Changes to the New Orleans Housing Market

 A Bucktown resident put their house on the market in January hoping the nice three bedroom home would sell fast after witnessing the explosion of buyers in the housing market since the Pandemic. After sitting on the market for two weeks with no offers Roxanna Campos was surprisingly disappointed.

“I would have thought we’ have multiple offers by now. If we haven’t had any movement in the next week, we might have to rethink things,” said Campos.

Sellers across the country are facing this same situation. They are having to lower their asking prices and agree on concessions to buyers. In 2022 the volume of home sales was down, and homes were sitting on the market longer according to the Gulf South Real Estate Information Network.

Although home prices did keep rising even with the slow down in the market. In fact, the median sale price in the New Orleans metro area was up 7.8% year over year to $277,000. This was up 24% from the pre-pandemic that was reported at $219,400. The biggest drop in pending sales was in outlying Plaquemines, northern St. Tammany, Tangipahoa and the River parishes.

Why is New Orleans seeing a slowdown? This can be blamed on the rising interest rates, high inflation and the big jump in property and flood insurance rates.

“The insurance rates are literally killing deals. I had a quote for a $10,000 premium for property insurance on a 2,800-square-foot house in Metairie. We couldn’t do the deal. The buyer had to walk away from their dream house,” said broker Jiarra Rayford of Rayford Realty.

Even with the total inventory of homes for sale is up due to the cooler market, the home prices in the area are still reflecting the rise. In some areas, like St. Charles Parish, the home prices doubled. Tangipahoa had the biggest increase up 15%, St. Tammany up 11%, Orleans up 5.8%, and Jefferson was up 5.5%.

In the New Orleans metro area, homes that were priced between $224,000- $350,000 sold the quickest. The average days on the market for these homes was around 32 days. Many agents throughout the area are seeing a shift in sellers. They are being a bit more realistic about their pricing.

“It’s not like the market is dead,” Mirambell said. “I had nine offers last week on a house in Old Metairie. Another one in New Orleans had an escalation clause for $40,000 above list price. So, houses that are updated and have a lot of appeal are still flying off the shelf.”

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This Year’s Southern Living 2022 Idea House Is Located in North Carolina

This year Southern Living chose River Dunes which is located in Oriental, North Carolina for their 2022 Idea House.  The community features 14 miles of waterfront on the Pamlico Sound, Intercoastal Waterway and the mouth of the Neuse River.  River Dunes offers wonderful amenities which include a 400-slip marina.

The home represents coastal living at its best and was brought to life by a team including Jordan Maroules of SLD Custom Homes, Charlotte Lucas of Charlotte Lucas Interior Design and William Court of Court Atkins Group.

“Our vision was to create a Southern ‘coastal-inspired’ home that has a strong traditional sense of place-but a slightly more contemporary sense of detail,” says architect William Court.

The home features multiple structures instead of just one which includes a guest home.  The main house sits at 4,125 square feet and includes a wraparound porch for outdoor living.  The porch gives a nice harbor view with great space for outdoor entertainment.  The exteriors are constructed of James Hardie siding which will stand up to the harsh coastal elements.

“While we are blessed with unparalleled beauty in the Southeast, the climate comes with humidity, moisture, salt air and pests. We love using Hardie fiber cement products in southern coastal areas because they hold their own in rain, sleet or snow. This allows us to provide our clients with a great low-maintenance and sustainable alternative to natural wood siding. Anytime we can get the look and feel of natural wood without the headache of ongoing maintenance, that’s a win, ” says Court.

The siding design used on the home is the Artisan shiplap siding by James Hardie.  “In our more contemporary coastal designs, we want to blend the use of historical proportions and familiar colors with unexpected details and clean lines. Our design team relies heavily on the range of products by James Hardie to create realistic historical details, as well as updated contemporary profiles with a sense of weight and proportion. Using the Artisan shiplap siding with mitered corners was a natural choice to get a crisp clean edge-but with an elevated sense of detail,” says Court.

The 2022 Southern Living 2022 house will only be on tour until the end of the month.  Currently the home is decorated for the holidays and can be toured by purchasing a ticket. All the proceeds will go to local charities.

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Reports have shown that inflation might have already peaked. This has caused the mortgage rates to start to fall back towards 5%. The week ending in August 18th showed 30-year fixed-rate mortgage at an average of 5.13% according to Freddie Mac. The week prior was an average 5.22% and the year prior the 30-year was 2.86%.

“Inflation appears to be beyond its peak, which has stopped the rapid increase in mortgage rates that the housing market was experiencing earlier this year,” said Sam Khater, Freddie Mac’s chief economist.

The higher mortgage rates hurt the housing market this summer which rose to a high of 5.81% in mid-June. Sales dropped on home sales for both new homes and existing homes causing a dip in mortgage applications. The last week in August 2022 mortgage applications were at their lowest levels since 2000.

“The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability,” said Khater. “As a result, over the rest of the year purchase demand likely will continue to drag, supply will modestly increase, and home price growth will decelerate.”

“Home purchase applications continued to be held down by rapidly drying up demand, as high mortgage rates, challenging affordability, and a gloomier outlook of the economy kept buyers on the sidelines,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

If home prices slow in increasing and mortgage rates lower, then hopefully the housing market will bounce back. This hopefully will ring true as a year ago a a buyer could purchase a $390,000 home with 20% down on a 30 year-fixed rate mortgage and have a monthly payment of around $1,292. This same home today will cost a home buyer around $1,700 a month which is around $408 more each month.

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Rising Home Prices Are Clashing With the Slowdown in Economic Growth

 Are rising home prices a wild card for the Federal Reserve?

According to an article posted by Bloomberg, the high home prices are a hitch in the Federal Reserve's plans for the nation's slowing economy. Many say that this is the worst inflation the country has seen in forty years. The Federal Reserve wants to put a stop to the inflation that is currently hurting our economy.

The change is planned to come around September of this year. The goal is to have its policy rate at a level it considers to be restrictive, putting further downward pressure on prices.

In order for this to happen there are several factors that have to align. The three biggest are the country needs to pay three months of declining core inflation, measured month-over-month, the rate of home price appreciation needs to slow down in market price gauges and energy prices need to stay contained. If this does happen, the Fed will be able to slow the rise in interest rates.

The reason the change will not happen until September or later is that Colin Powell wants to witness a slow down in inflation via several reports. The one thing that will stall this is the housing market. Why? Because housing inflation falls behind market prices by several months.

This means that when market prices slow down, the housing market will continue to rise for several months extending into 2023. The housing market is still going strong because of low invetnory.

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Plans For A New Subdivision in New Orleans East

 

James Smith of Imperium Estates LLC is a developer which has plans to build a subdivision on 36-acres close to the former Six Flags. The plans include over 116 homes that will be built in several different phases close to the intersection of Interstate 510 and Chef Menteur Highway, just south of the Eastover neighborhood.

“The homes are beautiful,” said Dawn Hebert, chairperson of the East New Orleans Neighborhood Advisory Commission, a group that represents several homeowner and neighborhood associations in the east.

The neighborhood has a few obstacles, including the property's current zoning. The city's master plan has the property zoned for an industrial park. Luckily District E Council member Oliver Thomas is backing the idea of changing the zoning to residential. He feels the master plan does not match the needs of New Orleans East development or the wishes of surrounding residents and landowners.

“I just thought it was appropriate in terms of what they wanted to do to fit to where that community was going,” Thomas said. “I haven’t seen or heard of anyone submitting plans for light industrial development out there.”

Herbert explains that the industrial designation for the area was originally placed in 1970. In five decades there has been zero interest or demand for an industrial park.

“I think it’s outdated zoning because, since Katrina, more homes have been built over there,” said Hebert.

“You don't have a long line of people trying to invest out there,” a neighboring property owner, Robert Charbonnet.

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