New Orleans Market Currents

While condo sales are slow, leases and apartment rentals are strong



Rachel Strassel knew she had to find somewhere to live before starting her last semester at Loyola University this coming fall. After choosing not to re-apply for her on-campus job that paid room and board, she began searching for places to rent in New Orleans. It wasn't as hard as she thought it would be.

  "The whole process only took a month," Strassel says. "I started looking for apartments online in March and then one weekend, I looked at one on Friday and two on Saturday, and I signed a lease for one of them the following week, in April."

  Strassel says she never thought about other options, such as purchasing a condominium, because of finances.

  Others looking to rent in the Crescent City may have experiences similar to Strassel's. Despite a decline in activity in national apartment markets because of the recession, things remain steady in the New Orleans market, with summer bringing a boost, realtors say.

  "With the recession, I've seen people putting their houses on the market, and people having to reduce their rent prices," says Leslie Perrin, Prudential Gardener historic residential specialist and realtor. "But then again, it just depends on if the person has overspent in the beginning, or has lost their job or not, or has gotten stuck in something that's affecting them personally."

  Cindy Schupp, a Latter & Blum realtor, says her business has been busier than ever. "I have units that I own and manage with a business partner, and all of our units are full except for two. That's pretty customary for this time of year," she says.

  The average national apartment vacancy rate is expected to reach nearly 8 percent, the highest level since 1980, according to Marcus & Millchap Real Estate Investment Services, but the Greater New Orleans Multi-Family Report for Summer 2009 states that despite major setbacks in the local apartment arena in recent years, such as Hurricane Katrina and the global credit collapse, the city "continues to avoid the large meltdowns prevalent in other markets." Occupancy ranges from 91 percent in Metairie to 79 percent in eastern New Orleans, the report states.

  Summer seems to be the hottest time for leasing, mainly because students like Strassel are rushing to secure apartments before classes resume in the fall, Perrin says. "At the end of the semester in May, a lot of students are looking for apartments," she says. Others preparing for fall, including teachers who want to get settled before school starts, also contribute to the summer rush, Schupp says.

While leasing options seem to be sound, condo sales in the New Orleans area haven't seen the boost they've experienced in previous years, says John Schaff, a Latter & Blum associate broker who says 99.9 percent of his business is condo sales.

  Latter & Blum's condo sales this year, mostly concentrated in the Uptown and French Quarter area, are off by 64 percent compared to last year, he says. "I think this is just [indicative] of the times," he says. "Our condo market has really become a big second-home market, and that second-home market really hasn't come back to what it was."

  National figures bear out his statement. The 2009 National Association of Realtors Investment and Vacation Home Buyers Survey notes that sales of vacation homes dropped 30.8 percent last year, while investment-home sales fell 17.2 percent. The real estate association also notes that national condo and co-op sales have dropped by 8.9 percent since 2008.

  Because more people are quick to sign a rental lease, area condo sales haven't seen the boost experienced in previous years, Schaff says. "I think people are still just skeptical, and realizing that it's an easy in/easy out on the lease," he says. "As I've advised people, unless they are willing to make a three-plus-year commitment, leasing is probably a better option for them."

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