Eleanor Farnsworth specializes in high-end real estate.
She represents the buyers and sellers of homes in some of the ritziest parts of the New Orleans area.
But even she is surprised by the current market for upper-echelon homes.
“I haven’t seen this type of demand before,” Farnsworth said.
“You always had people who wanted a second home, a pied-a-terre on the parade route for $200,000. That type of buyer I’ve had for years.”
However, those buyers have been joined recently by a growing number of people asking for million-dollar mansions, Farnsworth said.
As median home prices in the metro area climbed in 2014 for the third straight year, so too did the price of big-ticket homes, real estate agents say. No records were set for the highest amount ever paid for a New Orleans-area residence, but the agents say the $1 million club is growing, and there is no shortage of people lining up to buy into it.
Across the New Orleans region, the price of sales of single-family homes in average or better condition climbed 3.1 percent last year to $114 per square foot, compared with $110 in 2013, according to an analysis of data from the New Orleans Metropolitan Association of Realtors and Gulf South Real Estate Information Network done by real estate consultant Wade Ragas.
The price of homes in poor or fair condition also spiked in certain ZIP codes last year, according to Ragas’ report.
The top-of-the-market houses are “rising in price at least as fast as the market as a whole,” Ragas said, based on conversations with Realtors.
“In the higher market, it is a much brisker market now,” said Rick Haase, president of Latter & Blum Inc., which sold nearly one-third of the 158 homes priced at $1 million or more that were sold during the 12-month period ending Jan. 31.
The highest-priced home to sell in the New Orleans area last year was advertised as a “stately Queen Anne home” featuring seven bedrooms, 5 ½ bathrooms, “lush gardens with organically grown citrus trees and grapes,” and a heated pool. The property at 3 Audubon Place was listed for sale at $5.25 million and sold 86 days later for $5 million, or $583.57 per square foot.
Haase said the average number of days that properties selling at more than $1 million stay on the market has dropped from more than 150 to 90.
It took just one day for the sixth most-expensive New Orleans-area property to sell last year. The three-bedroom, three-bathroom single-family home at 828 Chartres St. in the French Quarter sold for its full asking price of $2.3 million, or $575 a square foot.
“It’s not like every house flies off the market. But if it’s priced appropriately, in the right location, has the right pedigree, then, yeah, the numbers are going up and up,” said Keller Williams Realtor Ricky Lemann, who was the listing agent on a $2.25 million property on First Street that sold last year. “There will be no adjustment in that luxury market until the (interest) rates go up.”
Ragas agreed that buyers are benefiting from historically low interest rates and the tax deductibility of home loans.
But Haase said that while low interest rates might factor into most buyers’ decision to purchase a home, they have little impact on the high-end market, where many transactions are cash sales.
While many of the buyers who have been snapping up high-value houses are after second homes, Haase said, they also include local families taking advantage of rising home values by trading up, plus people who have relocated to New Orleans for work and — having sold their homes in more expensive cities — are less sensitive to the price structure in the local market.
“I think what’s happening is there are more properties selling in that market because of the strong economy that New Orleans is experiencing,” Haase said, adding that the economy, more than home appreciation, is pushing the increase in $1 million homes.
Haase said upward price pressure in the most expensive sector of the market should be expected until there is enough inventory to match the demand.
“Every one of our agents had the exact same complaint,” Haase said. “Our Realtors are reporting an inventory drought.”
Sissy Sullivan, a Re/Max agent who listed the Audubon Place property, agreed.
“Everything in the whole city is going,” she said. “That’s our main problem right now.”