Homes for Sale
New Orleans’ housing market tipping in sellers’ favor
Have you noticed more “for sale” signs in front of homes in your neighborhood lately? Been thinking about putting one in your own yard? If so, you’re not alone.
Many local homeowners are getting restless, judging by the number who have decided to list their properties for sale. And while an itch to move up, scale down or simply relocate is one reason for the action, owners are also responding to changing dynamics in the marketplace.
“Homeowners are feeling a general optimism that their property values have risen and that, if they sell, they won’t be selling at the bottom of the market,” says Richard Haase, president of Latter & Blum Inc.
The attitudes stand in contrast to the past few years of uncertainty and sluggish improvement in consumer confidence. While home sales and prices edged up here and there during the national economic recession, across-the-board strengthening in the housing market has been lacking.
The turn of the calendar year seemed to change the picture. The number of pending local home sales by Latter & Blum during the first three weeks of January was 54 percent higher than in that same period in 2013, Haase says.
The fact that nearly 6,000 homes were on the market at the beginning of 2014 – 227 more than a year earlier – shows “more owners have decided that now is the time to sell,” he adds.
Many sellers who have made that decision recently have been rewarded. Not only are houses moving off the market faster than in recent years, but the gap between asking prices and actual sale prices has narrowed. Average sale prices in greater New Orleans rose about four percent in the past year, Haase says.
While that increase may not sound as impressive as the news of 15 percent to 25 percent increases in states such as California and Florida, Haase points out that those housing markets had to climb out of a very deep hole carved by a weak economy and collapsing real estate prices.
Louisiana experienced very little of the real estate weakness felt in those states because the local market never became overheated as those did. Seen in that light, Haase says: “A four percent increase in valuation is a nice healthy increase.”
It is also important to understand that the strength of the local housing market overall is adversely affected by areas that have become “chronic” underperformers in real estate. Property values in large sections of eastern New Orleans, for instance, never fully recovered from a population loss that followed Hurricane Katrina, and as a result, the housing market there struggles.
Standing in contrast to such areas are hot spots such as Uptown and the Garden District. High demand for homes in those areas coupled with a thin supply of houses for sale is driving prices higher. Whereas the average price of homes sold across the metropolitan area is $292,000, Uptown and Garden District home sales have averaged $451,000.
During the last quarter of 2013, pending sales in Uptown and the Garden District were up 14 percent from a year earlier, Haase says.
“When you have areas like New Orleans East that are really tough right now, it emphasizes the strength of these hot spots even more,” he says.
A few of the other areas that are heating up include Faubourg Marigny and Bywater in New Orleans, and West St. Tammany Parish on the north shore of Lake Pontchartrain.
The pace at which homes in these areas are selling shows the strength of the demand, Haase says. Real estate agents characterize housing markets according to how fast buyers gobble up the inventory of homes that are up for sale. In a “normal” market, it takes three to six months to sell all the homes listed at any given moment. When it takes longer than six months the market is said to favor buyers, and when it takes less than three months the market is leaning in sellers’ favor, Haase says.
The market in Uptown and the Garden District now holds less than three months worth of supply, he says. And in terms of homes priced under $500,000, those areas are down to a supply of less than two months.
The pickup in home sales and the contrast with past years has many agents, including Haase, feeling good about 2014. “We’re extremely optimistic about the market,” he says.
“With job growth outperforming most of the country and the fact that we’re not trying to climb out of a crashed real estate market like many other cities are, we feel good about what we see in New Orleans,” he says.
Haase cites factors including job growth and growing economic diversity that indicate the city is becoming less dependent than in the past on primary sources of jobs, including tourism.