Roxana Campos stands in her dining room on Thursday, February 2, 2023 where most of her belongings are packed in boxes awaiting the moving truck that will take her and her husband to Florida. She has been trying to sell her Metairie home. (Photo by Chris Granger| The Times-Picayune| The New Orleans Advocate)
When Roxanna Campos and her husband put their 40-year-old Bucktown house on the market in January, they thought the three-bedroom brick Ranch would be a quick sell.
She had reason to be optimistic. As a local real estate agent, Campos had a front-row seat to the bidding wars and buying frenzy that pushed up home prices across the metro area by more than 25%, on average, since 2019.
But it’s been two weeks since her listing, and despite positive signals at the open house for agents and brokers, Campos hasn’t gotten a single offer.
“I would have thought we’d have multiple offers by now,” said Campos, who is selling because of an upcoming move to Florida. “If we haven’t had any movement in the next week, we might have to rethink things.”
Cooling off
Campos’ experience is not unique. Across the metro area, sellers, who spent the past two years in the catbird seat, are lowering their asking prices and making concessions to buyers as the white-hot housing market of 2020-2021 continues to cool.
According to the annual report from the Gulf South Real Estate Information Network, the volume of home sales in 2022 was down, inventory of available homes was up, and houses sat for longer on the market.
True, home prices continued to rise. The median sale price across the metro area for a single-family home in average or better condition was up 7.8% last year over the year before to nearly $277,000, and up more than 24% over 2019’s pre- pandemic price of $219,400.
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But if you factor in the nearly 7% inflation rate, those increases are not as impressive as they would have been a few years ago, when the rate of inflation was less than 2%.
Experts attribute the slowdown, as they have for months, to the combined toll of three factors: higher interest rates — which nearly doubled to more than 7% by mid-2022, from less than 4% when the year began; inflation —which was also high in 2022; and huge premium increases in property and flood insurance rates.
As they look to 2023, they’re not optimistic things will change anytime soon.
“The insurance rates are literally killing deals,” said broker Jiarra Rayford of Rayford Realty. “I had a quote for a $10,000 premium for property insurance on a 2,800-square-foot house in Metairie. We couldn’t do the deal. The buyer had to walk away from their dream house.”
Mixed data
Overall, the numbers can seem confusing because while some indicators suggest a slowing market, home sale prices in 2022 continued to rise, just not as dramatically as the 9.3% jump they experienced between 2020 and 2021.
But the overall picture shows home prices are no longer trending steadily higher as they did through much of the pandemic.
On one hand, pending sales were down 13.5% in 2022 over 2021 and closed deals were down 12.6% during the same period. Outlying areas in Plaquemines, northern St. Tammany, Tangipahoa and the River parishes saw the most significant drops in activity.
Also signaling a cooling market, the total inventory of available homes was up 68% to 3,339 from 1,987. Outlying areas had more available inventory than most neighborhoods in the city or in the heart of Metairie.
Paradoxically, however, home prices continued to rise. Overall, every parish in the 10-parish region saw the median sale price of a home increase over the year before — in many cases, by double digits — except for St. Charles Parish, which was hit hard by Hurricane Ida in 2021 and saw its median home prices decline slightly.
The biggest increase in median sale prices came in Tangipahoa, up nearly 15% and St. Tammany, up more than 11%. Orleans and Jefferson parish prices saw more modest increases of 5.8% and 5.5%, respectively, which was below the rate of inflation.
While the numbers varied from one part of the metro area to the next, real estate experts say in general, the price increases reFLect spikes from the first half of the year. As interest rate and insurance price hikes began to exert pressure on the market last summer, prices began to come down slightly or level out.
“We were still riding high in the first half of 2022,” said realtor Craig Mirambell, whose Mirambell Realty specializes in Metairie. “It really shifted mid year.”
Data indicates that modestly priced homes performed better throughout the year than pricier properties. Homes priced between $224,000-$350,000, sold more quickly than those in any other price range, spending just 32 days on average on the market.
Closing costs and creative deals
Agents say they can fell the shift in the market by the concessions that sellers are now willing to make.
“Buyers are asking for more and sellers are willing to give a little more,” Rayford said. “I wrote a contract last week where the buyer asked for closing costs. Last year that was a no no.”
Sellers and their agents are also being creative about helping buyers shoulder the cost of higher interest rates. Broker Joyce Delery, who co-owns Engels and Völker New Orleans, said she has seen some sellers offer $10,000 to help “buy down” interest rates.
“We’re also seeing them be a little more realistic about their pricing," Delery said.
Delery and others expect that adjustments in the market will even out without causing significant disruptions. They’re more concerned about the effects of skyrocketing insurance premiums, which have more than doubled for some homeowners as dozens of carriers have stopped writing policies in the state.
Campos believes insurance issues are largely to blame for the lack of offers on her house. Her insurance premiums have more than tripled to $8,600 since she and her husband bought the house in 2014.
“Homes just two blocks on the other side of the (West Esplanade) canal are much less to insure, even though we’ve never flooded,” she said. “We don’t know what’s going on and the insurance companies won’t even talk to you.”
Agents and brokers expect those pressure points to continue slowing the market in 2023. That said, they’re still seeing the occasional crazy demand for mint-condition houses in desirable neighborhoods.
“It’s not like the market is dead,” Mirambell said. “I had nine offers last week on a house in Old Metairie. Another one in New Orleans had an escalation clause for $40,000 above list price. So, houses that are updated and have a lot of appeal are still flying off the shelf.”
