

The foreclosure rate is on the rise, with Louisiana having lagged behind much of the nation in the foreclosure crisis until now.

Developers are struggling to find affordable land on which to build.

Realtors are optimistic that economic development and a comeback in natural gas prices will give the market a lift in the coming years.

Mindy Wardlaw, president of the Northwest Louisiana Realtor’s Association and an associate broker with Diamond Realty & Associates, says that the six-month mark is the turning point from a buyer’s to a seller’s market. And she has the numbers to prove the market has turned a corner.

“At the beginning of 2014, we had a 9.27 month supply of homes on the market and by August, that had dropped to a 6.25 month supply,” she said. “Both the inventory and days-on-the-market are decreasing while housing prices remain stable. Plus, in August of 2013 there were 506 properties under contract while in August of this year that number rose to 577. So not only has the supply of homes decreased by one-third over the past eight months, but home sales have increased by 15 percent over the past year.”

Single-family homes are the most soughtafter said Joyce Jeffrey, owner and broker with Summit Executive Realty in Bossier City. “As former homeowners affected by foreclosure and economic conditions in previous years continue to work through credit issues and rising rental rates, more are returning to home ownership. With this rising trend, we are seeing a reduction in available inventory and a slight increase in the average ‘sold’ price.”

According to Scott Friestad, owner and broker of Friestad Realty, if your home is priced between $125,000-$300,000, you have a good chance of selling it. “However, the lower-end houses are not moving because the cost of financing with less than a 20 percent down payment is expensive.”

What’s hot?

Wardlaw said buyers are opting for amenities and upgrades over square footage.

“There are always going to be buyers looking for the most square footage, but our market is very spoiled in wanting the amenities and upgrades of granite, molding and high-end appliances. Most will forego some square footage to get these amenities. I see two distinct buyers: those who want to be ‘out’ away from everything with larger lots, space and trees, and those who want to be close to everything in the city.”

Jeffrey said three-bedroom homes are the most in demand. Buyer preferences range from new construction with the latest features and amenities, bright open spaces and efficient use of square footage, to the existing “resale” home, which is often move-in ready.

For those interested in new construction, the challenge is land prices. Wardlaw said developers on both sides of the river are having a difficult time finding land at a reasonable cost so that it can be developed efficiently into neighborhoods.

“The prices almost demand that the land be used for commercial purposes,” she said. “Even when land is found, the cost still makes it difficult for developers and builders to make profit margins needed for the turnover in our market.”

The result? Smaller – and more expensive – lot sizes.

Foreclosure rates on the rise

Friestad, who expects to close 250 foreclosed properties this year, said the foreclosure crisis that hit the nation a few years ago is now catching up to Louisiana. DSNews reports that 10 percent of Louisiana borrowers are currently in default.

“If that number is anywhere close to true for Shreveport-Bossier, I see that as very negative,” Friestad said. “If one in 10 homeowners lose their house here, that will cause values to drop. It will also change the demographic makeup of neighborhoods, reducing some from being 100 percent owner-occupied. Rentals are not great for a neighborhood as pride of ownership usually goes down as the percentage of rentals goes up.”

And while this scenario isn’t optimal, Friestad thinks that banks need to foreclose on borrowers in default. “In my opinion, if a borrower is in default, the best thing that can happen right now is to stop kicking the can down the road. Short-term, it will hurt our values a little. Long-term, it will help us get stable.”

Long-term outlook

“The outlook is fantastic,” Wardlaw said. “The Louisiana Economic Development Foundation is doing an amazing job with our local chambers to bring some of the best projects and industry to the area such as Benteler Steel, the Cyber Innovation Center and evolving subsidiaries, as well as Camp Minden in Bossier and Webster parishes. We see the oil and gas industry continuing to flourish, and as the price goes back up, so will the benefits.

“I am very optimistic about the future of real estate in northwest Louisiana over the next one to three years,” Jeffrey said. “I see the market improving steadily with seasonal adjustments. Efforts by local governments, industry leaders and the price sector will attract business and industry to the local area, which will help stabilize our local economy and job market, resulting in increased home ownership and a reduction in the rental vacancies.

Friestad said the Northwest Louisiana real estate market is going to be soft for the next few years, but hopes that will change as more industry moves in.

He does see great potential for investors, though. “Investors who have the mindset to buy, hold and rent are going to do very well in the next five years.”

–Jeff Slaughter