Homebuyers look to suburbs after years of surging prices in New Orleans

Homebuyers look to suburbs after years of surging prices in New Orleans
Homebuyers look to suburbs after years of surging prices in

For New Orleans-area homebuyers, the suburbs are calling.

Years of surging prices for single-family homes in Orleans Parish have prompted some potential buyers to look for more affordable options in neighboring parishes, according to real estate professionals and updated data on the state of the metro area’s housing market.

In the first six months of 2019, prices held flat or in some cases fell in what were recently the city’s highest-demand neighborhoods, including parts of Uptown, the Central Business District, Mid-City and downriver areas like Bywater.

Instead, the biggest jumps came in Marrero and other parts of Jefferson Parish, as well as in St. Bernard Parish.

Across the eight-parish metro area — which includes Tangipahoa Parish — sales prices for single-family homes rose 2.4% in the first half of the year, according to data compiled by the New Orleans Metropolitan Association of Realtors and the Gulf South Real Estate Information Network.

Adobe Stock

“There has been a lightening-up period in terms of (price) appreciation,” said real estate consultant Wade Ragas, who compiled the data. “Orleans Parish had been taking all the air out of the room, but about a year ago it started to shift and suburban parishes started to have more increases.”

Orleans Parish saw housing prices remain flat in the first half of 2019, while prices in Jefferson Parish rose 4.7%. St. Bernard saw a jump of nearly 11%. St. Tammany Parish prices rose by 2.1%, St. Charles Parish prices rose by 6.2%, St. John the Baptist Parish prices rose by 2.7% and the Belle Chasse area of Plaquemines Parish saw a 5.7% increase.

Tangipahoa Parish saw a decline of 2.7%, the only parish where prices fell.

Paul Richard, an executive at Latter & Blum, said the metro housing market is showing signs that are to be expected after a long period of expansion.

“We are in the long tail of a 10-year recovery cycle,” he said, noting that the theme of last year’s annual real estate forecasting conference in New Orleans was a question: “Are we at a market peak or a new base line?”

At the time of the conference, prices in Orleans Parish were starting to stabilize, helped by the Trump Administration tax cuts that took effect at the end of 2017 and a pause in the trend toward higher interest rates.

“We’re still going up,” Richard said, “but not at the rate we were, particularly for houses priced at over half a million dollars,” which include many houses in New Orleans’ most popular neighborhoods. Average house prices in those neighborhoods are prohibitively expensive for many would-be buyers, at around $300 per square foot, Richard said.

In fact, he said, his own son and daughter ended up opting to buy houses in the Harahan area of Jefferson Parish instead of in Orleans.

The decision to look for homes in areas that haven’t witnessed recent price jumps is becoming more common.

Janine Lewis, who grew up in the Hollygrove area in Orleans Parish, moved back to the metro area five years ago after a long spell living in Georgia following Hurricane Katrina.

Having been a renter her whole life, she decided last year to finally buy a house. The West Bank was the last place she thought she’d go.

“I didn’t like the West Bank since I was little,” Lewis said. “At first I was looking in Kenner and parts of Metairie, and I didn’t mind a little fixer-upper. But when I started to look at new-builds in the West Bank, it was actually cheaper than the old houses in Metairie that I was looking at.”

House prices in her old neighborhood in Metairie, around West Napoleon and Cleary avenues, have been rising steadily in recent years. The central Metairie area that is covered by the 70001 ZIP code had house prices of $171 per square foot on average in the first six months of this year.

Average house prices in Marrero on the West Bank have risen 6.5% in the last year. Still, the average single-family house there is priced at just $107 per square foot.

Lewis ended up buying a new three-bedroom, two-bathroom home in Marrero, part of a 100-unit subdivision called Brentwood, where homes have sold for $236,900 to $247,900.

The search for affordability has been one of the themes driving sales across the metro area.

Jefferson Parish saw a higher number of house sales in the first half of the year than Orleans Parish and nearly as many as St. Tammany, which was the busiest of the eight parishes tracked by the Realtors Association.

But Jefferson’s 1,918 units sold at an average price just under $238,000, whereas in Orleans the 1,623 units sold averaged more than $350,000.

Ragas said the broad trend supporting the housing market is a boost in available jobs, with New Orleans on track this year to match last year’s 12,000 net gain in jobs.

He said the flat overall house market in Orleans Parish, where average prices were unchanged at $177 per square foot in the first half of the year, feels more like the market taking a breather than heading toward decline.

The strong gains in St. Bernard Parish were helped by big jumps in Meraux and Chalmette, which Ragas attributed to strong “river-related” industry. He pointed to logistics operations like Associated Terminals, as well as the PBF Chalmette Refinery and Domino Sugar.

But the number of sales in St. Bernard is still relatively small compared to Orleans, Jefferson and St. Tammany, as the downriver parish had just over 200 unit sales in the first half of the year, or about 3% of the metro area’s total volume.

Of course, all home buyers aren’t driven by proximity to work. Steed “Steedie” Ubas Jr. said he was born and raised in Marrero and wanted to buy his first house on home turf, even though he works as a welder for Textron in New Orleans East.

He ended up buying a house in a brand new subdivision in Marrero called Pelican Bay, which has a total of 218 units.

“I bought in Pelican Bay because it’s close enough to the city and it’s close to the swamp, to Lafitte (National Historical Park), right in the middle of everything,” Ubas said.

The three-bedroom, two-bathroom house that he bought for $190,000 was also in the price range that made sense for his family of four, which includes his girlfriend Traci Angelona and their two boys, ages 1 and 3.

The trend in the Marrero area is typical of the suburban push, and the buyers run the gamut, according to Nell Francipane, a sales representative for DSLD Homes, which built both Brentwood and Pelican Bay.

“Some are single and in their 20s, others in their 30s, 40s, 50s,” Francipane said. “We have had first-time home buyers and some might be on their fourth property. There are teachers, nurses, firemen, police officers, retirees, empty-nesters. Really, from all walks of life.”

The sweet spot across the Greater New Orleans area is in the $200,000-$400,000 range. Brokers say sales are going particularly well in the golf communities in St. Tammany, such as around the Money Hill Golf & Country Club.

In that part of the parish, price gains for the first half of this year were more than 8%. Sales volume also remained strong near Covington’s Tchefuncta Country Club.

Saun Sullivan, chief executive of DSLD Homes, a large builder across the Gulf states, said that rising land costs have pushed large developers farther out from metro centers.

“One thing you’re seeing is that you’re starting to lose the first-time homebuyer in the $140,000-$150,000 range,” he said. “You’re starting to see that go to Tangipahoa Parish.”

Prices in Tangipahoa on average fell over the period covered, but they were up 6.5% in the area around the Walmart Distribution Center and held up well in the parts of the parish that are close to the Southeastern Louisiana University campus.

Indeed, within all the parishes, the broad price trends can mask big variations even within individual ZIP codes.

In Orleans Parish, for example, the 70130 area that includes the Lower Garden District, the CBD and part of the French Quarter is the priciest at $286 per square foot, even after it dropped more than 4% in the past year.

The decline reflects both a cooling in the priciest parts of the Warehouse District and increased sales of lower-priced rehabilitated houses in the Lower Garden District.

Ragas noted that the theme of the upcoming New Orleans real estate forecasting symposium in October is: “Dynamics of a Changing Economy.”

“There are still a whole series of things to generate jobs that haven’t kicked in yet,” Ragas said. These include the redevelopment of the old Avondale Shipyard, where the new owners have only started to hire for the 2,000 jobs promised.

Susan Ann Bourgeois, a real estate agent who specializes in the West Bank, is also upbeat about the outlook for her suburban market.

“I think we’re in a great market. I don’t see anything like the recession they’re talking about,” she said. “I don’t see it happening — as long as they keep interest rates low.”

Tribune Content Agency

Source link