Home prices in Orleans Parish declined slightly in 2017 after years of steady increases, according to newly released figures — a drop that analysts said was probably inevitable given how expensive local real estate has become.
In the surrounding parishes, meanwhile, prices mostly climbed last year.
The average price per square foot of a single-family home in Orleans Parish slid 3.4 percent in 2017, according to figures released last week by a local real estate trade association. That still leaves prices up about 23 percent from five years ago.
Homes listed in average-or-better condition sold for an average of $351,096, or $175 per square foot, in 2017, the data show. That was down from $181 per square foot in 2016.
Analysts said the drop was hardly a shock after nearly eight years of rising prices in New Orleans.
"We were overdue for a little correction. The markets behave like that. They tend to grow and grow and grow and get beyond the economics," said real estate consultant Wade Ragas, who compiled the numbers. "All of a sudden, everybody's looking at prices that are a little higher than their incomes can handle, and you start getting people pulling back and saying, 'I can't.' "
Still, others said local officials need to be vigilant lest perennial issues like violent crime scare away new buyers.
"Even though all these people are in love with the city, and for good reason, they don't want their lives threatened," said Glenn Gardner Sr., president of operations at Gardner Realtors. "If we don't recognize that, the key to our continued great tourism and convention business, and the key to having people keep living in Orleans Parish happily versus considering an exit to the suburbs — crime control is essential."
Outside New Orleans, prices continued to climb in 2017. Across an eight-parish metro area including Tangipahoa Parish, sale prices for single-family homes rose 2.4 percent in 2017 to an average of $252,090, or $129 per square foot.
Prices in Jefferson Parish saw the biggest jump, up 8.8 percent to an average of $225,730, or $124 per square foot. As in New Orleans, that's up significantly — almost 27 percent — from five years ago, when prices averaged $98 per square foot.
Sales activity in St. Bernard Parish also was strong in 2017. Prices there climbed 7.9 percent, averaging $99 per square foot. That spike is likely due, at least in part, to years of rising home prices in New Orleans that pushed many prospective first-time buyers to the downriver parish, where homes are much less expensive.
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St. Charles Parish's average home sale prices rose 5.2 percent, averaging $116 per square foot. St. John the Baptist Parish was up 4 percent, to $93 per square foot. St. Tammany Parish was up 2.9 percent, to $120 per square foot, and Tangipahoa rose 2.3 percent, to $95 per square foot.
Besides New Orleans, the only place where average prices fell was Plaquemines Parish, where they dropped a little less than 1 percent, to $129 per square foot.
A few neighborhoods in the area stood out. In St. Charles Parish, for example, the Luling area — the 70070 ZIP code — saw the most sales (154), with prices 4.8 percent higher than a year earlier, averaging $122 per square foot. In Destrehan (70047), prices were up slightly — 1.8 percent, averaging $114 per square foot.
In Jefferson, the Marrero area (70072) had the most sales (608), with prices up 11.4 percent, to $97 per square foot. But Jefferson's biggest year-over-year price increase was in the 70094 ZIP code, which includes Avondale and Westwego; there, prices rose 15.4 percent, to $73 per square foot.
Jefferson's most expensive ZIP code remained — by a long shot — 70005, which includes parts of Old Metairie. There, home sales averaged $514,620, or $217 per square foot, which was up about 10.2 percent compared to a year earlier.
Ragas' analysis, which is based on data from the New Orleans Metropolitan Association of Realtors and the Gulf South Real Estate Information Network, does not include sales of multifamily homes, townhouses, condominiums or vacant lots.
Looking forward, Ragas said potential job growth in the area and the pace of interest rate hikes by the Federal Reserve will be crucial. Higher rates would raise interest costs for mortgage borrowers.
In 2017, the New Orleans metro area lost roughly 2,200 jobs — for a 0.4 percent loss — from the previous 12 months, according to preliminary figures released by the Louisiana Workforce Commission.
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"What drives demand for housing and house prices is employment, and the metro area has been having little in the way of job gains for the last year or so," Ragas said. "So you'd expect, as it stopped adding lots of jobs, that you would get some forward pressure on price, and that's what's affecting the market with the highest prices — that's Orleans."
However, if the U.S. economy continues to expand, as many predict, the New Orleans area will likely benefit, probably making the city's recent price decline temporary. "I'm not anticipating some large-scale, further price decline," Ragas said.
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