Quarterly Home Prices Fall Slightly As Sales Volume Strengthens

Average Quarterly Prices of Single Family Homes Listed in Very Good or Better Condition

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Recent Prices at a Glance

Even as prices of New Orleans single family homes fell slightly during the last three months of 2011, the sideways trend that began in 2008 continues.

During the quarter ending on December 31, 2011, average prices of homes listed in very good or better condition dropped 2.1% compared to Q-3 of 2011. Going back to the last quarter of 2010, averages fell 3.6%. Nevertheless, prices remain in the $111 to $116 per square foot range in place for more than three years.

More promising news is that during 2011, total residential property sales numbered 807 units per month, a strong 13% gain over sales volume in 2010.

New Orleans Real Estate Prices During the Last Few Years

The New Orleans region saw a steady increase in home prices during the years prior to Hurricane Katrina in 2005. From 1997 through 2004, single family homes listed in move-in condition increased in price from an average of $68 per square foot to $100 per square foot. This computes to an average of 5.7% a year, somewhat higher than inflation, but substantially lower than national trends.

In 2005, prices increased by 8.9%, a high rate for the region, but still substantially lower than soaring national levels. In August 2005, Katrina damaged much of the home stock, resulting in a sharp price rise of 13.8% during 2006. This increase was largely due to reduced supply of inhabitable properties.

Area prices peaked during the second quarter of 2007 at $126 per square foot and subsequently fell to $112 by the first quarter of 2009. Since that time, prices have followed a narrow trend bounded by $115.53 on the upside and $111.30 on the downside.

While home prices in Metro New Orleans are not exactly robust, our market is in much stronger shape than many others across the United States.

Metro New Orleans Home Prices Did Not Tank

There are several good reasons New Orleans region real estate prices have remained resilient in the face of national recession and substantial declines in home prices.

• We did not experience unsustainable double digit percentage yearly increases during the early part of the 2000s.
• Our mortgage brokers are licensed and must comply with a code of standards. In some of the states where prices got out of hand, mortgage brokers had little training and were encouraged to loan money to anyone, properly qualified or not.
• As a result, Louisiana's foreclosure rate is lower than national averages.
• During 2005 and 2006 when prices were rocketing upward in many areas, the New Orleans area was recovering from Hurricane Katrina. The housing bubble scarcely touched us.
• Our region's employment rate remains stronger than national averages.

Where Do New Orleans Area Home Prices Go from Here?

That's the $64,000 question. All the past data in the world can only show where prices have been, not where they are headed.

We can say for sure that since late 2008, New Orleans area home prices have been rock steady in the $111 to $116 per square foot range. Near-term economic growth looks promising, and employment levels remain relatively strong.

Nationally, some highly distressed housing markets are recovering, and other economic indicators are looking up. Time will tell how robust this recovery will be.

Meanwhile, we will carefully monitor developments in the New Orleans real estate market. Please visit us again soon.

If you have any questions or comments, just call or email.

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