You say you’d like to buy a house in the local area, but the hand-wringing over the national economy and declining real estate prices in some cities combined with the lingering uncertainty about the local market have left you in a state of orange alert?
Calm down. Things probably aren’t nearly as serious as you think.
Despite some unique challenges in New Orleans, the real estate market here appears to be more stable than in many other metropolitan areas. Whether you yearn to be a buyer or a seller, you definitely need to examine your goals and plan carefully. But with the right approach and a little patience, a good real estate deal could lie ahead.
First, get a grip on the local market. Greater New Orleans real estate agents currently are selling about 700 homes a month –– not bad at all, according to Arthur Sterbcow, president of LATTER & BLUM Inc./Realtors. “We are selling a pretty
good number of homes given that our population is smaller than a few years ago,” he says.
The pace of sales is slower than it was pre-Katrina, but the local market was at a peak of activity then. “July 2005 was the tightest inventory we’ve ever had,” he says. Today, sales all over the country have slowed.
Sterbcow says current sales activity resembles that of 2003, which he terms a good, though not great, year in local real estate. The greater New Orleans area has about a 13-month supply of homes for sale across all price ranges. That’s a little more than twice what might be termed a “normal” inventory. But the average supply in much of the rest of the country is currently in the 13- to 16-month range, he says.
The fact that the local area never experienced wild speculative activity or rampant lending to “subprime” or risky borrowers has helped insulate New Orleans from some of the problems that plague other cities, Sterbcow says. One result is that home prices here have held up relatively well, despite the thorny post-Katrina environment.
Sterbcow says the average selling price in the metropolitan area was $206,000 in February. Although that is down 2 percent from a year earlier, it is well above the $178,000 average before Hurricane Katrina.
Barbara Blades, president of residential services at Prudential Gardner Realtors, says much of the recent sales action involves homes priced at $200,000 to $300,000. “We have more buyers in that range, and there’s a considerable inventory now,” she says, adding that it helps that sellers are willing to drop their prices to close a sale.
Still, Blades says agents are finding buyers for pricier homes, as well. “Surprisingly enough, we’ve had quite a few high-end sales, primarily in the Garden District and Uptown,” she says.
Blades says that while the real estate market was frenzied in the immediate aftermath of Katrina –– with many people scrambling to find undamaged homes or making quick decisions to leave the area for good — today’s market represents more of a return to normalcy. Typically, owners are putting homes up for sale in order to move to better homes in the same neighborhood.
Although dismal economic reports in recent months and the collapse of some of the nation’s largest mortgage lenders struck paralyzing fear in consumers nationwide, Blades senses a change is at hand. “There’s been a slight upward blip in activity,” she says. “I think people are tired and ready to move on. Housing is very important to most people, and if they wait too much longer, they may miss the price bottom.”
Credit Where it’s Due
Although “easy money” is a thing of the past in mortgage lending, help remains available for people who want to buy. The Federal Reserve’s interest rate slashing and government stimulation of the housing market mean that loans are readily available to persons with good credit histories.
That fact, along with speculation that the worst of the bad real estate news may be over, is indeed sparking activity, according to Richard LaNasa, managing partner at NOLA Lending Group LLC. “In March we saw a shift,” he says. “Sales contracts really picked up.”
LaNasa says the recent mortgage crisis “changed the whole dynamic” of home lending. The increased documentation now required has driven the cost of loans up, even as interest rates have declined, he says. Persons who have spotty credit records will feel the difference. “Anybody who has a credit score below a certain level is going to have a credit adjustment, meaning they will pay a higher rate,” he says.
Meanwhile, prospective home sellers also need to adopt a down-to-earth attitude, says Prudential Gardner’s Blades.
“Pricing is a key factor,” she says. “You’ve got to have the best house on the market, and you’ve got to be realistic. For a while, market prices were falling faster than people were adjusting their asking prices. You’ve just got to stay ahead of that if you want to sell.”
For more information about new borrowing requirements of the Federal National Mortgage Association, go to www.fanniemae.com or call 800/732-6643.