New Orleans Home Prices Future Outlook and Effect on the Economy

 

National industry leaders say that the housing market might slow down soon affecting the home price increases. Although this report looks negative, local New Orleans real estate specialists are confident the market will not go cold soon.

"I don't think weakness is the right word for what we'll see; I think it's going to be more a shift in gears," Missy Whittington, CEO of NOMAR, said.

The New Orleans housing market saw a considerable rise in the number of homes for sale this summer but the New Orleans Metropolitan Association of Realtors (NOMAR) September housing-market report predicted an increase in inventory which might bring a slow down in the market. This trend would slow down the price increase, which has not stopped rising in 114 months.

"A lot of buyers got beat up and decided to take a break," Local Agent Katie Witry said. "Now, we're about two weeks behind what is typically the secondbusiest time of year and we'll see how they react when the inventory comes onto the market. It's still a strong market but I see signs that prices are cooling a bit."

Due to Hurricane Ida and buyers frustrated with being priced out of the market, there was a pause in listings coming on the market. The hurricane could have driven some residents away from the area. Local experts feel that this was awash with some residents moving out due to the storms while others moved in.

"After a big storm there's always some people leaving and some moving in," said Witry, speaking on the sidelines of the New Orleans Metropolitan Association of Realtor's annual forecasting symposium.

According to forecasters, New Orleans metro area real estate has seen a 13% jump in single-family home prices this past year. They feel this push has been due to the pandemic wave. This has been seen through the residential real estate market nationwide. This has been due to the lack of inventory and buyer demand.

"The fundamentals of the market have not changed," said Paul Richard, broker at Latter & Blum who co-chaired this year's symposium. "If there is a headwind into 2022 it will be inflation and an uptick in interest rates, but then the jobs market has been improving and even most of the hospitality jobs are back."

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Tips To Take To Get a Higher Value on Your Home

 One of the first rooms a buyer looks at is the kitchen. The kitchen has become the heart of a home, and its functionality and appearance are important. This is the reason why kitchens are the most popular room for renovations. Remodeling a kitchen can be very expensive and a lot of work, but will add value to your home. Here are six tips to follow if you want to spruce up your current kitchen.

1. Paint or refinish your kitchen cabinets

This is a simple or cost-effective way to update your kitchen space. Outdated or dingy cabinets can harm a kitchen's look. If you decide to change the color of your kitchen cabinets, make sure to choose a color that blends with the color scheme of your home. Another simple idea to update your outdated cabinets is to replace the hardware.

2. Add a kitchen island

Every buyer loves more counter space. A kitchen island not only gives extra counter space but storage as well. A kitchen island can drastically open up the room by offering depth and making more efficient use of the space. Kitchen islands not only are a great place to prep food but also can be a great place for additional seating. A nice kitchen island can cost upward of thousands depending on the size, materials, and accessories. If you are on a tight budget, a nice freestanding table can make a great kitchen island.

3. Install new energy-efficient appliances

Energy-efficient appliances are a great way to save energy and cut down costs on utilities. Switching your existing appliances to energy-efficient appliances is a great way to start. When purchasing new appliances look for the Energy Star label.

4. Consider updating your kitchen floor

Kitchen floors get the brunt of the mess in a kitchen. They take a beating from hot food spills, foot traffic, and appliances being moved across the floor. Replacing your old flooring can give your kitchen a facelift. Remember to choose durable and easy-to-clean flooring. Great materials include tile flooring, hardwoods, or artificial wood alternatives.

5. Install a backsplash

A backsplash behind an oven is a great way to protect from harsh spills and build-ups. It also makes it easier to clean them up. Having a backsplash above the kitchen countertops can add dimension and color to your kitchen.

6. Update lighting

Poor lighting in any space is a no-no. A kitchen can look very dingy with poor lighting. Try updating your lighting fixtures with energy-efficient LED bulbs. These will not only brighten up your kitchen but will also add to your energy savings. Adding track lighting and dimmers are another great idea to add ambiance to the space.

A major remodel or a minor remodel with both do wonders for your kitchen and adds value to your home. A Realtor can help you determine how much value can be added.

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Reports Show an Increase in Steel Prices While Lumber and Concrete Prices Fall

 

Good news in the residential construction industry. Both lumber and concrete products have dipped in price. This has caused prices paid for goods used in residential construction ex-energy decreased 0.8% in September (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The price index of services input to residential construction also saw a dip in pricing in September. This was caused by smaller gross profit margins of building materials retailers.

Even with the decrease in pricing, building materials are still 13% higher than a year earlier and 11.3 higher than reported this January 2021. Service inputs also are up but did not increase as much. There was only a 9.5% increase in the first nine months of 2021 which dropped from the 11.9% increase in the first nine months of 2020.

The Producer Price Index (PPI) for softwood lumber shown seasonally adjusted went down 3.5% in September. This is calculated by taking a survey of the prices paid for goods shipped during the month. The industry leaders predict there will be an increase in softwood lumber prices due to the FLCP (Random Lengths Framing Lumber Composite Price) rising 36% since August 2021.

As for ready-mix concrete (RMC), the PPI went down slightly to 0.5% in September. This is the first decline seen since January 2021. Over the past 12 months, RMC has increased 3% and year-to-date 4.1% in September 2021. The largest decline was seen in the West at 2%, in the Northeast and South at 1% and increased 0.2 in the Midwest.

Gypsum products rose 1% in September making it the seventh consecutive monthly increase. The PPI year-to-date in 2021 increased 16.6% and 22.6% over the past 12 months in September. Gypsum products did see a decrease last year between January and September 2020 of 2.8%.

Steel products rose in pricing 5% in September which followed a 5.1% in August 2021. The monthly change in the steel mill products PPI increased by more than 10% only three times (in 1947, 1948, and 2008) over the 80-year period ending in 2020. Monthly increases have exceeded that mark four times in 2021.

Luckily the prices of services declined 2.7% in September which followed a decrease of 5.7% in August 2021. The monthly decline of 3.7% in trade services input pushed this decline.

If you are in the market for a new construction single-family home now is a good time to contact a local Realtor or local custom builder who can help you with your needs. Leave it to a professional as they are able to navigate this boisterous current housing market.

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Suburban and Exubran Communities See The Fastest Home Building Activity

 

The pandemic has not only changed buyers' perspectives on what they want in a home but also where they want their home to be located. More and more buyers are searching in the suburbs away from crowded urban areas. Surprisingly the multifamily sector is seeing more new home starts in the suburbs and lower-cost markets.

According to the NAHB's current Home Building Geography Index (HBGI) multifamily construction saw double-digit percentage gains in suburban areas in the second quarter of 2021. Large metro areas saw a decline in multifamily new starts. Multifamily residential construction rose 14.3% in small metro urban cores and 25.5% in small metro suburban areas while large metro core areas saw a 0.5% decline.

“The trend of construction shifting from high-density metro areas to more affordable regions, which accelerated at the beginning of the pandemic early last year, appears to be continuing,” said NAHB Chairman Chuck Fowke. “Lower land and labor costs, and lower regulatory burdens in suburban and exurban markets make it more appealing to build in these communities. And workers are increasingly flocking to these areas due to expanded teleworking practices and lower housing costs.”

If you are in the market to purchase a home, now is the time. Get in touch with a Realtor in your local community who can help you with the process.

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A Positive Employment Report for August

The NAHB Eye on Housing reported an increase in nonfarm payroll employment from July to August this year. Nonfarm payroll employment increased to 31 states in August with 235,000. This was at a slower rate than seen in July with an increase of 1,053,000.

August saw a strong increase on a month-over-month basis in California where 104,300 jobs were created, in Texas 39,300 and New York 23,500 were created. Nineteen of the states and the District of Columbia saw a decline with a loss of 64,100 jobs.

Out of the 48 states which reported construction sector job information, 24 of those states saw an increase in both residential and non-residential construction jobs. Colorado, South Dakota and Utah saw no changes while Nevada added 3,000 construction jobs. There was a 4.4% increase in New Hampshire but a 3.7% in Kansas between July and August.

The construction sector jobs also saw an increase of 2.7% by 193,000 jobs on a year-over-year basis. California again came in at the top with 35,900 construction sector jobs while New York lost the most at 11,700 jobs. In percentage comparisons, Rhode Island had the highest growth at 13.9 which Wyoming at the worst at a decline of 7.7%.

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Hilcorp Might Purchase Phillips 66 Refinery in Belle Chasse

This can be both good news and bad news for Belle Chasse and Plaquemines Parish. Phillips 66, which is based out of Houston wants to sell its Alliance Refinery in Belle Chasse. The good news is that Hilcorp Energy Co. is considering purchasing the refinery but the bad news is over 850 workers and contractors who are employed at the current refinery will be out of a job.

Hilcorp would have to shut down Alliance to be able to convert the refinery which is located on the lower Mississippi River into an oil export terminal. Hilcorp feels the refinery is a possibility to be incorporated into Hilcorp's growth strategy. In 2020 the company acquired BP PLC's in all of Alaska adding it to the already huge Hilcorp Alaska private oil and gas operator.

Hilcorp is also based out of Houston and was founded in 1989. It is the largest privately-owned oil and natural gas producer in the country. They provide oil, petrol and natural gas.

The Alliance Refinery is about 25 miles south of New Orleans. The refinery gets its crude oil from the Gulf of Mexico by pipeline and U.S. tight oil by barge. Most of the refined products from the refinery are distributed around the eastern United States. It is distributed through the major common-carrier pipelines and by barge.

The refinery, built in 1971, sits on 2,400 acres in Belle Chasse and has a capacity to process 255,600 barrels of crude oil each day, most of which is refined into gasoline. This sale could see a potential of $500 million.

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Patios Are Now Built on Over Half of New Homes

The National Association of Home Builders reported that over 60% of new homes built in 2020 have patios. This is the first time since the Census Bureau's 2005 survey that patios have been on over 50% of new homes. There were around 990,000 single-family homes started in 2020 and 61.4% of these homes had patios.

The shares of new homes with patios started to dip in 2007 from 50.4% in 2006 to 48.8% in 2007. The shares did not begin on the upwards trend again until 2011. The big increase from 2019 at 59.6% to 2020 at 61.4% was due to buyers' change in desires in what they want in a home. The pandemic caused us to rethink what is important when it comes to a home. Having a private place to spend outdoors became very important.

The nine US Census divisions also saw a drastic change across the board. Surprisingly the Mountain division was the highest at 74%, next was West South Central at 73%, the South Atlantic at 67%, and the Pacific at 59% all at over 50%. The remaining regions were all under 50% with the East North Central coming in at 47%, the West North Central and East South Central at 41%, New England at 21% and Middle Atlantic at 19%.

As for the construction and size of patios, those also differ. The majority of the patios across the board are constructed of poured concrete, followed closely by concrete and brick pavers. The average size across the board for a patio on a new single-family home was reported to be about 278 square feet. The largest were over 350 square feet in the Mid Atlantic, East North Central and Pacific divisions. The smallest which were under 200 square feet were found in the East South Central division.

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