It is our goal at The Parks at Plaquemines to keep our buyers informed about the latest information from the local, state-level, and national real estate industry. We post content to our blog that we hope that you as our custom home buyer will find helpful. Look here for information about financing your new home, building restrictions for new homes, and real estate legislation that will impact you as you are looking to buy or build a new home in the Greater New Orleans area.

New Orleans Metro Prices Climbed and Are Still Going Up

What is considered the Greater New Orleans Area – the 8 parishes which include and surround the City of New Orleans and Lake Pontchartrain are reporting substantial price increases across the board for the first 6 months of 2013.  Average home prices are going up and so is the cost per square foot for housing according to an analysis of real estate data for the New Orleans Metropolitan Association of Realtors by Wade Ragas, a real estate consultant and owner of Real Property Associates.  This report comes out twice a year.  According to his analysis, Ragas states that all but 2 parishes around New Orleans are showing pricing gains, part of a temporary surge in pricing coming out of a depressed market as part of the “bottom of the housing market” working its way back up.  A combination of higher home prices and lower interest rates have balanced supply and demand.  Currently, in the City of New Orleans, inventory supply is at approximately 5.5 months (the number of months it would take to sell every house on the market at fair market value).  In a “normal” economy, a 6 months supply is a sign of a healthy real estate market.

Below are pricing percentage gains, home prices, and price per square foot in all metro New Orleans areas reporting gains in the first 2 quarters:

Compilation of Parish Pricing Gains:

St. Bernard Parish – 9% at an Average Price of $118,492 per House, $70 per Square Foot

St. John the Baptist Parish – 9% at an Average Price of $131,108 per House, $78 per Square Foot

Jefferson Parish – 6% at an Average Price of $196,970 per House, $104 per Square Foot

St. Charles Parish – 7% at an Average Price of $194,316 per House, $98 per Square Foot

St. Tammany Parish – 3% at an Average Price of $220,229, $103 per Square Foot

Because Orleans Parish is so diverse and spread over several wards, separated by the French Quarter and CBD, these statistics are broken out by neighborhood:

Orleans Parish by Neighborhood:

Mid-City – 9%
Gentilly – 12%
Bywater & Lower Ninth Ward – 6%
Lower Garden & Warehouse Districts – 14%
Carrollton & Holly Grove – 6%
Lakeview – 4%
French Quarter / Seventh Ward – 6%
Algiers – 2%-6%

Areas such as Uptown and Riverside as well as Broadmoor have reported steady sales with no big increases in the price of homes. The 70116 zip code, which includes much of the French Quarter, had an average price per-square-foot of $246. The highest in Jefferson Parish was 70005 in Metairie with $168 per square foot. Some areas of the Garden District have seen home prices skyrocket over fair market value, creating bidding wars on homes as soon as they hit the market.  Homes in this area have sold in days sometimes hours of being put up for sale.

There are many factors which contribute to the residential boom in New Orleans.  The construction of the new LSU hospital campus / complex in Mid-City is bringing in plenty of young professionals and families to work in the city.  Also, the technology and entrepreneur odyssey in the City of New Orleans are bringing in home buyers interested in urban living – walking to stores and restaurants and using public transportation to get around. Other factors include the revitalization of downtown with new retail, tourism and sports development, $50 billion invested in post-Katrina projects including streets, governmnet facilities, and levee / pumping station projects, and the re-emergence of the oil and gas industry with the renovation of a natural gas facility in Chalmette as well as the discovery of 2 new oil deposits in the Gulf of Mexico.

Another aspect of the real estate market in New Orleans are post-Katrina renovated homes.  As more years pass and nothing is able to be done on these homes, the homes fall more and more into disrepair.  With lower interest rates and a lower average price of purchasing a home to “flip,” (down from last year’s average price of $63,013 last year to $49,799 this year), it is profitable for an investor to buy, fix up, and sell a home in a damaged neighborhood.  However, statistics from the report are showing the home buyers are still hesitant to buy in those neighborhoods which “have not come back yet” from Hurricane Katrina.

Overall, the real estate industry in the Greater New Orleans area is reporting excellent numbers of sales and price gains.  Everyone’s eye is on the Fed meeting September 17-18 to see how interest rates will “play out” for the rest of 2013 and beyond.  If you are interested in buying a home just over 10 miles from the Central Business District of New Orleans, Contact The Parks of Plaquemines today at 504-364-2350 or E-mail [email protected].

 

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It’s a Seller’s Market in New Orleans

Realtors in New Orleans seem to be regularly advising their clients to be savvy when pricing their home for sale – they are telling them to list the house above the asking price.  In New Orleans, especially the Uptown and Garden District areas, there is a feeding frenzy going on right now, and it is a SELLER’s market there.  Since the Recession, the inventory on the market has been steadily decreasing from a 2-year supply of homes on the market to now just a 2-month supply of homes in the Garden District.  Because of this, homes are going on the market and getting 3 – 15 offer on it – the majority ABOVE the asking price – in just 24 hours.

sellers-market

Home buyers are mainly people who are looking to invest in the culture and quality of life in New Orleans.  Realtors’ clients include out-of-towners who are relocating to New Orleans in industries such as film, biomedical, digital media, software, and creative professionals.  They are seem to be people who have “fallen in love” with the city of New Orleans – its history, architecture, and accessibility by walking or biking.

The market is so hot right now that Realtors are contacting their previous clients to find out if they would be interested in listing their home for sale – people to whom they may have sold a home over 3 decades previously.  Also, once one homeowner is able to sell her house for a huge profit, other neighbors are following in her footsteps and listing their homes for sale.

Of the homeowner contacted, though, there are holdouts who would not consider selling their home for any price.  These homeowners are admired by Realtors in the area because they are truly invested in the New Orleans way of life.  Also, it’s a huge vote of confidence that people from out of town are willing to pay more than the asking price for a home in New Orleans despite the constant negative media feedback which touts the unsafe conditions in the city of New Orleans.  Living in the Greater New Orleans area – in a safer neighborhood – is worth the small risk because of what you get.

Even though The Parks of Plaquemines is “across the bridge” from the City of New Orleans, this community is an ideal location for relocation for people considering moving to New Orleans.  In New Orleans, you pay higher taxes, utilities, and rents.  You end up forking out a lot of money for having the New Orleans, LA on your physical address.  The Parks of Plaquemines is located a little more than 10 miles from the city of New Orleans either by car or by ferry.  It is a safe location that has never been flooded.  It has also just been re-classified by FEMA as a place where there will be low or no flood insurance requirements for houses built in the neighborhood.

It’s a small piece of the country living convenient to the “big city.”  At The Parks of Plaquemines, you will enjoy amenities which include a system of walking trails all around the subdivision.  Also, traditional amenities such as a pool and tennis court are “in the works!”  So, if you are relocating to New Orleans and would like a little breathing room with easy access to the Central Business District (CBD), Contact The Parks of Plaquemines at 504-364-2350 or E-mail [email protected] to find out more information on buying a new home today.

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PATH Act Negotiated With the NAHB in Washington D.C.

If you’ve been paying particular interest to the news lately, then you have probably heard about the overhaul or threatened elimination of Fannie Mae and Freddie Mac, and like many people not employed in the real estate industry, you may not have any idea how those actions will affect you as a future home buyer.  The truth is that mortgages held by Fannie Mae and Freddie Mac were a large cause of the stock market crash and the real estate industry’s demise.  However, even though these two companies had flaws, the greater problem was a combination of factors which included little or no regulation or oversight of approval of loans by banks and mortgage companies, poorly devised mortgage packages with initial low interest rates that doubled or tripled after a certain time period, and the “everyone should own a home” attitude of the Clinton era.

Originally, Fannie Mae was a government created mortgage company launched right after the Great Depression by President Roosevelt and Congress.  The company was conceived to buy mortgages from lenders offering low-income Americans a chance to buy a home using a government-backed loan.  The company was de-regulated in 1968 when it became a public corporation, and the government even opened a new company called Freddie Mac to “compete” with Fannie Mae, so that the company wouldn’t become a monopoly.  Freddie Mac also was separated from the federal government to become a public corporation in 1989.  The names Fannie Mae and Freddie Mac are actually based on the departments of the federal government which were in charge of their structure and development – Federal National Mortgage Association (Fannie) and the Federal Home Loan Mortgage Corporation (Freddie).

A common misconception today is that Fannie Mae and Freddie Mac are still “owned” by the government.  The semantics of the term is that these two corporations are “backed” somewhat by the U.S. Government.  Fannie Mae and Freddie Mac are able to get investments from many different sources on Wall Street, nationally, and internationally because of their reputation – they truly are “too big to fail.”  If Fannie Mae and Freddie Mac were to “go under,” it would cause a greater panic and a global meltdown much worse than the real estate market catastrophe of 2008.

Now, the United States agencies have “learned their lesson” and are trying to figure out how to get the mortgage industry out of the “hands” or actual influence of the government and dole it out to the private sector so that the true capitalism of supply and demand can “take over” dictating interest rates, home pricing, and home buyer qualification.  A legislative proposal called the Protecting American Taxpayers and Homeowners (PATH) Act is now being discussed by Congress and the NAHB (National Association of Home Builders).  As of now, the PATH Act is shying away from ANY government involvement.  However, this is not the direction in which the NAHB wants it to go.

“NAHB believes federal support is particularly important to ensure that 30-year, fixed-rate mortgages, the bedrock of the nation’s housing finance system since the 1930s, remain available at reasonable interest rates and terms,” said NAHB CEO Jerry Howard. “As currently drafted, the PATH Act does not provide the federal support necessary to ensure a strong and liquid housing finance system, and we urge the committee to make the necessary changes. The historical record clearly shows that the private sector is not capable of providing a consistent and adequate supply of housing credit without a federal backstop,” he said.

The PATH Act also wants to eliminate or greatly diminish the FHA program which is a government-backed program for first-time home buyers.  If put in the hands of the private sector mortgage companies, brokers, and banks, there may not ever be a “first-time home buyer” without perfect credit and an above $200,000 portfolio.  The government’s involvement and influence on the housing market has been, in the past, a good thing.  It simply became too much of a good thing and got out of balance.  The purpose of the approval process for the PATH Act to make sure that there is a good balance between government regulation and private sector capitalism – just like every good republic is always trying to achieve.

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Materials Shortages a Positive Sign for New Home Builders

In what could be termed “good news” for the building industry, builders and lumber companies are reporting shortages of materials according to recent surveys by the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association (NLBMDA).  These materials include but are not limited to the following: oriented strand board (OSB), with 22 percent of builders reporting shortages, followed by wall board (20 percent), framing lumber (18 percent) and plywood (18 percent).

Items that are typically hard to come by, such as, copper wire, vinyl siding, HVAC equipment, insulation and structural insulated panels show the same “unavailability” as they did in 2004 and 2005 when the real estate market was stable and producing approximately 1.8 million homes annually.  The shortfall of the products listed above, though, indicate that companies are still not ready to “stockpile” material inventory that is used regularly by a thriving real estate industry.

With the post-Recession, record-breaking numbers and statistics emerging recently from the National Association of Home Builders, this shortage of materials would bolster the perception to builders that the housing industry is on the rise.  This cautiously optimistic view is tempered slightly by the inflation of the cost of building materials.  Builders have reported a 5.17% rise in materials costs, while distributors, specifically the lumber companies surveyed by the NAHB, report a 10% (or more) increase in cost.

This should come as no surprise for consumers who “live in the United States,” as the cost of, well everything, has been going up during and since the end of the Recession.  As the building industry balances out, and the new normal of supply and demand is established according to the new pace of the home building/buying industry, one would expect to see these prices level off.  They may not ever retract, but the rise of the cost of materials may cap as demand increases.

Altogether, though, the outlook for builders is positive, and builders seem to think so also, showing higher builder confidence numbers than they have since 2008.  Here at The Parks of Plaquemines in Greater New Orleans, we see many new homes being built by our builders.  Also, there seems to be a lot of interest in building on our lots as our Garden Home Phase I lots are Sold Out.  If you are interested in building your new home on one of our lots at The Parks of Plaquemines, Contact Us at 504-364-2350 or E-mail [email protected].

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Generation Y the “New” New Home Buyer of New Homes

As the real estate market recovers from a financial disaster, a new generation of home buyers has emerged, or we should say matured.  Interestingly, as the housing market turns to more energy-efficient – “everything” – so does this new demographic of interested purchaser.  Not only is the home building industry focusing on Green Building, but it is also financially beneficial both to the builder and the home buyer because of government programs which offer rebates and incentives for using energy efficient, “green” appliances, products, and systems.

For instance, solar energy has been a strongly emerging market, which is undeniably profitable both for solar energy companies as well as people who install these systems in their new or existing homes.  The monthly utility cost is cut by as much as 85% because of the use of a solar system vs. using a traditional electrical utility.

ENERGY STAR-rated appliances, insulated windows, specialty blown or foam wall insulation, insulated doors, and even water proofing features (great for hurricane flooding protection) are all “must haves” of the Generation Y home buyer population, according to the National Association of Home Builders.  Before, builders considered these types of luxuries to be upgrades, not standards.  However, as affordability for these products and government backing for the use of these products have increased, these features, for some builders in the Greater New Orleans area, have become standards.

It’s almost a natural progression of supply meets demand when it comes to builders building new homes which are the exact product that new home buyers, aged 24 – 35, are looking for.  Another factor that these buyers take into consideration is the cost of buying/maintaining a home.  New homes require less money on an annual basis to take care of vs. previously owned or existing homes. In fact, an NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241.

The train of thought for Generation Y buyers is that they are not looking to save a lot of money on the front end of the new home purchase, but they would like the monthly costs, once they buy the home, to be as low as possible.  With interest rates remaining historically low, the emergence of the standard use of energy-efficient features by builders, and the benefit of buying a new home vs. a used one, Generation Y home buyers have found their perfect solution by building a new home with top quality builders in the Greater New Orleans area.

Most of the builders at The Parks of Plaquemines design and build homes with tons of energy efficient features.  This new home community is located a little more than 10 miles from the Central Business District (CBD) in New Orleans, so home buyers enjoy an easy commute, city convenience, more security and safety from living outside city limits, and less monthly and annual cost because the cost for taxes and utilities are based on Plaquemines Parish regulations instead of the City of New Orleans.  To find a home just right for you, Contact Us at 504-364-2350 or E-mail [email protected].

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