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.
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. In this blog post, we'll take a closer look at the current state of the New Orleans housing market, including prices, trends, and analysis.
New Orleans Housing Market Trends
The New Orleans housing market is experiencing a notable cooling trend in 2023 after a period of rapid price appreciation in previous years. Several factors contribute to this shift, including rising interest rates, inflation, and a general economic slowdown.
According to data from Redfin, the median home price in New Orleans as of August 2023 stands at $323,000, reflecting a 5.1% decline from the previous year. Additionally, homes are now taking an average of 80 days to sell, a significant increase from the 30-day average observed last year.
Despite this cooling trend, New Orleans remains relatively affordable for potential homebuyers, with the median home price still 25% lower than the national average.
Key Trends in the New Orleans Housing Market for 2023:
- Declining Home Prices: The median home price in New Orleans has witnessed a 5.1% decrease over the past year, a trend expected to continue due to factors like rising interest rates making borrowing more expensive.
- Increased Days on Market: Homes in New Orleans are now taking an average of 80 days to sell, indicating reduced buyer demand likely influenced by rising living costs and economic uncertainties.
- Reduced Market Competition: Buyers face less competition, providing them with increased negotiation power. While beneficial for buyers, this poses challenges for sellers who may need to be more flexible with pricing and terms.
In addition to these trends, here are some other insights into the New Orleans housing market for 2023:
- The inventory of homes for sale is increasing, offering more options for buyers but intensifying competition among sellers.
- The luxury housing market shows more resilience, experiencing less significant price declines compared to the overall market due to sustained demand from wealthy buyers.
- The rental market remains tight, driving up rents due to low vacancy rates, a situation favorable for landlords, but challenging for renters.
Tips for Buyers and Sellers in the New Orleans Housing Market for 2023:
- Act Swiftly: While homes are selling more slowly than before, desirable properties still attract competitive bids, so be prepared to act quickly.
- Pre-Approval: Obtain a pre-approved mortgage to demonstrate your seriousness and financial readiness to sellers.
- Negotiate Effectively: Leverage the current market conditions to negotiate for a lower price or favorable terms.
- Competitive Pricing: Price your home realistically to attract buyers in a market with declining home prices.
- Enhance Appeal: Make your home attractive to potential buyers through repairs, updates, or effective staging.
- Flexibility in Negotiations: Be willing to negotiate on price and terms to secure a successful sale in a buyer-friendly market.
New Orleans Housing Market Forecast 2023-2024
The New Orleans housing market has been under scrutiny due to its dynamic shifts and changing trends. With the help of Zillow's data and forecasts, we can gain insights into the projected trajectory of the market. In this article, we will delve into the current state of the New Orleans housing market, explore Zillow's forecasts, and discuss what this means for potential buyers and sellers.
Current Market Overview:
According to the latest data available through August 31, 2023, the average home value in New Orleans stands at $263,349, reflecting a significant 8.3% decrease over the past year. Additionally, homes are taking approximately 53 days to move to a pending status, indicating a longer duration compared to previous years.
Market Forecast for New Orleans MSA:
Zillow's housing market forecast for the New Orleans Metropolitan Statistical Area (MSA) presents a projection of declining home values in the coming months. According to the forecast, the region is anticipated to experience a decline of -0.8% by September 30, 2023, followed by a further decrease of -1.5% by November 30, 2023. Looking ahead to August 31, 2024, a continued decline of -1.6% is projected.
In conclusion, the New Orleans housing market forecast suggests a challenging period for both buyers and sellers due to the projected decrease in home values. Adapting to the evolving market conditions and seeking professional guidance will be crucial for making sound real estate decisions.
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).
Maybe you have done a bit of real estate investing in New Orleans, LA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you are a home buyer or real estate investor, New Orleans real estate investment definitely has a track record of generating one of the best long-term returns in the U.S. through the last ten years. If you invest wisely in New Orleans real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate.
Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like New Orleans, LA. New Orleans offers a good combination of short-term renters like students and tourists and a permanent population of renters who cannot afford to buy homes. Geography and market forces limit housing supply, keeping home values and rents stable.
Buying an investment property is different from buying an owner-occupied home. Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor in New Orleans, LA is your ability to find great real estate investments in that area.
According to real estate experts, buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
Let us know which real estate markets you consider best for real estate investing!
Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Market Data, Trends and Statistics
Demand for rentals
Short term rentals
Affordable real estate