Still a Buyers' Market

So far, New Orleans has avoided the rash of foreclosures that has plagued the rest of the country, and the real estate market is still healthy.



Among the nation's current ills " like soaring gas prices and a plummeting economy " the one hitting closest to home for most Americans is the ubiquity of foreclosures.

While mortgage holders across the country are filing foreclosures in unprecedented numbers, statistics are proving Louisiana to be relatively insulated from this trend. In its June report, Realty Trac (, an online database of foreclosures and bank-owned properties, ranked Louisiana 43rd in the number of foreclosure properties. Money magazine ranked the state sixth in its May list of top 10 fastest-growing real estate markets.

It seems the housing plague has passed over the state, yet male realtors from around New Orleans hold differing theories about the matter as well as about what buyers are looking for, the current status of the real estate business and the residual effects of Hurricane Katrina on the housing market.

The 2005 hurricane still remains a big factor in real estate transactions, especially in the realm of home foreclosures " or the lack thereof. Real estate agent G. Geoffrey Lutz thinks post-Katrina aid is what is shielding local homeowners from the full force of the foreclosure crisis.

'We're doing pretty well," he says. 'We've been insulated from national effects because of recovery cash influx."

Nicolas Nesbit of Nesbit Clesi Realtors feels Katrina has played the opposite role in home foreclosures. He says foreclosures in Louisiana seem to result from unemployment after the storm, but adds that his firm, which Nesbit operates along with his brother and stepbrother, has fared well amid local housing strains.

'It's not really (a problem) for us," he says. 'We do a lot of corporate rentals " it has really saved our company. We've been able to stay afloat."

Michael Zarou of Latter & Blum says that while current statistics rank the state low in the number of foreclosures, he believes the effects of Katrina on this area are yet to be seen. He attributes the current small foreclosure numbers to longer loan-payment grace periods granted to homeowners after the storm.

'When the time (on grace periods) runs out, we might see some more foreclosures," he says. 'The statistics say that we're not (being affected), but I think it's starting to happen."

With foreclosures potentially on the rise in the state, some may ask if buying a home right now instead of renting is worth the cost " and the oftentimes difficult bank restrictions.

'The mortgage market seems increasingly stricter and more rigid," Zarou says. 'Two years ago " even a year ago " it might not have been much of an issue. Companies weren't quite as cautious."

Nesbit agrees, saying, 'I've seen a few places where you can get zero percent down. But most people can't afford it, so they're just renting. And banks are not wanting to lend anymore. It wasn't as difficult before the storm (to get a loan)."

Despite the difficulties, Nesbit says owning a home is still a good investment if it is financially feasible. 'Rental rates compared to mortgage are usually about the same," he says. 'If you have the money to put down on a house, sometimes it could be lower. That's what's so sad " people don't realize they're throwing their money away by renting when they could be putting it toward something."

Even with the obstacles impeding potential homeowners, people are still looking for houses. These real estate agents have identified some common needs among their clients.

'I would say that buyers are looking for good deals " very good deals " a lot because of foreclosures," Nesbit says, adding that buyers may benefit from seeking long-term options. 'Things are going to change in one to two years. If they can hold on for that long, the market's going to go up."

Zarou says for buyers, it's really about location, location, location.

'I think perception of safety in a neighborhood is on top of the list (for buyers)," he says. 'I sell to a lot of young couples who want to have children, and it is very important that the area they move to is safe."

He has even seen the location of the house be more important to buyers than the house itself.

'A lot of my buyers are more flexible in the kind of the house they'll buy than (they are with) the neighborhood," Zarou says. 'People are open to doing repair work and making improvements if they get to live in the neighborhood they want."

As for the housing market in general, these agents agree that it has been pretty slow, but nothing to be pessimistic about.

'It's a little slower than usual, but not nearly so bad as other parts of the country," says Lutz, who adds that sales of his French Quarter properties are surpassing records set in the past. 'It's on track to be a pretty good year."

Nearly three years after Hurricane Katrina, the storm's effects still haunt the city's housing market, says Michael Zarou, who manages mainly Uptown properties.

'There's a stigma in the areas that were flooded, preventing people from buying in those areas," he says. 'People will specifically say, "I don't want anything that was flooded.' That has affected those areas, and they will not bring in the same dollars (as) the other areas."

The storm has made some people reticent to invest in a home in New Orleans, he says, but certainly not everybody.

'Some people will say, "I really want to buy the house, but we're not too sure about the weather in New Orleans, the flooding,'" Zarou says. 'I'm just praying for a good hurricane season with a good summer and no evacuations for the third year in a row. (Katrina) is still with us " probably will be for a while " but if we get through another season, it'll help us; we'll have a good fall."

Zarou also says he has seen more out-of-towners looking to buy homes in New Orleans, indicating there is a growing interest in the city.

'People are interested in having a second home to stay in while they are visiting New Orleans, retiring here or moving here full time," he says. 'There's a lot of people who want to have a place here.

'Because I'm Uptown, I see professors coming to teach at the universities who, before they even move here, want to buy a house and are ready to invest in New Orleans and in a property here. It's a very encouraging thing that people who are just moving here are willing to buy a house."

While it seems that as of now, the Louisiana housing market has fared well despite foreclosures nationwide, local buyers still face difficulties " either because of Katrina or because of an economic crunch. But like Zarou, Nesbit sees New Orleans and its real estate market rebounding.

'The real estate market will come back if people will keep on coming back to the city," he says.

Add a comment