The housing market is cooling throughout the country, including in New Orleans. Buyers are backing out because of the high-interest rates. When someone talks about New Orleans, the odds are equally good that it will conjure memories of Cajun food and Mardi Gras as Hurricane Katrina. The hurricane’s aftermath has come and gone, and while many left the city, the fact remains that New Orleans is still here.
Looking ahead, the future market outlook for New Orleans remains promising, albeit with some fluctuations. While the current market conditions favor neither buyers nor sellers overwhelmingly, the relatively affordable prices and moderate competition make it an attractive option for both parties.
New Orleans, a vibrant and culturally rich city located in Louisiana, has been an attractive destination for many people seeking to buy a home. With its lively music scene, delicious cuisine, and charming architecture, New Orleans offers a unique living experience. However, as with any housing market, it's essential to stay informed about the trends and prices to make an informed decision. Let us take a closer look at the current state of the New Orleans housing market, including prices, trends, and analysis.
New Orleans Housing Market Trends in 2024
According to Redfin, in February 2024, the New Orleans housing market witnessed a slight decline in home prices, with a median price of $325,000, marking a 0.98% decrease compared to the previous year. Homes in the area typically spend 106 days on the market before being sold, which is an increase from 73 days in the previous year. Additionally, the number of homes sold in February dropped to 193 from 230 in the previous year.
Current Market Performance
Compared to the national average, the median sale price in New Orleans is 22% lower, indicating a relatively affordable housing market. On average, homes in the area sell for about 5% below the list price and typically go pending in 102 days. While multiple offers are rare, hot homes have the potential to sell for around list price and go pending in approximately 48 days.
The sale-to-list price ratio stands at 94.4%, showing a slight decrease of 0.92 points year-over-year. Moreover, 8.8% of homes are sold above the list price, which is 2.5 points lower compared to the previous year. Meanwhile, 20.2% of homes experience price drops, reflecting a decrease of 0.43 points year-over-year.
Market Competitiveness
The New Orleans housing market is not highly competitive, with homes typically selling within 102 days and multiple offers being rare. While this may offer some advantages to buyers, it also indicates a balanced market where neither buyers nor sellers hold a significant advantage.
Supply and Demand Dynamics
In terms of migration and relocation trends, approximately 21% of homebuyers in New Orleans expressed interest in moving out of the area, while 79% looked to stay within the metropolitan area. Additionally, 0.43% of homebuyers from across the nation searched to move into New Orleans from outside metros.
Los Angeles homebuyers showed the highest interest in relocating to New Orleans, followed by New York and Washington. This influx of potential buyers from other metros adds to the diversity of the housing market and could impact future market trends.
Tips for Buyers in the New Orleans Housing Market
Whether you're a first-time homebuyer or looking to relocate to New Orleans, navigating the real estate market requires careful consideration. Here are some valuable tips to guide you through the buying process:
- Understand the Market Dynamics: Recognize that the New Orleans housing market is not highly competitive. This means you might have more time to make decisions, but it's essential to stay informed about pricing trends and property values.
- Consider Long-Term Value: Learn which home features add value in New Orleans. Whether it's historic charm, modern amenities, or proximity to schools and parks, understanding local preferences can help you make a wise investment.
- Explore Nearby Cities: If New Orleans doesn't fully align with your preferences, consider exploring nearby cities. Redfin's Compete Score and data on multiple offers can guide you in finding a location that better suits your needs.
- Be Mindful of Migration Trends: Understanding migration patterns can impact your buying decision. Whether you're moving in or staying within the metropolitan area, knowing where people are coming from and going to can provide valuable context.
New Orleans Housing Market Forecast for 2024 and 2025
According to Zillow, the average home value in New Orleans stands at $241,369, reflecting a 7.1% decrease over the past year. Properties typically remain pending for an average of 70 days. As of February 29, 2024, the city boasts 1,933 homes available for sale, with 296 new listings added during the same period.
The median sale to list ratio as of January 31, 2024, stands at 0.957, while the median sale price is $283,167, and the median list price is $347,667. In terms of pricing dynamics, 6.7% of sales occurred above the list price, whereas 81.2% of sales transpired below the list price during January 31, 2024.
Understanding the New Orleans MSA Housing Market Forecast
The New Orleans Metropolitan Statistical Area (MSA), encompassing various parishes within Louisiana, including Orleans, Jefferson, and St. Tammany, presents a crucial segment of the state's real estate landscape. With $241,369 as the average home value, this MSA provides a diverse array of housing options, catering to a broad spectrum of residents.
The forecast for the New Orleans MSA, as projected by Zillow, anticipates a marginal decline in housing prices, with a projected change of -0.3% by May 31, 2024, followed by a more substantial drop of -4.6% by February 28, 2025.
Is New Orleans a Buyer's or Seller's Housing Market?
Assessing whether the New Orleans housing market favors buyers or sellers entails scrutinizing various factors, including inventory levels, pricing trends, and market forecasts. With 1,933 homes listed for sale and 296 new listings as of February 29, 2024, buyers have a reasonably diverse selection to choose from. Additionally, the median sale price of $283,167 and the median list price of $347,667 indicate a range of options across different price points. However, the forecasted decline in housing prices by -0.3% by May 31, 2024, and a further decrease of -4.6% by February 28, 2025, suggests a shift towards a buyer's market in the foreseeable future.
Are Home Prices Dropping in New Orleans?
The data from Zillow indicates a 7.1% decrease in the average home value in New Orleans over the past year. Furthermore, the forecast anticipates a continued decline in housing prices, with a projected change of -0.3% by May 31, 2024, and a more significant drop of -4.6% by February 28, 2025. These trends suggest a downward trajectory in home prices, potentially impacting sellers and investors in the market.
Will the New Orleans Housing Market Crash?
While forecasts predict a decline in housing prices within the New Orleans market, it's essential to distinguish between a market correction and a full-fledged crash. The projected decreases of -0.3% and -4.6% by May 31, 2024, and February 28, 2025, respectively, indicate a corrective phase rather than an impending crash. Factors such as economic conditions, employment rates, and government policies will play significant roles in determining the market's stability in the long term.
Is Now a Good Time to Buy a House?
For prospective homebuyers contemplating whether now is the opportune moment to enter the New Orleans housing market, several factors come into play. With declining home prices on the horizon, coupled with relatively low mortgage rates, purchasing power may increase in the near future. However, buyers should conduct thorough research, consider their financial stability, and assess their long-term housing needs before making a decision. Additionally, consulting with real estate professionals can provide valuable insights tailored to individual circumstances, aiding in making informed choices amidst market fluctuations.
New Orleans Real Estate Investment Overview
If you are looking at buying a house in New Orleans as a potential investment opportunity, you must read it till the end. Investing in real estate is touted as a great way to become wealthy. Is New Orleans rental property good for investment? Planning to invest in the New Orleans real estate market? Many real estate investors have asked themselves if buying a property in New Orleans is a good investment. You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
As per the data from the real estate company called Neigborhoodscout.com, with a population of 383,997, 153,819 houses or apartments, and a median home price of $301,010, New Orleans real estate is some of the most expensive in Louisiana, though New Orleans home values are not among the most expensive in the United States. Single-family detached homes are the single most common housing type in New Orleans, accounting for 45.0% of the city's housing units.
Other types of housing that are prevalent in New Orleans include duplexes, homes converted to apartments or other small apartment buildings ( 24.1%), large apartment complexes or high-rise apartments ( 20.3%), and a few row houses and other attached homes (10.2%). People in New Orleans primarily live in small single-family detached homes. We have already discussed the New Orleans housing market forecast for answers on why to put resources into this sizzling market. Here are some of the reasons to invest in New Orleans real estate for the long term.
The Diverse Economy
New Orleans has much more than tourism to fuel its economy. It is a major port. It is the commercial and economic hub for the Gulf Coast, the home to hospitals and schools. The Gulf of Mexico oil and gas industry has a strong presence there. Tourism, though, is a major contributor to the local economy. Tourism accounts for about two-fifths of their tax revenues.
The Sheer Demand for Rental Properties
New Orleans has a mixture of owner-occupied and renter-occupied housing. One of the lasting effects of Hurricane Katrina was the destruction of affordable properties in the New Orleans real estate market because they sat in the flood plain. Many who owned their homes had to move because rebuilding in below-sea-level areas was not permitted. Some left the area altogether, though others returned within a year and Hispanic immigrants working in the tourism industry have filled in the gap. This has resulted in high demand for New Orleans rental properties.
The military and government contractors also contribute to the demand for New Orleans rental properties. For example, the Navy’s SPAWAR Systems Command is located in Gentilly. There is a Naval Air Station Joint Reserve Base in New Orleans. The marine force federal reserves are in nearby Algiers. Then there is NASA’s rocket manufacturing facility in New Orleans run by Lockheed Martin. Note that Louisiana offers more protection for military tenants than average, such as letting them terminate the lease without penalty if government-supplied quarters become available or if they’re ordered to move into the barracks.
New Orleans has been one of the largest cities in the United States and the largest in the region for literally 200 years. It is home to Tulane University, Loyola University New Orleans, the University of New Orleans, Xavier University of Louisiana, Southern University at New Orleans, Dillard University, the University of Holy Cross, the Notre Dame Seminary, New Orleans Baptist Theological Seminary, Herzing College and several smaller schools. This means you can own multiple New Orleans rental properties, each catering to a different school. You can essentially diversify your portfolio while catering to college students.
The Short-Term Rental Opportunity
New Orleans had almost 18 million people visit in 2017. This creates significant demand for hotel space, though many choose to stay in New Orleans rental properties instead. What matters to investors considering the New Orleans real estate market is the fact that the city passed laws legalizing and regulating short-term rentals. You do have to secure a city license, go through inspections, and meet zoning restrictions. However, this is far better than the cities that have made it almost impossible to buy the property and turn it into short-term rental properties.
Airbnb was legalized in the New Orleans real estate market in 2016 and it's been growing quite well since then. Therefore, you can choose to invest in Airbnb rentals in New Orleans and earn a steady rental income. The upfront cost of running an Airbnb business is not much as you do not need to own a rental property. However, if you want, you can buy a property in New Orleans for an Airbnb investment. Unlike big cities like New York, the regulations on short-term rentals in New Orleans are not very tight, though there is some criticism from opponents about the leniency of these laws.
The Economics Driving Demand for Rentals
There are a number of factors driving demand for rentals in the New Orleans real estate market. The destruction of a fraction of the New Orleans housing market made the value of everything livable much higher. The flight of many residents did not hurt real estate prices much, because it paralleled the decreased number of homes. Rebuilding has occurred, with many new properties built in the suburbs away from the water. The influx of Hispanics and local kids coming for college and staying to work prevented wages from skyrocketing. In fact, they have stagnated. This keeps many people renting who would otherwise buy homes in the New Orleans housing market. This is why rents hit almost a thousand dollars a month in 2017.
The Landlord-Friendly Jurisdiction
If you are considering buying New Orleans rental properties, one of the next questions is how landlord-friendly the jurisdiction is. High return on investment only happens if tenants pay the rent, and that depends on the ability to quickly evict those who do not pay. If you have to go through a long, expensive legal process to kick out someone who sells drugs, intentionally damages the property, or disrupts the neighborhood, you do not want to invest there.
Fortunately, owners of New Orleans rental properties have the law on their side. The South in general is landlord-friendly, though individual cities can toughen up their laws to favor tenants. New Orleans has gone the other way, protecting landlords. Note that Louisiana’s French flavor means that the state has a number of legal quirks, so always work with an attorney to draft a lease agreement.
The Affordable Real Estate
The typical home price in the New Orleans housing market is 350K dollars. That alone makes it affordable compared to other large cities. One of the unique features of New Orleans is how many older homes it has. This does not just create a distinct architectural look and cultural atmosphere. It means that there are many older homes for sale. For example, in Orleans Parish, roughly two-fifths of all homes were built before the 1950s. These homes may be harder to maintain, but they also tend to be affordable and in walkable communities that newer residents desire. It also opens the door to investors buying homes in dire need of repair at a discount, fixing it, and then renting it out.
The Impact of Geography
One of the biggest factors in the New Orleans real estate market is geography. The city was built as a port because it sits on the mouth of the Mississippi River where it meets the Gulf of Mexico. On top of this are myriad lakes, sinking mud islands, and other uncertain ground where you cannot build. This means that a large part of the metro area is off-limits to development.
They simply cannot expand the housing market in New Orleans in several directions. Then there are the protected wetlands near city that you cannot build on. Geography literally constrains growth in the New Orleans housing market, and laws to protect the character of the city limit the ability to build skyscrapers and other high-density development. This protects the value of homes in the New Orleans real estate market.
Here are some of the best neighborhoods in New Orleans to invest in real estate because they have the highest real estate appreciation rates since 2000 (List by Neigborhoodscout.com).
- Bywater East
- St. Roch Southeast
- St. Claude Southeast
- Bywater
- St. Claude
- St. Roch South
- Holy Cross South
- St. Thomas Development
- St. Thomas Development West
- Coliseum Square
References
Market Data, Trends and Statistics
https://www.zillow.com/neworleans-la/home-values
https://www.neighborhoodscout.com/la/new-orleans/real-estate
https://www.redfin.com/city/14233/LA/New-Orleans/housing-market
https://www.realtor.com/realestateandhomes-search/New-Orleans_LA/overview
Military Market
https://en.wikipedia.org/wiki/New_Orleans#Business
https://www.avail.co/education/laws/louisiana-landlord-tenant-law
Landlord friendly
https://www.theadvocate.com/gambit/new_orleans/news/article_ea6cfdac-fc09-5dae-8480-4768a93ab6b5.html
Demand for rentals
https://www.theadvocate.com/gambit/new_orleans/news/article_ea6cfdac-fc09-5dae-8480-4768a93ab6b5.html
https://www.bigeasymagazine.com/2019/02/11/pushed-out-the-changing-demographics-of-new-orleans
Short term rentals
https://www.mashvisor.com/blog/new-orleans-real-estate-market-airbnb
Affordable real estate
https://www.bigeasymagazine.com/2019/02/11/pushed-out-the-changing-demographics-of-new-orleans