CONFUSION CONTINUES: Housing starts kept to their recent up-and-down pattern, as both total starts and single-family starts increased over October. Another record is in the works: Total starts were up 17.5% against November 2004.
CONFUSION CONTINUES: Housing starts kept to their recent up-and-down pattern, as both total starts and single-family starts increased over October. Another record is in the works: Total starts were up 17.5% against November 2004.

Last year's gulf coast hurricanes displaced upward of 1 million people, many of whom sought temporary shelter in Baton Rouge, La., and Houston. As the months have passed and uncertainty about rebuilding on the coast remains, thousands are choosing to stay put, creating a new surge in demand for housing in those markets.

A recent report from the Office of Federal Housing Enterprise Oversight (OFHEO) on home price appreciation in South Florida in the aftermath of Hurricane Andrew, which hit Miami-Dade County in August 1992, suggests those cities may have something to learn from the past. According to OFHEO, “anecdotal indications [offer] that, at least for some less-affected communities, the influx of displaced citizens may elevate prices significantly.” Prices in areas affected by Andrew grew 5 to 6 percentage points in the 20 months after the hurricane before rates of appreciation retreated to pre-hurricane levels.

In Baton Rouge, the peak came in the first weeks after Hurricane Katrina struck. The area had about four months of for-sale inventory in August, which plummeted to one month in September and increased to three months in October, according to the Greater Baton Rouge Association of Realtors. The average price of homes sold hit $188,151 in September, up from $168,882 in August and $149,165 in September 2004. Ken Damann, a spokesperson for the association, says the growth likely reflects higher-priced homes that sold more quickly than they otherwise would have.

CLOSE CALL: Mortgage rates were hovering near the levels economists projected for the end of 2005. One-year ARM rates were a full point higher than December 2004.
CLOSE CALL: Mortgage rates were hovering near the levels economists projected for the end of 2005. One-year ARM rates were a full point higher than December 2004.

But some potential home buyers in Baton Rouge have been delayed by the processing of their insurance claims. For that reason, says Steve Baker, sales manager of United-Bilt Homes, many potential customers won't be in a position to buy for a few more months. The company is an on-your-lot builder, and Baker says he's seen the price of land increase dramatically.

Home prices are rising in Houston, too. But builders there say increases are due less to demand—the local HBA estimates that between 2,500 and 5,000 evacuated families are in the market for new homes—than they are to shortages of labor and key supplies.

Shawn Speer, Houston division president of Royce Homes, says uncertainty about the future has slowed some potential buyers, but other evacuees are buying now—many opting for spec homes that are nearly complete—before prices increase even further. “Anybody who buys now will see a return on their investment,” Speer says. “There's no end in sight for prices returning to their pre-hurricane levels.”


DOWN LOW: Consumer sentiment rebounded slightly in November, but more home buyers said high interest rates make this a bad time to buy.
DOWN LOW: Consumer sentiment rebounded slightly in November, but more home buyers said high interest rates make this a bad time to buy.

HOT NOVEMBER: A strong month of starts helped most regions rebound. The South, however, posted a 1.3% decline in total starts against October.
HOT NOVEMBER: A strong month of starts helped most regions rebound. The South, however, posted a 1.3% decline in total starts against October.

PRICE APPRECIATION: New-home prices are up only slightly over October 2004. Existing-home prices jumped 16.6 percent over the same period.
PRICE APPRECIATION: New-home prices are up only slightly over October 2004. Existing-home prices jumped 16.6 percent over the same period.

SURPRISE SALES: New-home sales beat expectations in October, just as many economists said the market had slowed. Sales were up 9 percent compared with the previous October.
SURPRISE SALES: New-home sales beat expectations in October, just as many economists said the market had slowed. Sales were up 9 percent compared with the previous October.

STEADY SUCCESS: The rate of total building permits pulled continues to outpace 2004. Single-family permits are carrying the load, up 7.7 percent over November 2004.
STEADY SUCCESS: The rate of total building permits pulled continues to outpace 2004. Single-family permits are carrying the load, up 7.7 percent over November 2004.

SEPARATE WAYS: While consumer confidence rebounded a bit, builder confidence continues to wane. Builders' positive feelings about buyer traffic dropped.
SEPARATE WAYS: While consumer confidence rebounded a bit, builder confidence continues to wane. Builders' positive feelings about buyer traffic dropped.

RETURN TO FORM: Prices were close to their year-ago levels. Trading in the lumber market slowed after the U.S. announced it would lower duties on Canadian lumber.
RETURN TO FORM: Prices were close to their year-ago levels. Trading in the lumber market slowed after the U.S. announced it would lower duties on Canadian lumber.

Learn more about markets featured in this article: Houston, TX, Baton Rouge, LA.