It has been a buyers' market in New Orleans for some time following Hurricane Katrina, but prices have continued to go down even lower in recent months.
Keller Williams Realty's Polly Eagan, who specializes in the Uptown market, says it is an encouraging time to purchase property in New Orleans. 'There are a lot of great opportunities for buyers right now," she says. 'It is a time where a young couple can purchase a property they could not have afforded before."
In some areas of the city, such as eastern New Orleans, the real estate market is hot and new subdivisions are sprouting up rapidly, while in Metairie and Lakeview, homes are selling slowly.
Selling a home in a buyers market can be extremely challenging. There are so many homes to choose from that consumers can afford to be picky. On the other hand, sellers are reducing prices at surprising rates in order to attract the increasingly valuable buyer in a tough market. They also are offering attractive incentives like decorating allowances and a years' worth of homeowners insurance.
'There are few buyers," says Margaret Stewart of Latter & Blum Realtors. 'However, they are coming. New Orleans is going to be fine, it's just going to take a while." Stewart, who does the majority of her business in the Uptown market, explains that mint-condition and special houses are selling at top dollar and that they are few and far between. She advises sellers to clean up their property and go the extra mile to attract buyers.
'Houses needing work have to be a good deal for the buyer to even consider purchasing," she says. 'When I say work, I mean updating kitchens and bathrooms, not so much structural issues. Then, once you have a contract on your house, you should be prepared to address the hidden deficiencies and repair them or credit money at the act of sale. It is a buyers' market and prices are coming down to reflect this."
Stewart says pricing of a home these days is based less on comparable sales and more on competition with other sellers. As of Oct. 19, she says, there were 509 active listings in the Uptown market. Just over 130 of these properties sold within 90 days of their listing. The odds of a home in this market selling before 90 days is just 30 percent, she says.
In other areas of the city, including Metairie and Old Metairie, the market is still slow as a result of people moving away and settling in other cities after Hurricane Katrina.
'Nothing is moving in Metairie," says Carol Riggio of ReMax, who lives in Metairie but sells properties in eastern New Orleans. 'Mandeville and Metairie are dying. It's pretty scary." She says a lot of young people had purchased homes there beyond their means (before the hurricane). 'Those people are losing their homes," she says. 'They can't get loans and they're having a lot of problems."
'New Orleans East is a different story," Riggio says, adding that two new subdivisions with roughly 200 homes each are being built, which indicates an increased demand in that market. Many new residents are transplants from the Lower Ninth Ward, she says.
'I'm doing fabulous," Riggio says. 'New Orleans East is coming around (well). I'm elated." Although the $150,000-$190,000 market in which she deals is not as 'hard" a market as other areas of the city, Riggio says she is selling more properties because many new homes are being constructed and insurance rates are three times as cheap in eastern New Orleans as other markets.
Keller Williams Realtors' Donna Rodrigue, a 10-year veteran of the industry who specializes in the Lakeview area, says properties in her part of town are selling, but slowly.
'A lot of the properties I am working with are right where the levee breached (during Hurricane Katrina)," she says. 'I am seeing a lot of young, single women and young couples moving in using "sweat equity' (the value added to real estate by owners who make improvements by their own toil) to afford their new homes."
She says there is still a lot of work to be done in rebuilding the vacated neighborhoods of Lakeview. 'There are still problems with taxes and insurance in Lakeview," Rodrigue says. 'This is a middle upper- to upper-class neighborhood and after two years, there are still no grocery stores or dry cleaners for residents to use. The only gas station closes at 6 p.m."
Despite the work that lies ahead, Rodrigue says she considers the real estate market in New Orleans to be steady.
'The market is slow, but things are moving," she says. 'Lakeview is moving, and I've had three recent sales in Marrero, six sales of renovated properties in Lakeview and a few in Metairie."
Rodrigue says she is curious to see what will happen with Gov. Kathleen Blanco's Road Home program, which was designed to help Louisiana residents affected by Hurricanes Rita or Katrina get back into their homes. According to the Road Home Web site (http://www.road2la.org), eligible homeowners who suffered losses in the hurricanes may receive up to $150,000 in compensation from the government to get them back into their homes. Road Home also provides assistance to homeowners who are rebuilding, relocating " or still trying to decide.
'I am wondering what will happen when [the government] releases the money," says Rodrigue. 'Will there be enough funds to help most people, because I know there are a ton of applications (almost 186,000 as of Oct. 15)."
Rodrigue says a tragedy such as Katrina, although devastating for everyone, tends to improve the real estate market. 'Overall, I have had one of my best years in real estate this year," she says.
In the current New Orleans real estate market, sellers are offering lower prices and more incentives, which enables buyers to be more selective in where they choose to live. However, the process of purchasing a house in New Orleans is still a daunting task, especially for people who move here from other states.
Bruce and Mary Smith, a married couple in their fifties, recently moved to New Orleans from Raleigh, N.C., after Bruce took a job here. When asked what positive things he has to say about his experience of purchasing a house in New Orleans, he jokes, 'I'm positive that there is nothing good about it!" His wife Mary says some of the problems they ran into include difficulty securing reasonable insurance rates and worrying about personal safety.
'For people coming from elsewhere, the number one issue is homeowners insurance," Mary says. 'The rates are 10 to 12 times more expensive than where we came from. Oddly enough, flooding isn't even the big deal. Finding an insurance company that will insure your home if it is worth anything less than $750,000 or is within 3 miles of Lake Pontchartrain is very difficult. A lot of times insurance companies want you to transfer everything, such as cars, over to them, too.
'We were also concerned about personal safety. The perception is that New Orleans has a very high murder rate, so gated communities are popular. But, are they really as safe as you think? We're [temporarily] staying in an apartment complex in River Ridge, and the gates here are broken quite frequently."
After an extensive search, the Smiths finally chose a home in Destrehan, located along the Mississippi River near New Orleans. The seller offered a one-year homeowner warranty (covering air conditioners, furnaces, dishwashers, stoves, ovens and water heaters) and agreed to make improvements based on a full inspection of the home.
'Certainly there's a large number and variety of homes in the New Orleans area, but because of Katrina the number of livable homes tends to be limited to a more expensive price range," says Bruce, who cautions other buyers to be careful during their search. 'Although it's a buyers' market, you have to be patient and scrutinize any property you're looking at, taking price, insurance, taxes and flood-zone situations into consideration."