Home prices in New Orleans metro area continue steady climb, report says

Home prices in the New Orleans metro area continued to climb last year as more buyers leapt into a heated market and prices in some urban neighborhoods spiked as high as 15 percent, according to a report released this week by the New Orleans Metropolitan Association of Realtors.

In New Orleans, the overall average price of a house last year was $325,348 — or $153 per square foot — up nearly 8 percent from 2012.

The average per-square-foot home price in the city was up by 34 percent compared to prices in 2005 before Hurricane Katrina destroyed or damaged the housing stock and threw the market into disarray.

Across the eight-parish metro area, homebuyers last year paid an average $222,440 for a house, $110 per square foot, up 3.9 percent from 2012. More than 11,160 homes were sold, the highest rate since the 12 months prior to Katrina, when more than 12,000 homes sold, according to the report. In the earlier years of that decade, home sales exceeded 13,000.

Wade Ragas, real estate consultant and owner of Real Property Associates, analyzed Realtor-assisted sales for the Realtors Association’s twice-yearly report. Ragas said with New Orleans prices on the rise recently, there was a misperception that prices were also strong in suburban areas, where markets were actually lagging behind.

Metro area home prices, by ZIP code

The new data indicates there is now broad price growth across the area.

“It’s no longer just being pulled along by Orleans,” Ragas said. “Just about every parish is rising in price, very few zip codes are not rising in price.”

Nationwide, housing prices are on the rise. The Standard & Poor’s/Case-Shiller 20-city and 10-city home price indexes both reported nearly 14-percent increases in November 2013 compared to the previous year, the most recent data available.

Housing markets in Sun Belt cities — such as Atlanta, Las Vegas, Phoenix and Tampa — were hit hardest by the financial crisis and have seen the biggest upswing in prices over the last 18 months.

“Home prices continue to rise despite last May’s jump in mortgage interest rates,” David M. Blitzer, S&P Dow Jones index committee chairman, said in a news release last week. “Combined with low inflation — 1.5 percent in 2013 — home owners are enjoying real appreciation and rising equity values. While housing will make further contributions to the economy in 2014, the pace of price gains is likely to slow during the year.”

Orleans, Jefferson, Plaquemines and St. Bernard home prices compared to pre-Katrina

In the New Orleans area, which was shielded from the foreclosure crisis while homeowners worked to rebound from Katrina, the price climb has been more steady.

Rick Haase, president of real estate company Latter & Blum Inc., said he looked at his company’s January business report and the number of closed sales were up by 36 percent, indicating that market growth is continuing into the new year.

“As goes Orleans Parish, so goes the rest of the marketplace,” Haase said. “It’s not a surprise to me that the outer lying markets are doing well when we’ve watched Orleans Parish come back over the last four or five years,” Haase said.

The New Orleans metro area is moving toward a more balanced market when looking at housing inventory, Haase said.

Months of supply means the time it would take for all houses on the market to be sold at the current sales pace. In general, a six-month of housing is considered a balanced market. Any more and it’s a buyer’s market with shoppers having more options. Less than three months of supply is considered a sellers’ market, as buyers compete for fewer houses.

Today, the New Orleans metro area has 6.9 months of inventory, Haase said, compared to 8 months of inventory last year and 12 months of inventory a year earlier.

St. John and St. Charles home prices compared to pre-Katrina

In other pockets of the city’s urban core, such as Bywater, Uptown or the Garden District, strong demand for houses and less than three months of inventory have caused prices to spike, creating a real estate frenzy with bidding wars. Much of the demand has been fueled by historically low interest rates on mortgages.

Last week, the Federal Reserve said it will cut its monthly bond purchases — intended to keep interest rates low and stimulate the economy — by $10 billion to $65 billion. That was the second $10 billion cut after the Fed reduced its bond buying from $85 billion to $75 billion in December.

“When the bond buying process slows down, the interest rates tend to increase, and that’s what’s starting to happen,” Haase said. “So, over the last year, as buyers have become more aware that the interest rates hit the bottom, it triggers activity.”

The report breaks down sales data by ZIP codes. The ZIP codes that include Gentilly, Bywater, Lower Ninth Ward, Uptown, Carrollton, eastern New Orleans and Lakeview all reported between 7 percent and 13 percent growth in price per-square-foot. In the Lower Garden District and Warehouse District areas, prices grew by 15 percent, according to the report.

St. Tammany home prices compared to pre-Katrina

In suburban areas, the average price of a home St. Tammany Parish was $223,338, or $104 per square foot, up 5.1 percent from 2012. In Jefferson Parish, the average price was $190,100, or $102 per square foot, up 4.1 percent.

Glenn “Chip” Gardner, Gardner Realtors vice president of operations and special initiatives, said the average number of days a house sits on the market in the metro area is steadily declining, another sign that the market is heating up. In December 2013, a house sat on the market for an average of 72 days, down from 96 days in December 2012.

“We think it’s all lining up to be a really strong year in the New Orleans real estate market,” Gardner said.

Stay with NOLA.com for updates on this story, including a database of average prices by ZIP code and maps.