Condos, Apartments & Houses -- Oh My!



In the days after the storm, Kim and Michelle Schlafly realized with horror and heartbreak that their beloved Mid-City home was one of the many thousands inundated with floodwaters. Over the previous six years, the Schlaflys had spent countless hours and dollars renovating their house off Canal Street. Though much work remained to be done, the end was in sight. The double parlors were finished, a custom cabinet was built along the hallway, and the ceilings were now a pale, Titian blue. Soon, a new kitchen and bedroom would fill out the back of the house, and the long-term project would come to a close. Then, they would only have to live in it.

That hope burst with the levees. When the Schlaflys realized they were back to square one, they snuck into the city on Sept. 16 and began gutting their house. With 7 feet of water in the neighborhood, the damage was significant. They looked for temporary housing and were aghast at the exorbitant rents demanded by local landlords. Faced with the prospect of paying $1,500 or $2,000 per month, they changed tacks and decided to buy. A three-bedroom house in Gretna became home on Nov. 1.

The Schlaflys are not unique. Many local residents have purchased homes or condos in unflooded areas to serve as temporary housing while they renovate or rebuild their destroyed homes. This trend is apparent to Letty Rosenfeld, a realtor with Latter & Blum. Rosenfeld reports that it's a strong market all over the city, especially Uptown, one of the areas she specializes in. "We're seeing lots of buyers and all price levels are selling. Many of the new Uptown residents are displaced Lakeview families."

Homeowners who were hoping that the citywide housing shortage would support a 10-20 percent increase in asking prices are disappointed. In general, the houses in unflooded areas are selling at pre-Katrina levels, and sometimes less. Buyers are understandably reluctant to pony up more than the pre-K value, especially with the current problems and looming risks of living in New Orleans at this time. And unless the buyer can make a significant down payment, mortgage companies won't approve loans on the inflated home values. Rosenfeld urges appraisers "to stick to pre-Katrina levels" and make it easier for prospective homeowners and underwriters alike.

Other hot areas in Orleans Parish are the Garden District, Irish Channel, and the Marigny and Bywater neighborhoods. These last two, with their proximity to the French Quarter and homegrown funky feel, have long served as home base to the city's bohemians, who were attracted to the area for its varied housing stock and affordability. According to George Cossitt, a Latter & Blum agent who covers rentals and sales in Marigny/Bywater, those days seem to be over.

"The Marigny and Bywater neighborhoods have historically provided affordable housing for the service workers in the French Quarter. Now, these neighborhoods are out of their reach. Property values have consistently increased over the last several years and there was an assumption that prices would go up dramatically after the storm. This has proved untrue," says Cossitt. "These houses are languishing on the market, mainly because buyers can't afford the insurance on top of the mortgage. Policies are very expensive now."

If you're a landlord in this area, you are celebrating. Rentals in the Marigny/Bywater are now in line with property values. In his experience, Cossitt has seen few cases of out-and-out price gouging or tenant evictions just to raise rents. The properties available now are typically those of tenants who didn't come back after the storm or units that were damaged by the storm and are now repaired. Rents have increased by as much as 40 percent, making it nearly impossible for French Quarter service workers to live there, but delighting landlords who can now cover their mortgage payments.

And where will the bohos, artists, waiters and musicians live next? Cossitt predicts a revival on the other side of St. Claude Avenue. Historically occupied by New Orleans' working class, this neighborhood offered cheap rent and affordable homes for families, many of whom can't or won't return. This change will be a gradual transformation, cautions Cossitt, since vast sections of this area suffered flooding and many properties are owned by out-of-state investors who, by their absence, are slow to make the needed renovations.

Throughout the city, affordable apartments are scarce, but condos are not. One recent article in City Business reports that more than 1,000 units have been proposed by developers, and when added to pre-K proposals, the number of new condo units will swell to more than 3,000. This concerns Letty Rosenfeld, who says that there are already a "tremendous amount of condos on the market" and not enough people for those already available. Nonetheless, condo sales are strong, especially in the Warehouse District and along the Magazine Street corridor. Ashley Huck and Lindsay Moylan each purchased a one bedroom unit in those respective areas last March and they estimate that the property values have increased by 10 percent in just one year.

Sales are also increasing in the flooded areas of the city. Rhea Gonczi, a loan officer with National City Mortgage who personally lost two properties in Lakeview and now lives in a newly purchased house in Metairie, says that in the first few months after the storm, most applicants were local families who had lost homes and were buying property in Uptown and Metairie. "But recently, we're seeing more applicants for damaged properties in Orleans Parish. It's picked up significantly." And they're not all carpetbaggers; many of the people buying homes in Lakeview, Broadmoor and Mid-City are locals looking for a primary residence. "Many are families who couldn't afford to live there before the storm. With a repair and renovation loan, people are finding it easier to get in. They see this as an opportunity," says Gonczi. She also plans to return to her neighborhood.

Kim and Michelle Schlafly expect to be back in their Mid-City home in early May. They plan to sell their Gretna house, and anticipate a returning family to buy it. Like the intrepid souls in Oz who braved lions, tigers and bears in order to find their way home again, displaced and uprooted New Orleanians believe there's no place like home.

Add a comment