A real estate veteran talks about the local market
GREG MILES PHOTOGRAPH
ew people know the real estate business as well as Arthur Sterbcow does. President of Latter & Blum Companies and an industry veteran of more than 30 years, Sterbcow has seen booms, busts and everything in between.
Recently Sterbcow took time out to give us his thoughts on how the Greater New Orleans real estate market looks now, and what the future holds.
What is your overall opinion of the local real estate market at present? Recently we’ve seen a small pickup in sales, driven by lower interest rates and a lack of negativity from political campaigns. Too much negativity erodes consumer confidence. Rates are the best they’ve been in 40 years and we’re seeing more refinancing and more people getting into the market.
Areas especially feeling the upward movement are Uptown, the Garden District and New Orleans East. Remember, New Orleans East was one of the largest concentrations of population [before Hurricane Katrina], and a lot of those people are going home. Young people are realizing that if they can pick up a home for $60,000 and put in another $30,000 plus some sweat equity, they can end up with a home that was worth $250,000 before the storm. People love their neighborhoods and they like to go home.
How difficult is it for prospective homebuyers to obtain credit? It’s no trouble at all if you have a good credit score and can make a down payment. One glitch comes because lenders have added higher closing fees for some loans for those with an arbitrarily set credit score. It’s an overreaction caused by problems in California, Nevada and other states where “crazy” loans were made. As a result, California is facing a 40 percent to 50 percent foreclosure rate, compared with less than 1.5 percent here. Investment loans for multifamily homes, doubles, duplexes, etc. are tougher to obtain now – you’ll need 20 percent down.
What impact did Road Home money make on the local real estate market? It never really had an impact. The money came out so slowly, and so illogically, and people didn’t get enough to renovate their own homes – much less buy new homes.
The houses Road Home bought are also posing a problem. They are all concentrated in the same areas and they’re depressing neighborhoods. People living near these houses are worried because they don’t have a lot of confidence that the government will maintain them.
If you’re trying to sell your home now, what should you do to speed up the sale? Make sure you put as many photos of your home as possible on the Web site listing the house. And make the pictures look pretty – clean up the yard; don’t show kitchen counters littered with dishes or children’s rooms knee-deep in toys.
Next, make sure your home is priced right. We have a 14-month supply of houses on the market now; the average should be a five- to five-and-a-half-month supply. People trying to sell their homes often overprice, based on what they think their neighbors got for their homes. Neighbors may not have revealed the accurate price, or your home may lack key features that boosted your neighbor’s sale price. Remember, buyers have hundreds of choices, and the first time they look at your house they’re trying to disqualify it to winnow down their list.
How do home prices look? Overall, prices are relatively flat, but they have gone up in areas. The days of “bargain-hunting” after Katrina are gone.
Look for prices to rise as demand for houses grows. In Lakeview, for example, people continue to come back. Young people are buying old houses, tearing them down and rebuilding homes they find more practical for today’s lifestyle. Once the economy heals and people are more confident, demand for houses will be even stronger.
How does the Northshore market look? Northshore communities – specifically West St. Tammany, even Tangipahoa – experienced an unsustainable surge of home sales right after Katrina. Spurred by this growth, builders began to add to the supply. Now, some of those people are returning to the south shore, so the market has hit a valley. It’s a great time to buy if you do want to move to the Northshore. You can find incredible prices and interest rates, and sellers are willing to deal.
How about the condo market? The condo market has just started to heat up a little. For a while, condos fell out of favor. Insurance costs drove up condo fees all over the country, not just here. People fell out of love with condos. Rates and fees are more in balance now, and we’re seeing some increased activity, especially with condos costing less than $200,000.
What does your crystal ball show for the rest of 2009? I think a lot of what happens depends on Congress. If they do what I’m 85 percent sure they will do, the economy should improve. Fannie Mae and Freddie Mac need to change their policies. Good underwriting policies need to be in place and be enforced. Otherwise, it’s like letting people drive on the freeways with no speed limits.
People will always want to buy new homes. There’s always movement in the real estate market, and when people feel more positive about the economy and their jobs, they will be more eager to buy.