Aaron Dare wasn’t quite 20 minutes into the first showing of a stately Esplanade Ridge home on Wednesday afternoon when he received his first offer on the property. He didn’t expect it to be the last.
“We’ve had a lot of calls on it. And a lot of agents have expressed interest,” Dare, the property’s listing agent, said as about a dozen people strolled through the home. “We’ll just give everybody a fair chance to bring their highest and best offer and let the chips fall where they may.”
Dare’s optimism is understandable, given the state of the New Orleans area’s housing market over the past 18 months. Even after prices soared to a record high level last year across the eight-parish region, buyers pushed them even higher in the first six months of 2014.
Sales of homes in average or better condition climbed 2 percent, to $112 per square foot, in the first half of 2014, compared with $110 in all of 2013. Those figures compare with an average price of $102 per square foot before Hurricane Katrina in 2005. Considered another way, a 2,000-square-foot home now sells for an average of $224,000 in the metro area. It would have sold for an average of $220,000 last year and $204,000 before Katrina.
That 2 percent growth, however, is down from the 4 percent rise from 2012 to 2013, suggesting that the market has cooled a bit.
“It is not jumping at an extraordinary rate,” real estate consultant Wade Ragas said. “It is not a housing market on fire. It is (rising) at the inflation rate or something near that.”
Contributing to the rise in prices since last year have been improved consumer confidence, particularly greater job security and low unemployment levels; speculation that interest rates will rise; and the city’s soft second mortgage program for first-time homebuyers.
The sales numbers are based on Ragas’ analysis of data from the New Orleans Metropolitan Association of Realtors. The findings are intended as a market snapshot, not an estimate of the value or likely sale price of homes. The data do not include sales of multifamily homes, townhouses, condominiums and vacant lots.
Prices were highest in Orleans Parish, where homes in acceptable or better condition commanded $155 per square foot on average in the first six months of 2014, a 1 percent improvement from 2013.
That is a modest uptick when compared with the 6 percent jump in home prices in the first six months of 2013 compared with the same period in 2012. But real estate experts cautioned against interpreting the slower price growth as evidence of weakening demand for housing in Orleans Parish.
“It’s much more indicative of inventory being in short supply,” Latter & Blum Inc. President Richard Haase said. “The constraint that we are seeing in sales volume today is very much not having enough (properties) on the market.”
That assessment is born out in Ragas’ data, which show there was greater interest in homes that haven’t been repaired since Katrina. The price of homes in fair and poor condition rose sharply in prime areas like parts of Uptown and Mid-City. Overall, the average sales price of unrenovated homes rose to $79,623 in Orleans Parish in the first half of this year, compared with $52,669 in 2013, a 47 percent increase.
On a neighborhood level, the greatest price jump in Orleans Parish was in New Orleans East. Average prices rose 14 percent in the 70127 ZIP code, an area that includes the newly opened New Orleans East Hospital. The nearby 70126 and 70128 ZIP codes also improved by 7 percent and 3 percent, respectively. Those gains, which began in the second half of 2013, are the first signs of a “real recovery” for that area since Katrina, Ragas said.
“There are a lot of first-time homebuyers who are transitioning from renting to buying” and are choosing to buy in New Orleans East, said Jerome Baylis, of Baylis Realty Group Inc. “There are some good properties on the market, and those good properties, when they’re priced right, are selling fast.”
Baylis said he put two New Orleans East properties on the market late Monday and had three requests for showings by Tuesday evening. That’s a far cry from a few years ago, when properties might sit for weeks before getting a bite, he said.
Broadmoor and the 70115 ZIP code in Uptown also recorded double-digit percentage increases in single-family home prices in the first half of the year.
Prices fell the most, 17 percent, in the 70116 ZIP code, which includes portions of the French Quarter, Treme-Lafitte and the 7th Ward. Homeowners also accepted less for homes in the 70117 ZIP code, which includes Bywater and the Lower 9th Ward, and in parts of Algiers, according to the report.
Jefferson Parish home prices climbed just 1 percent in the first half of the year, on the heels of 4 percent price growth in 2013. Homes sold for an average of $103 per square foot in Jefferson in the first half of the year, compared with $102 in 2013. Prices in Jefferson still are short of their levels pre-Katrina, when homes sold for an average of $105 per square foot.
Ragas said expected construction on the new Louis Armstrong International Airport terminal might help to boost those numbers, especially in Kenner, where prices fell by 3.1 percent in the first half of the year.
At an average sale price of $104 per square foot, homes in St. Tammany are selling just above the pre-Katrina level of $103 per square foot.
St. Tammany Parish, which last year recorded its first year of higher prices since 2009, has seen prices climb again in 2014, though the 2 percent growth was more modest than last year’s 5 percent boost. The average price per square foot for a home sold in St. Tammany this year was $106. Homes sold for $103 per square foot in 2005, before Katrina.
Realtors had anticipated prices to climb more in 2014, said Margie Inman, president of Coldwell Banker TEC.
“The market in our opinion was relatively flat,” Inman said. “We thought it would be higher. It hasn’t ignited as much as we’d hoped.”
Among other parishes in the metro area, home prices were down 2 percent in Tangipahoa and St. Charles parishes and up 6 percent and 2 percent, respectively, in St. Bernard and Plaquemines parishes. Prices remained the same in St. John Parish.
Overall, the metro area still is a neutral market, Haase said. A neutral, or balanced, market is in between a buyer’s market and a seller’s market. In a buyer’s market, it would take six months or longer to sell all the properties available for sale at any one time. In a seller’s market, the supply could be extinguished in three months or less.
The metro area taken as a whole currently has enough inventory to last 4.4 months, Haase said, though some areas like Uptown have a much smaller supply. As the supply dips lower, more houses will likely go up for sale, he said, as sellers decide to take advantage of the supply curve.