New Orleans' booming real estate market is showing signs of cooling.
After years of steady price increases, sales of single-family homes in Orleans Parish in average-or-better condition climbed less than 3 percent in the last half of 2016, compared with a year earlier, according to figures released Tuesday by a local real estate trade association.
That modest bump — about $4.50 per square foot — came a year after home prices posted a nearly 14 percent increase from 2014 to 2015, as pent-up demand and a dearth of available units in many of the city's most sought-after neighborhoods propped up the local real estate market.
For the last half of 2016, the average sale price for a single-family home in New Orleans in average or better condition was roughly $353,400, or about $177 per square foot.
Across the region, average home sale prices were up 5 percent overall.
The latest analysis, compiled by real estate consultant Wade Ragas, is based on figures from the New Orleans Metropolitan Association of Realtors and the Gulf South Real Estate Information Network. The data do not include sales of multifamily homes, townhouses, condominiums or vacant lots.
"Prices are still rising in Orleans. They're just slowing down and rising slower than the suburbs, but they're still going up," Ragas said.
In New Orleans, homes in the 70130 ZIP code — which includes parts of the Irish Channel, Garden District, Central Business District and French Quarter — saw the biggest year-over-year jump in average sale price, climbing 32 percent, to almost $319 per square foot.
The next-largest gain was in the 70128 ZIP code, which includes part of New Orleans East; sale prices there rose about 19 percent, to almost $85 per square foot. A dozen years after Hurricane Katrina's devastation, the East is enjoying an economic revival, attracting new retail and other services, such as the New Orleans East Hospital, which opened in 2014.
Overall, New Orleans' 70122 ZIP code, which includes Gentilly, had the most home sales —169 properties, which averaged about $138 per square foot, good for a 12 percent jump from the same period a year earlier.
Meanwhile, the number of single-family homes in need of renovation sold citywide in the second half of 2016 fell roughly 19 percent from a year earlier, while their average price per square foot climbed nearly 25 percent — a signal that the city's once-plentiful supply of storm-damaged homes is evaporating, and most of the more easily renovated ones have already been scooped off the market.
"We're simply running out of housing that investors want to acquire and renovate," Ragas said.
Elsewhere in the metro area, single-family home sale prices rose by 13.5 percent in St. Bernard Parish, to $90 per square foot; 10.7 percent in St. John the Baptist Parish, to $88 per square foot; 8.2 percent in Jefferson Parish, to $116 per square foot; 7.3 percent in Plaquemines Parish, to $130 per square foot; 2.9 percent in St. Tammany Parish, to $117 per square foot; and 1.5 percent in Tangipahoa Parish, to $93 per square foot.
Prices stayed flat in St. Charles Parish, at $108 per square foot.
St. Bernard has enjoyed three years of rising home prices, which Ragas views as "an encouraging sign of growing consumer confidence." Prices for average-or-better homes there hit $90 per square foot in the second half of 2016, compared with $79 in 2015.
Amid the state's burgeoning industrial revival, suburban parishes had begun attracting new buyers, but the fall in oil prices that started in mid-2014 has slowed job growth and likely stunted sales figures, Ragas said.
That's particularly true in St. Charles Parish. The Ormond neighborhood in the 70047 ZIP code saw about a 1.2 percent jump, while the Luling area (70070) had a 1 percent average price increase, but the parish as a whole saw no rise from the second half of 2015.
In Jefferson, the average sale price for a single-family home was about $209,700. In the 70002 ZIP code, which includes parts of Metairie, sale prices rose about 11 percent, to $144 per square foot. In the priciest ZIP code, 70005, which includes parts of Old Metairie, the average sale price was about $491,300, or nearly $198 per square foot.
As the five-year anniversary of Hurricane Isaac approaches, home sale prices in St. John Parish have bounced back. Prices in the LaPlace area — in the 70068 ZIP code — rose about 11 percent to $90 per square foot, which helped buoy the rest of the parish. The average home sale price parishwide in late 2016 was about $162,600, up from $141,200 a year earlier.
Sales volume in St. John is also back to pre-Isaac levels, Ragas said.
Looking ahead, Ragas is keeping an eye on several factors to get a feel for where the market is headed, including whether rebounding oil prices can help the metro area stem the tide of recent job losses — about 4,000 jobs disappeared last year in the New Orleans area — as well as the pace at which the Federal Reserve raises the benchmark interest rate, which could hike costs for some mortgage borrowers.
In turn, that could cause some homeowners who were considering upgrading to a bigger property to instead hold onto their present property so they don't lose their lower mortgage rate. That, in turn, would have a ripple effect, with fewer properties hitting the market.
But Rick Haase, president of the New Orleans-based Latter & Blum company, said the local real estate market is strong enough to absorb the three interest rate hikes that the Fed is widely expected to approve in 2017.
"The issue is how fast it goes there," Haase said. "We can handle some incremental steps for sure, but the rate at which they go up has to be very, very slow."