Home Prices Rebound in New Orleans, Cool Off in Suburbs in First Half of 2018
August 20, 2018
A house on South Clark Street in New Orleans Dec. 22, 2015. Home prices across the New Orleans area were up in the first half of 2018, including in Orleans Parish. (Photo by Chris Granger, Nola.com | The Times-Picayune)
The average price for a single-family home in New Orleans rose in the first half of 2018, reversing a recent slip in prices that looked as though it might chip away at several years of gains for the market. Prices in Jefferson Parish and other suburbs were also up, though they appear to be cooling off after a hot run in 2017.
That is according to the latest home prices report prepared by Real Property Associates, using data provided by the New Orleans Metropolitan Association of Realtors and Gulf South Real Estate Information Network. The August report is one of two released by the partnership each year. One report looks at year-over-year pricing trends for the full year and a second looks at how mid-year prices compare to the same time a year prior.
Here are a few highlights from the mid-year 2018 report.
- The average price for a single-family home in Orleans Parish was $354,962 for the first six months of this year. Buyers paid an average of $178.70 per square foot, up 8.6 percent from $164.50 in the first half of 2017.
- Algiers, Mid-City, the Garden District, Irish Channel, and part of New Orleans East all saw solid price increases. However, prices in the French Quarter, Marigny Triangle, Treme and Broadmoor were down.
- Home prices held steady in Jefferson Parish, but didn’t see the same spike as when full-year prices for 2017 and 2016 were released earlier this year. The average home in Jefferson Parish sold for $227,670, or $124.60 per square foot, in the first half of 2018, up 1.1 percent from a year ago.
- Homes in St. Tammany Parish are now selling for about the same price per square foot as homes in Jefferson Parish, indicating buyers are finding equal value in the suburban parishes. That said, Tangipahoa Parish was a mid-year breakout, with a 14.1 percent spike in home prices, up from $89.30 percent square foot in the first half of 2017 to $101.90 in the first half of 2018.
- St. Bernard Parish and the River Parishes all posted modest gains when comparing mid-year prices. The average price per square foot remained below $100 in both St. Bernard and St. John parishes.
The uptick in Orleans Parish follows a 2017 slump that appeared to hint at a longer-term correction in prices. The average price per square foot for a home in Orleans fell 3.4 percent in 2017 compared with the year prior.
Wade Ragas, who heads Real Property Associates and authors the report, said the turnaround in New Orleans was a bit of a surprise. Ragas and others had expected the downturn recorded in 2017 to hang on a little longer, but the mid-year figures indicate the New Orleans market may be stronger than many thought.
He noted the concern over affordable housing in Orleans Parish is palpable, especially as the debate over the role of AirBnb and other short-term rental companies gets increasingly heated. The average rent for a two-bedroom apartment in New Orleans was $1,172 in June 2018, up 1.2 percent from the previous year, according to RentCafe, an apartment search website that tracks rental rates nationwide.
Ragas suspects the affordability question combined with a range of housing stock currently up for sale and rising interest rates could be nudging more New Orleans renters into the buyer’s market.
“It’s as if a lot of renters have gotten aware of how expensive it is to rent,” he said.
Ragas noted the greater New Orleans area has also added more jobs thanks to River Parish petrochemical investments, a recovering oil industry and ongoing hotel openings and renovations. The metro area — which includes Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John and St. Tammany parishes — had 5,300 more jobs in June 2018 that it did a year ago, according to seasonally-adjusted data from the Louisiana Workforce Commission. St. James saw the largest jobs bump (up 7.5 percent), followed by St. John (6.7 percent) and Orleans Parish (6.3 percent).
Cindy Callais, a real estate agent with Latter & Blum and NOMAR president, said a lot of people gave up on buying when lending tightened after the 2008 financial crisis. Today, agents are doing better at walking buyers through the lending process and matching them with aid programs, though there is still a lot of work to do, Callais said.
“Many renters never thought they could actually own a home,” she said.
The NOMAR report looks exclusively at single-family home sales in the eight-parish metro region that involved a real estate agent. Average prices are broken down by ZIP code, and ZIPs with fewer than two sales recorded are not included.
The August report is also the first since Hurricane Katrina to include sales of damaged and unrenovated homes as part of the larger sales data. Previously, home prices for those units had been listed separately. The report notes sales of damaged, unrenovated housing made up just 12 percent of sales in Orleans, St. Bernard and St. John in the first half of 2018.
Across the region, home prices were up 5.6 percent for the first half of 2018 compared with the same time a year ago. New Orleans is still the priciest area at $178.70 per square foot on average, but Jefferson ($124.60) and St. Tammany ($122.40) are gradually closing in on prices seen in the city. For example, homes in the highly-desirable 70121 ZIP code in Jefferson Parish, which includes Jefferson, sold for an average of $167 per square foot, above prices seen in Algiers and nearing those in the Broadmoor and Fountainbleau areas.
Callais said Algiers, Terrytown and Marrero are getting a lot of interest from buyers looking in the $150,000 to $250,000 range, mostly first-time homebuyers and older buyers looking to scale down. Of her last three listings, two were in Algiers and one was in Terrytown. All had multiple offers and were under contract within days, she said.
“I personally had never seen that before,” she said.
St. John and St. Bernard remain the cheapest places to buy, with homes selling at an average $96.10 and $97 per square foot respectively.
On the North Shore, prices surged in Tangipahoa Parish. Homes there sold for an average $101 per square foot during the first half of 2018, up 14.1 percent from a year ago. Ragas said job growth in the River Parishes and rising prices in St. Tammany are likely combining to boost Tangipahoa’s allure, though the mostly rural area will have to contend with stressed infrastructure if that trend continues.
“They’re playing catch-up,” Ragas said.
Karen Guerra and Robert Santopadre, real estate agents with Gardner Realtors’ North Shore office, said Tangipahoa is drawing a lot of families looking for safe neighborhoods, quiet roads and a more rural landscape. That includes buyers from New Orleans and nearby Covington and Mandeville, which continue to grow.
“A lot of those people are migrating over,” Guerra said.
Callais said Mid-City, Arabi and Belle Chasse are all heating up, and she expects to see more growth from St. Tammany. She has worked with several homeowners in New Orleans and in Jefferson Parish who want to sell in order to buy on the North Shore. One sold their newly-built home in Lakeview and upgraded to a home twice the size in Madisonville, she said.
Homeowners want prices go up at a healthy clip, but Callais said a slow or even slight dip in prices can also be a good thing — small price adjustments allow more buyers to get into the market and keep it active.
“You have to level out at some point,” Callais said.
Original article found at http://realestate.nola.com/realestate-news/2018/08/home_prices_new_orleans_2018.html