Eric Wilkinson is confident about the New Orleans real estate market. "It's definitely a buyers' market," says Wilkinson, a realtor with French Quarter Realty. "It's alive and well."
Against a backdrop of somber national economic forecasts and the sub-prime mortgage crisis, Wilkinson is one of many agents who believes, all things considered, that the local real estate market is in good shape.
'New Orleans is a little different; it always has been," he says.
'We're seeing a lot of first-time home buyers and not as many investors," says Helen Krieger of Urban Vision Properties, who specializes in historic properties in the Marigny, Bywater and Algiers Point neighborhoods. She says the market has softened just enough to be accessible to a new group of buyers while remaining less attractive to investors. "It's really unusual," Krieger says.
Over the past three years, New Orleans home prices have fallen without plummeting. In February 2005, the average sale price of a home in Orleans Parish (excluding Algiers) was $196,732. This February, that average was $180,793.
In addition, more homes are staying on the market longer. February counts by the New Orleans Metropolitan Association of Realtors (NOMAR) show that single-family homes in the area are on the market an average of three to four-and-a-half months before selling.
The combination of reduced prices and increased volume means more choice for buyers.
'Artists, musicians and writers are coming to me looking in the $150,000 to $200,000 range," Krieger says. Where in previous years she may have had only one or two homes to show them, now she can offer five or six options at a time. "It's kind of exciting to me as an agent to be able to place people in those houses," she says.
Foreclosures also provide good opportunities for buyers, although they have their limitations.
'You can get really amazing deals on foreclosures," Krieger says, but they require a more rigorous paperwork process and banks generally won't negotiate conditions on the sale or throw in home improvements. The rewards, however, can be worth the effort, says Krieger. For example, she recently sold a double-family home in Bywater near the river for $130,000.
Although there are occasional foreclosure deals to be had, they are not driving this buyers' market. Louisiana actually has one of the lowest rates of foreclosure in the nation. RealtyTrac a company that maintains a database of national home foreclosures reported that in February, only one in every 2,985 Louisiana households entered foreclosure filings. The national average was more than five times that number. According to Krieger and others, the low foreclosure rate probably reflects local banks' willingness to work with residents following Hurricane Katrina, especially those in line for insurance or Road Home funds.
Just how well the New Orleans real estate market is doing depends largely on the neighborhood.
RE/MAX agent Rayelynn Fagot, a third-generation New Orleanian, has been in the real estate business 30 years and lists properties across the city and in Mississippi. She says that along with homes in the French Quarter, Uptown sellers are moving properties at a relatively brisk pace. Areas where it is hardest to sell a house are in eastern New Orleans and the Lower Ninth Ward.
'At first, in New Orleans East, I was doing well," she says. "That was locals buying local." With the first wave of insurance payments, residents of eastern New Orleans were able to buy homes in their own neighborhood. But as the disbursements slowed, so did the market for houses.
'I'm very disappointed in the Lower Ninth Ward," Fagot says of the molasses-slow pace of home sales in that area.
She says these communities in particular suffer because "these were elderly residents to begin with. There was not a younger person to go back in and gut it." As a result, Fagot sees more families consolidating homes. Buyers frequently are adult children moving back to New Orleans to live with, or very near, aging parents.
'We have our own, specific pause," says Dan Armstrong, a Latter & Blum real estate agent in the Lakefront area. Like Fagot, Armstrong doesn't see too much of an effect from national markets. "Our situation is more Katrina-related," he says.
Armstrong identifies the slow pace of recovery in flood-damaged neighborhoods as the biggest barrier to housing turnover in the Lakeview market, though he says the situation has its benefits.
'The healthier part of that market is for flooded and gutted properties," Armstrong says, adding that there's a steady niche market for the homes that have been stripped down to their architectural skeletons and structurally refurbished. The bare-bones shells provide a carte blanche for new buyers willing to put a little sweat equity into a dream home.
'It's a great chance for people on a budget to get into an area they might not have (been able to afford) before," Armstrong says. He sees young professionals and families snapping up these properties more quickly than other houses. Drawn to newly opened businesses and neighborhood services, this latest generation of Lakeview residents is contributing to what Armstrong calls "the rejuvenation of Lakeview."
These younger buyers also have a whole different set of requirements than their predecessors did, including "big bathrooms, fancy kitchens, that sort of stuff," Armstrong says. "I recommend that change for the buyers rather than the sellers. A buyer wants to explore their taste."
In the French Quarter, buyers have had the opposite reaction to post-storm fixer-uppers.
'Since Katrina, people are so much more hesitant to renovate things," Wilkinson says of his clients who are interested in more expensive properties. The contractor horror stories that followed the storm are still fresh in buyers' minds, he says, making them wary of any property that requires too much touching up. Finding a good contractor isn't the same issue it was two years ago, but buyers are still skittish, Wilkinson says. In the mid- to high-end housing market, buyers expect sellers to furnish the latest appliances and make a house as up-to-date as possible. "They hear so many bad things about the market," Wilkinson says. "They're looking for a low price. They want to get a good deal." And in this market, he says buyers can afford to be more selective.
'Buyers are very astute," says Roy Guste of Dorian Bennett Sotheby's International Realty. He attributes much of that to access to information on the Internet. Instead of coming to him with a list of general requirements a balcony, garden, walking distance to Jackson Square, etc. Guste's clients now often have exact addresses of listed homes. "They're familiar with square-foot differences," he says, adding that it's a phenomenon almost unheard of before agents started advertising properties on Web sites.
That doesn't mean buyers aren't amenable to suggestions from realtors. "If I think something is really nice, I'll bring them there," Guste says. He recently took a couple on an exhaustive tour of French Quarter homes without success. "[The homes] needed to be fixed up, they were larger than their needs, or they didn't have parking," Guste says. Then, one Tuesday, he saw a new listing for a $590,000 home he was sure met the couple's criteria, so he called them. "I said, "You've got to come see this place and put in your contract tonight. Tomorrow it will be gone.'" The couple signed the contract that evening.
Guste says he knows many buyers who are continually waiting for some perfect property. With all the good deals, they sometimes forget they're still competing with other buyers, some of whom are less interested in haggling tooth-and-nail with sellers.
'If they're coming from chic cities like Los Angeles or New York, they think it's cheap here already," he says. "There are some really good buys in the Quarter. The good stuff goes. When you find what you like, don't delay."
That advice is echoed by agents in other parts of the city.
'If you have the ability and the desire, get into it," Fagot says. "The interest rates are phenomenal, and the prices have come down."
First, however, prospective homebuyers must make sure they are eligible for financing. New Orleans is not suffering the same foreclosure rates as other parts of the country, but conservative lending by banks is one way the instability of national markets has been pressing down on first-time buyers here.
'They have to be a perfect client," says Fagot, who has seen the recent purchase of a new car do enough to a credit score to keep a mortgage just out of a buyer's grasp. Fagot says she would like to see more financial counseling and education for first-time homebuyers.
'Start the process early so you know where you stand," Krieger recommends. She suggests buyers talk frankly with lenders. If a buyer knows they need to amass money in the bank a few months ahead of time, they're less likely to be disappointed when they find a home they want to buy.
Given the right development, planning and internal investment in local neighborhoods, Fagot is optimistic: "It's going to be a nice, new, beautiful city. It's going to take time."
'I've been seeing a lot of real estate agents buying property, and I think that's always a good time to start buying," adds Krieger, who, along with her partner, is keeping an eye on the market for a home of her own. "Now is absolutely the time to look at property as investment, or for living in, or both. Make your shelter your investment."