Although home prices continued to climb in the second half of 2016, the rate of growth has started to slow even further from the first half of 2016 in Orleans Parish, according to a new report.
New Orleans CityBusiness file photo
Meanwhile, the housing stock in suburban parishes in the metro area has seen its largest gains in years.
That’s according to data released this month by local real estate consultant Wade Ragas, who looked at numbers from the New Orleans Metropolitan Association of Realtors and Gulf South Real Estate Information Network. The figures exclude sales of multi-family homes and condos.
New Orleans home prices increased from $172 to $177 per square foot, or 2.6 percent, for the final six months of 2016. That’s compared with an increase of $151 to $172 per square foot, or 13.9 percent, in 2015.
Latter & Blum president Richard Haase, who saw his company’s revenue increase from $106.9 million to $112.3 million in the last year, said the slower rate of appreciation represents a much more sustainable level of growth than the record increases the city witnessed in the last four years. Homes in the bellwether markets of Uptown, Garden District, the Marigny, Bywater and the lakefront continue to be at a premium, forcing buyers to consider other options.
This lack of supply has outpriced many potential homeowners from these neighborhoods and shuttled that demand to the outlying suburbs – increasing the prices there, according to Haase.
Two parishes in the metro area were the biggest beneficiaries of the migration. Jefferson Parish home prices increased from $107 to $116 per square foot, or 8.2 percent, and St. Bernard Parish home prices swelled from $79 to $90 per square foot, or 13.5 percent.
The area around Lafreniere Park in Metairie saw the biggest jumps in terms of sales volume and appreciation, with 252 units sold in 2016 and an increase of $107 to $117 per square foot, or 9.7 percent, from the previous year.
“Homebuyers are realizing they can get more house for their money in these suburban parishes,” Haase said.
Haase said another reason for the surge in prices in St. Bernard Parish is the “natural and ongoing recovery from Hurricane Katrina.” He added that the addition of New Orleans East Hospital as well as retail and other critical infrastructure has contributed to the gains in the area.
One thing that could slow the growth is predicted interest rate hikes from the Federal Reserve in 2017. Glenn Gardner, president of operations for Gardner Realtors, said increases have already started to occur.
Gardner said the interest rate for a 30-year fixed mortgage six months ago was 4.375 percent. Today, the rate is 4.625 percent. The gradual increases will create a sense of urgency among buyers and encourage them to get off the sidelines, Gardner said.
“Buyers will realize they won’t be able to get these bargain-basement rates anymore,” he said. “The sale is about to be over, so to speak.”
Another trend the local real estate market is embracing is virtual online tours for their properties. Craig Mirambell, owner of Mirambell Realty, said his company implemented the method three years ago and has cut down on the number of actual open houses.
“I think it is neat (that) as we promote, we are always holding an open house,” he said. “Don’t wait until Sunday. See it now.”
Haase said Latter & Blum offers both the online virtual tour as well as a slideshow for all its properties. Consumers are 600 times more likely to click through the photos in a slideshow than to sit through a 3-minute virtual open house presentation, he said, citing statistics he recently saw.
“Many customers feel that the slideshow is the quickest way to view a house,” he said. “There are also issues with internet speed.”