After years of steady price increases, more single-family homes have been staying on the market lately in New Orleans for longer periods of time.
It’s a recent trend that Bill Bliss, managing broker at Latter & Blum’s Lakefront office, has labeled “New Orleans fatigue.”
In Bliss’ mind, high home prices, coupled with issues ranging from crumbling roads to an antiquated drainage system, are leading some home buyers elsewhere, such as St. Tammany Parish, where they typically can find a bigger property for less money.
“We have nine months of inventory, and many of the people are looking to move to other places,” Bliss said Tuesday at Loyola University’s annual economic and real estate forecast symposium. Six months is considered a balanced supply.
In the first half of 2018, average home sale prices in St. Tammany rose 3.1 percent to about $122 per square foot, compared with the same period a year earlier, according to industry figures. That’s compared to $179 per square foot in New Orleans, which was up 8.6 percent from a year earlier.
Despite the added housing stock, Bliss described the city's broader real estate market as being in transition, with single-family homes generally sitting on the market for three to six months — longer than what favors a seller but not long enough to tilt the scales in a buyer's favor.
Meanwhile, in the city’s Central Business District, a recent spate of construction is expected to add hundreds of new rental units and condos, as developers cater to younger renters, second-home buyers and others relocating from the suburbs.
Wade Ragas, who has tracked the local real estate market for decades, said he expects strong national and international demand for new high-end luxury offerings, such as those at the former World Trade Center at the foot of Canal Street. It is being converted into a half billion-dollar Four Seasons Hotel and condos and is scheduled to open in late 2020.
In the 70130 ZIP code — which includes the CBD and Warehouse District — 189 condos were sold last year and averaged roughly $363,400, according to Ragas' data.
When the Four Seasons Hotel’s 90 luxury condominiums hit the market, they’re certain to be among the city's priciest, observers predict. But Ragas expects that sales will not suffer for a lack of interest among wealthy national and international buyers and investors, who will view the price tag as “not being that high compared to what high-quality destinations charge for lodging in other markets.”
As for the immediate fate of several other developments underway in the CBD that aim to include expansive ground-floor retail space, Ragas warned that the market may be getting over-saturated. “It’s always a downward pressure on price when there’s simply too many units,” he said, “and we may have gotten ahead of ourselves a little bit.”
Alleviating that, Ragas said, could require more “robust demand from second- and third-home buyers,” who want to live near the city’s historic core, at least some of the time.
“There’s some depth to that market,” he added, “whether or not it will be sufficient to absorb this inventory, time will tell.”