By David Jones

Published: Apr. 3, 2024 at 10:43 PM CDT|Updated: 17 hours ago

NEW ORLEANS (WVUE) - Some realtors and real estate analysts said the increasing cost of home insurance is driving first-time homebuyers out of the New Orleans market, but steadily increasing home prices have led to greater equity for current homeowners.

But that equity is being wiped out by the high costs of home insurance, said local real estate analyst Arthur Sterbcow.

“While there are a lot of people who are angered, who refinanced their homes at two percent, three percent, even four percent, they’re now seeing a lot of those savings disappear because their insurance premiums have risen so high that it’s taken that disposable income away from them,” Sterbcow said.

Sterbcow said insurance costs are crucial for the vast majority of homebuyers, particularly first-time homebuyers.

“The biggest impact we’re seeing locally, as opposed to the rest of the country, has been insurance rates,” he said. “The number of insurance companies that have just left Louisiana has been dramatic and significant.”

“Longtime insurers with the same families have basically said, ‘We’re just not going to insure you anymore.’ No claims, nothing, and there’s no amount of rate increase that they’re willing to accept. They just don’t want to write anymore policies; they don’t want any more exposure.”

According to data from the New Orleans Metropolitan Association of Realtors, average home prices are up nearly eight percent from February 2024 compared to February 2023.

The average cost of a home in the Greater New Orleans market in February was $335,492.

Meanwhile, the number of days homes are sitting on the market before sale is also up.

In February 2023, the average number of days was 53, compared to 72 this February, a nearly 36 percent increase.

“Insurance is probably our biggest factor that’s hindering sales,” said Craig Mirambell, President of Mirambell Realty and Board President for NOMAR. “Insurance prices are still the sticker shock. What we might used to see at three-to-five-thousand-dollar premiums are now 10-thousand-dollar premiums, and it’s really slowing down the progress that we’re making here in New Orleans.”

Mirambell said realtors across the region have been seeing an uptick in sales post-Mardi Gras, although that data is not yet reflected in NOMAR reporting.

“End of last year, things really started slowing down for us. We just kind of assumed, beginning of this year after Mardi Gras, that we would start seeing those numbers kind of climbing again, and sure enough that’s what’s happening,” he said. “Soon as Mardi Gras stopped, we started getting all sorts of calls again.”

But Sterbcow said those first-time homebuyers, typically younger people with less disposable income, are the cornerstone of the real estate market.

And with insurance prices as high as they are in South Louisiana, he said first-time homebuyers are becoming rarer and rarer in the New Orleans area.

“We’re certainly seeing some home sales, some sellers reducing their properties as the new buyers get the new insurance rates and go, ‘Wait a minute, that’s almost twice what I was paying as a seller,’” Sterbcow said. “And they’re going, ‘Yeah, but we didn’t factor that in.’”

The measure of affordability, called the Housing Affordability Index, also decreased from February 2023 to February 2024 by more than eight percent.

“We’re seeing some people say, ‘Ok, buying’s not for me right now. I’m going to go back to rent.’ The thing is, the rental market is really high too. So they’re not in a position that’s enviable for anyone,” Mirambell said.

Sterbcow said homes which underwent recent renovations are selling at a greater clip, as well as homes with roofs less than five years old.

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