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

Key Takeaways

• Home Prices: Recent changes show that prices have dropped 7% over the past year, providing potential bargains for buyers.
• Home Sales: The number of homes sold has decreased by 14% compared to last year, suggesting a cooling market.
• Housing Supply: Inventory is still rising, with a significant increase of 24% noted recently.
• Market Trends: Expectations indicate a continued decline in home prices with potential worsening by 5.8% through 2025.

Home Sales in New Orleans

Analyzing home sales in New Orleans gives us insight into buyer behavior and market movement. According to data from Realtor.com, the number of homes sold in New Orleans has decreased. Over the past year, reports show a 14% decline in home sales compared to the previous year (Realtor.com). Fewer transactions indicate that buyers are less active, possibly due to rising interest rates and increasing home prices, which have created a more cautious market environment.

Home Prices in New Orleans

Home prices in New Orleans have experienced significant fluctuations. Currently, the average home price is reported at $325,000, exhibiting a decrease of 7% from last year (Zillow). This decline can be advantageous for first-time homebuyers or those looking for investment properties. However, the market isn't entirely stagnant; some neighborhoods still show rising prices. For instance, Lakeview homes have a current average price hovering around $530,000 (Redfin).

Housing Supply in New Orleans

The housing supply in New Orleans is also trending upwards. There's been a 24% increase in available listings compared to last year (Realtor.com). This means more options for buyers, but it can result in longer selling times and increased competition among sellers. As swathes of houses become available, prices may struggle to hold steady, leading to broader market implications. The increase in inventory could also hint at a shift in seller confidence, as they may choose to list now rather than wait for potentially worse conditions in the future.

Market Trends in New Orleans

Understanding the market trends helps us predict where the future may lead. As projected, the New Orleans housing market is set to face further challenges. According to data gathered for the next few years, we can expect prices to decline by 5.8% from August 2024 into 2025. This overall downward trend is attributed to several factors, including economic uncertainty and a shift in buyer demand (Zillow). Sellers may find it increasingly difficult to maintain their asking prices, while buyers may benefit from heightened negotiation power.

New Orleans Housing Market Forecast for 2024 and 2025

Looking ahead, the New Orleans housing market forecast for 2024 and 2025 remains cautious. Predictive analysis indicates a potential decrease of 0.5% by the end of September 2024, followed by steeper declines of 2% and 5.8% as we transition into 2025. Such predictions might raise concerns about a potential downturn, but local knowledge is key. For instance, hovering around $237,512 in average home value by the end of 2024 indicates more affordability as compared to others regions in the U.S. (Zillow).

Will the New Orleans Housing Market Crash in 2025?

While forecasting the collapse of any housing market can lead to speculation, the trends do suggest a tough environment for sellers in 2025. A decrease by over 5% hints at softer demand and may result in a longer recovery period for home prices. However, while some neighborhoods may suffer more than others, New Orleans has a resilience that has historically allowed it to rebound from downturns. The community's charm, culture, and ongoing developments mean that there's still a demand for homes, albeit at a possibly lower price point.

Conclusion

The New Orleans housing market trends showcase a vital period of adjustment for both buyers and sellers. With a downward trajectory in home prices and an increase in inventory, it creates both opportunities and challenges. The balance of the market seems precarious, but it reflects a broader narrative about economic conditions and preferences. As we move into 2025, it will be crucial for stakeholders to remain informed and adaptable to the changes that unfold in this uniquely appealing city.

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).

1. Bywater East
2. St. Roch Southeast
3. St. Claude Southeast
4. Bywater
5. St. Claude
6. St. Roch South
7. Holy Cross South
8. St. Thomas Development
9. St. Thomas Development West
10. Coliseum Square