 But there are plenty of buyers, with some seeking investments and others just needing a place to live after losing a home. Most people are buying "high and dry," to borrow the term on every broker's lips since Katrina, but even that seems a surprising vote of confidence in the long-term prospects of New Orleans and the surrounding parishes. In the West Bank area, which lies west of the Mississippi River, November sales were up 99 percent, in dollar terms, over November 2004, according to data provided by Latter & Blum. And in the high-priced Garden and Warehouse districts, the firm's November sales more than doubled.
GARY RIVLIN for nyt
Published: January 1, 2006
NEW ORLEANS, Dec. 31 - A surprisingly healthy real estate market in the New Orleans metropolitan area is proving to be one bright spot in an otherwise stagnant local economy.
A house recently sold in Metairie, a suburb of New Orleans.
The market is not sizzling hot, at least by comparison to New York and San Francisco in recent years. Still, it is stronger than anyone might reasonably expect four months after Hurricane Katrina, with prices for houses in many areas at or above prestorm levels.
"Right after the storm, if I had heard myself talking like I am now, about setting records in some offices and posting three record-breaking months in a row, I would've wondered what Kool-Aid this guy was drinking," said Arthur Sterbcow, the president of Latter & Blum, an 89-year-old New Orleans real estate firm that bills itself as the largest on the Gulf Coast. "But every day it gets crazier and crazier in a positive way." The last few months of 2005, Mr. Sterbcow said, have proven to be "the best period in the history of our company."
The market is spotty, to be sure. In areas hit hard by flooding, such as the New Orleans East and Lakeview neighborhoods of the city and other communities that ring the southern edge of Lake Pontchartrain, home sales are down significantly, as only the bravest speculators are buying in these distressed communities.
But there are plenty of buyers, with some seeking investments and others just needing a place to live after losing a home. Most people are buying "high and dry," to borrow the term on every broker's lips since Katrina, but even that seems a surprising vote of confidence in the long-term prospects of New Orleans and the surrounding parishes. In the West Bank area, which lies west of the Mississippi River, November sales were up 99 percent, in dollar terms, over November 2004, according to data provided by Latter & Blum. And in the high-priced Garden and Warehouse districts, the firm's November sales more than doubled.
Real estate brokers here view the housing market's comeback as a small miracle in a city where 80 percent of homes were flooded. Don Randon, a broker who has been selling properties in New Orleans since the 1970's, described himself as "busier over the last 10 weeks" than at any time in his 28-year career.
And while Sissy Wood, who runs her own real estate firm in Metairie, a suburb west of New Orleans, said she had not been setting records in recent months, she described the sales in her area as robust.
Thousands of buyers are paying good money for homes and making the ultimate commitment to the area - signing long-term mortgages when the city is still debating its rebuilding plans and while large swaths of the region remain deserted like ghost towns in the Old West. Many critical questions, including the strength of the levee system and the rules for rebuilding in flood plain areas, remain unanswered.
So with New Orleans's revival still in doubt, paying pre-Katrina prices even for a splendid piece of property on high ground may seem risky. Yet some are already speculating that, in the coming months, New Orleans will be experiencing the kind of bidding wars that occur in some markets, at least for homes in those areas that did not flood.
"That's coming," David Abbenante, the director of property management at HRI Properties, a local real estate developer. "Just wait until people start getting their insurance checks." Brokers are also looking forward to an influx of buyers in June, when families with children enrolled in schools around the country are able to move back.
And while it is too soon to reach definitive conclusions, real estate brokers suggest that the flight to higher ground, especially to the suburbs or to urban condominium towers that boast "Cat 5" windows - those strong enough to withstand the winds of a Category 5 hurricane - promises to reshape the housing market in the metropolitan area in the coming years. It is no wonder, since Hurricane Katrina destroyed or damaged roughly 200,000 homes in the greater New Orleans area.
"When you have a huge amount of people displaced by flooding, like you did in New Orleans, it makes perfect sense that you have people who need to buy real estate and people who feel like they have to sell," said Thomas Z. Lys, a professor at Northwestern University and a director of the Guthrie Center for Real Estate Research.
In the Latter & Blum office for the Garden and Warehouse districts, which remained fairly dry, November sales were $15.8 million, up from $7.8 million in November 2004. The increase in sales is primarily the result of volume rather than price increases, said Joan Winchell, who manages the office. "The bulk of homes are going at pre-Katrina prices, or maybe $10,000 or $20,000 more," Ms. Winchell said.
One Firm's Experience
The increase has been even more dramatic in the West Bank area, which saw little flooding. Home sales jumped 159 percent, to $26.5 million in November, from $10.3 million the same month in 2004.
And sales in the suburbs that lie just west of New Orleans soared to $29.7 million, up from $10.3 million, representing a 189 percent year-over-year increase. The sales in other suburbs around Orleans parish were up 65 percent to 162 percent in November, according to the figures provided by Latter & Blum.
"We're hopelessly undersupplied right now in terms of what people are demanding most: homes in areas that have power and have schools in areas that did not flood," said Mr. Sterbcow, the company's president. Latter & Blum lost two of its New Orleans offices in the flooding.
This mini-boom, at least in select areas, is due to a confluence of factors, including the presence of speculators who believe this is the perfect time to be scooping up properties.
"If you're willing to buy flooded houses, you can find some great bargains," said F. Patrick Quinn III, a local real estate developer who said he has been snapping up both commercial and residential properties throughout the region. Several real estate brokers contacted said they were representing out-of-towners or corporations looking to invest in New Orleans real estate.
The bulk of residential buyers, agents say, are local residents who are purchasing a second home to live in while the fate of their first home is determined by insurance companies and government officials. That includes Mark Rose, who in November bought a home in Metairie after his Lakeview home was flooded. Mr. Rose is the general manager of Nola.com, a Web site that includes extensive real estate listings in the greater New Orleans area.
"What we're seeing is a lot of homeowners trying to inflate the price of homes in areas not hit by flooding," Mr. Rose said. Those properties do not tend to move, he said, because a lack of available funds in people's pockets are keeping home prices relatively stable.
"How many people can afford two monthly mortgages, especially if the prices of the second home are inflated?" he asked. For some people, insurance payments are helping to defray the cost of a second home.
Yet buying a second home might still be more attractive than leasing, as the monthly cost of renting a home has spiked by 50 percent or more, according to Ms. Wood, the broker in Metairie.
"Leasing is at a premium right now as so many people are looking for a place to live for 90 days to six months while things sort themselves out," Ms. Wood said.
Another sign of optimism came in December when KB Home, the California home builder, bought 3,000 acres of land in a suburb to the west of the city. The firm, which is in a partnership with the Shaw Group, a construction and engineering company based in Baton Rouge, has said it plans to build as many as 20,000 homes on the property.
"Until now, we've never seen any national builder express interest in building in the New Orleans area," said Mr. Randon, the broker. He represented the property owner in negotiations with KB Home.
The RAND Corporation has predicted that, in three years, the city of New Orleans will have a population of no more than 275,000, down more than 40 percent from its pre-Katrina population of 465,000. Much of the decline will come from evacuees who do not return, while some former city residents will move to the suburbs.
"I think what we'll see is a morphing of the residential property market," Mr. Randon said. The demand for homes on the north shore of Lake Pontchartrain, which is at less risk of flooding, and for homes in high-and-dry suburban communities, will prove a factor that will help reshape the metropolitan area, he said.
Another could be the lure of condominiums, which offer people a chance to live high above sea level. The New Orleans condo market was hot prior to Katrina, but Mr. Randon predicts the market will be "very, very, very strong in the coming months," in no small part because of empty-nesters like him and his wife. With a daughter in college and a huge bill to fix up a flood-damaged home, "I think we're like a lot of people in asking, 'Do we really need a big house or would we be better off moving into a condo more in the center of town?' " Mr. Randon said.
So far, there has not been any spike in condo prices, according to Sean Talbot, of the Talbot Realty Group, which specializes in condominium sales. "We've been busy, but not as productive as we had been before the storm," he said.
Mr. Talbot was the only one of the dozen-plus brokers, bankers and developers contacted for this article to sound a skeptical note about post-Katrina business. Still, he is hardly pessimistic about the local real estate market. He described business in recent weeks as only "decent," but he added, "things are starting to happen and getting better every week."
|
- bill 1-01-2006 1:45 am
GARY RIVLIN for nyt
Published: January 1, 2006
NEW ORLEANS, Dec. 31 - A surprisingly healthy real estate market in the New Orleans metropolitan area is proving to be one bright spot in an otherwise stagnant local economy.
A house recently sold in Metairie, a suburb of New Orleans.
The market is not sizzling hot, at least by comparison to New York and San Francisco in recent years. Still, it is stronger than anyone might reasonably expect four months after Hurricane Katrina, with prices for houses in many areas at or above prestorm levels.
"Right after the storm, if I had heard myself talking like I am now, about setting records in some offices and posting three record-breaking months in a row, I would've wondered what Kool-Aid this guy was drinking," said Arthur Sterbcow, the president of Latter & Blum, an 89-year-old New Orleans real estate firm that bills itself as the largest on the Gulf Coast. "But every day it gets crazier and crazier in a positive way." The last few months of 2005, Mr. Sterbcow said, have proven to be "the best period in the history of our company."
The market is spotty, to be sure. In areas hit hard by flooding, such as the New Orleans East and Lakeview neighborhoods of the city and other communities that ring the southern edge of Lake Pontchartrain, home sales are down significantly, as only the bravest speculators are buying in these distressed communities.
But there are plenty of buyers, with some seeking investments and others just needing a place to live after losing a home. Most people are buying "high and dry," to borrow the term on every broker's lips since Katrina, but even that seems a surprising vote of confidence in the long-term prospects of New Orleans and the surrounding parishes. In the West Bank area, which lies west of the Mississippi River, November sales were up 99 percent, in dollar terms, over November 2004, according to data provided by Latter & Blum. And in the high-priced Garden and Warehouse districts, the firm's November sales more than doubled.
Real estate brokers here view the housing market's comeback as a small miracle in a city where 80 percent of homes were flooded. Don Randon, a broker who has been selling properties in New Orleans since the 1970's, described himself as "busier over the last 10 weeks" than at any time in his 28-year career.
And while Sissy Wood, who runs her own real estate firm in Metairie, a suburb west of New Orleans, said she had not been setting records in recent months, she described the sales in her area as robust.
Thousands of buyers are paying good money for homes and making the ultimate commitment to the area - signing long-term mortgages when the city is still debating its rebuilding plans and while large swaths of the region remain deserted like ghost towns in the Old West. Many critical questions, including the strength of the levee system and the rules for rebuilding in flood plain areas, remain unanswered.
So with New Orleans's revival still in doubt, paying pre-Katrina prices even for a splendid piece of property on high ground may seem risky. Yet some are already speculating that, in the coming months, New Orleans will be experiencing the kind of bidding wars that occur in some markets, at least for homes in those areas that did not flood.
"That's coming," David Abbenante, the director of property management at HRI Properties, a local real estate developer. "Just wait until people start getting their insurance checks." Brokers are also looking forward to an influx of buyers in June, when families with children enrolled in schools around the country are able to move back.
And while it is too soon to reach definitive conclusions, real estate brokers suggest that the flight to higher ground, especially to the suburbs or to urban condominium towers that boast "Cat 5" windows - those strong enough to withstand the winds of a Category 5 hurricane - promises to reshape the housing market in the metropolitan area in the coming years. It is no wonder, since Hurricane Katrina destroyed or damaged roughly 200,000 homes in the greater New Orleans area.
"When you have a huge amount of people displaced by flooding, like you did in New Orleans, it makes perfect sense that you have people who need to buy real estate and people who feel like they have to sell," said Thomas Z. Lys, a professor at Northwestern University and a director of the Guthrie Center for Real Estate Research.
In the Latter & Blum office for the Garden and Warehouse districts, which remained fairly dry, November sales were $15.8 million, up from $7.8 million in November 2004. The increase in sales is primarily the result of volume rather than price increases, said Joan Winchell, who manages the office. "The bulk of homes are going at pre-Katrina prices, or maybe $10,000 or $20,000 more," Ms. Winchell said.
One Firm's Experience
The increase has been even more dramatic in the West Bank area, which saw little flooding. Home sales jumped 159 percent, to $26.5 million in November, from $10.3 million the same month in 2004.
And sales in the suburbs that lie just west of New Orleans soared to $29.7 million, up from $10.3 million, representing a 189 percent year-over-year increase. The sales in other suburbs around Orleans parish were up 65 percent to 162 percent in November, according to the figures provided by Latter & Blum.
"We're hopelessly undersupplied right now in terms of what people are demanding most: homes in areas that have power and have schools in areas that did not flood," said Mr. Sterbcow, the company's president. Latter & Blum lost two of its New Orleans offices in the flooding.
This mini-boom, at least in select areas, is due to a confluence of factors, including the presence of speculators who believe this is the perfect time to be scooping up properties.
"If you're willing to buy flooded houses, you can find some great bargains," said F. Patrick Quinn III, a local real estate developer who said he has been snapping up both commercial and residential properties throughout the region. Several real estate brokers contacted said they were representing out-of-towners or corporations looking to invest in New Orleans real estate.
The bulk of residential buyers, agents say, are local residents who are purchasing a second home to live in while the fate of their first home is determined by insurance companies and government officials. That includes Mark Rose, who in November bought a home in Metairie after his Lakeview home was flooded. Mr. Rose is the general manager of Nola.com, a Web site that includes extensive real estate listings in the greater New Orleans area.
"What we're seeing is a lot of homeowners trying to inflate the price of homes in areas not hit by flooding," Mr. Rose said. Those properties do not tend to move, he said, because a lack of available funds in people's pockets are keeping home prices relatively stable.
"How many people can afford two monthly mortgages, especially if the prices of the second home are inflated?" he asked. For some people, insurance payments are helping to defray the cost of a second home.
Yet buying a second home might still be more attractive than leasing, as the monthly cost of renting a home has spiked by 50 percent or more, according to Ms. Wood, the broker in Metairie.
"Leasing is at a premium right now as so many people are looking for a place to live for 90 days to six months while things sort themselves out," Ms. Wood said.
Another sign of optimism came in December when KB Home, the California home builder, bought 3,000 acres of land in a suburb to the west of the city. The firm, which is in a partnership with the Shaw Group, a construction and engineering company based in Baton Rouge, has said it plans to build as many as 20,000 homes on the property.
"Until now, we've never seen any national builder express interest in building in the New Orleans area," said Mr. Randon, the broker. He represented the property owner in negotiations with KB Home.
The RAND Corporation has predicted that, in three years, the city of New Orleans will have a population of no more than 275,000, down more than 40 percent from its pre-Katrina population of 465,000. Much of the decline will come from evacuees who do not return, while some former city residents will move to the suburbs.
"I think what we'll see is a morphing of the residential property market," Mr. Randon said. The demand for homes on the north shore of Lake Pontchartrain, which is at less risk of flooding, and for homes in high-and-dry suburban communities, will prove a factor that will help reshape the metropolitan area, he said.
Another could be the lure of condominiums, which offer people a chance to live high above sea level. The New Orleans condo market was hot prior to Katrina, but Mr. Randon predicts the market will be "very, very, very strong in the coming months," in no small part because of empty-nesters like him and his wife. With a daughter in college and a huge bill to fix up a flood-damaged home, "I think we're like a lot of people in asking, 'Do we really need a big house or would we be better off moving into a condo more in the center of town?' " Mr. Randon said.
So far, there has not been any spike in condo prices, according to Sean Talbot, of the Talbot Realty Group, which specializes in condominium sales. "We've been busy, but not as productive as we had been before the storm," he said.
Mr. Talbot was the only one of the dozen-plus brokers, bankers and developers contacted for this article to sound a skeptical note about post-Katrina business. Still, he is hardly pessimistic about the local real estate market. He described business in recent weeks as only "decent," but he added, "things are starting to happen and getting better every week."
- bill 1-02-2006 6:28 pm [add a comment]