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It Depends On what Your Definition of "Boom" Is.

The New York Times has declared the New Orleans housing market to be "booming." And they have all kinds of quotes that supposedly back that up. But let's forget the chatter and get to the numbers:

Investors Lead Home Sale Boom in New Orleans

... Across the nine-parish region that includes New Orleans, 7,506 single-family homes were sold between January and the end of last month, compared with 6,449 in the same period last year, according to statistics from the New Orleans Metropolitan Association of Realtors and the Gulf South Real Estate Information Network. The average price so far this year is $221,244, compared with $193,097 in the same period last year.

So in an area where almost a quarter of a million homes were destroyed and thousands of families have had to relocate across the country, home sales are up 16%. Yippee!

That 1000 extra homes sold in such an extraordinary time is actually astonishingly low.

The sales prices figures are equally unimpressive. The numbers the Times cite represent a 14.5% year to year increase in a market that has been averaging about 10-15% for the last several years. And those are buoyed by the fact that mostly homes in the expensive parts of town were selling.

It is worth noting that the housing market didn't collapse after Katrina but to call it "booming" is just a gross misrepresentation of the facts.


Comments (9)

Do you mean that "it is wor... (Below threshold)
Clay:

Do you mean that "it is worth noting that the housing market,etc."? Not to be nit-picky, but it does make a bit of a difference.

Contrast that bullhockey wi... (Below threshold)

Contrast that bullhockey with the reality and facts from the lead story in today's Times-Picayune!

Us Coon-Asses have been leaving Louisiana and its corrupt ways in droves for years. It is a shame what the horrible crooks have done the people of Louisiana.

Thanks Huey Long....

Hey they have to do somethi... (Below threshold)
retired military:

Hey they have to do something to try to get the democratic voters back into the New Orleans area. Giving them hyped up news is just another method of trying to help out the Dems. The 06 elections are just around the corner.

Let's not forget, this does... (Below threshold)
Jim:

Let's not forget, this does include the immense numbers of damaged and destroyed houses being bought by contractors for the purpose of flipping. "We buy ugly houses" and all that. It doesn't mean that individuals are actually purchasing homes. In fact, in my neighborhood, the same 15 or so houses have been up for sale for months, most of them grossly overpriced.

Not to mention, you have dislocated families buying a home to live in while their original home is being rebuilt. And, you have contractors and construction workers from out of town, buying property to live in while they are here working.

There is a construction boom, sure. But, how can you have a housing boom when 30-50% of the population is simply gone?


But, I'm here!

Laissez les bons temps rouler!

Thanks Clay... (Below threshold)
Paul:

Thanks Clay

LOL Does Bush get the credi... (Below threshold)
Robert:

LOL Does Bush get the credit?

Follow up to this NYT "stor... (Below threshold)
Red Fog:

Follow up to this NYT "story" could be the number of city homeowners that are now in default on their property taxes and how long before the city ends up with the deeds to these destroyed homes. Bye-bye tax revenue in "chocolate" town. There should be only marginal demand for regentrification because the jobs have migrated out of the flood prone welfare zone (Jesse Jackson, eat your heart out).

Detroit wound up owning something like 90% of the real estate by default after the race riots and no revenue except that from the feds ...

I saw a sample of the boom ... (Below threshold)
doctorj:

I saw a sample of the boom this last week. As I was driving around the devastated neighborhood of Lakeview (not the mansion part) I saw a man in his 80's in his yard cutting boards to rebuild his little home all on his own. Way to go America!

I can't fathom why a New Or... (Below threshold)

I can't fathom why a New Orleanian who wants to "look at the numbers" would focus on a NYT article rather than the in-depth feature story that ran in Sunday's Times-Picayune.

There is indeed a housing boom occurring in New Orleans. Actually there's two: an emerging reconstruction boom in the "flooded" parts of town, and an intensification of a previous boom in the unflooded market. Unflooded houses have appreciated, on average, 55% in the past 18 months. That qualifies as a price "boom".

Secondly, despite the market being overwhelmed with thousands of flood damaged homes (on sale at 50-75% of their pre-flood value), and despite half of the city's population living elsewhere, the AVERAGE sales price throughout the region increased substantially. Not all of that is due to increased prices in the expensive areas either. True, the 250k-500k unflooded market is torrid right now. But the 750k+ homes are not moving very quickly at all.

Third, unit sales are up. As the T-P article states:

"There's two markets going on, but the amazing news is that unit sales volume (for a 10-month period) has exceeded pre-Katrina sales," Ragas said. "The good news is that this is a strong market." The level of unit sales indicates a strong desire by many to return home or to invest in local real estate.

That's amazing considering the fact that between September and December, there were virtually no transactions occurring.

Fourth, Billions of federal housing aid dollars will be distributed at the end of summer. As housing markets cool in other areas of the country, New Orleans' will be an epicenter of construction activity.

And finally, you have to remember that all of this increased real estate activity has occurred amidst tremendous uncertainty. There's no clear "plan" for the city, people are still haggling with their insurance companies, and everyone is relying on the Army Corps of Engineers to not screw up again with their floodwall repairs.

As a real estate investor who specializes in distressed properties, I'll put it this way: if you have a tolerance for significant risk, there is immense money to be made in New Orleans' housing market during the next several years. Assuming the floodwalls hold, in 2009 no one will be quibbling about whether a boom was occurring in '06 through '08.




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