Despite the dip in 2023, New Orleans home prices remain higher than pre-pandemic levels, reflecting the aftermath of a buying frenzy that triggered bidding wars and substantial price hikes.
What a stable real estate market in the metro area means for buyers and sellers
The New Orleans metro area real estate market is considered stable right now, although it’s slightly slower than in the past couple of years. There’s no reason to worry, as it reflects the state of the economy, demographic trends, population shifts in the area, and how interest rates directly affect home affordability, among other factors.
Median home prices have dropped over a year, but potential buyers and sellers remain stuck in place, The New York Times reported at the end of last year. The median sale price of a home in the United States dropped to $431,000 in 2023 from $479,500 in 2022. In many cities, prices for condos were down as well. So, why are both sellers and buyers feeling stuck? Mainly because homeowners are not willing to list at a loss. We’ll just have to see whether local home prices can cause a shift in the market and encourage more homeowners to sell their New Orleans homes.
The Hottest and Coldest Markets in the Nation
In January, NOLA.com reported on Zillow’s predictions for the best and worst real estate markets among the nation’s 50 largest metropolitan areas. Zillow looked at data including:
- Growth in home values
- Job growth per new home
- Projected change in owner-occupied households
- The speed at which sellers are entering contracts with buyers.
Unfortunately, Zillow predicted that New Orleans would have one of the nation’s coolest real estate markets in the coming year. Buffalo, New York, was predicted to become the hottest, with cities in the Midwest, including three in Ohio, following closely behind.
Factors Affecting Home Prices
Many prospective homebuyers in the New Orleans area are currently waiting on the sidelines, with soaring interest rates causing a slowdown in the once red-hot market. Last year, home sale prices in most ZIP codes across metro New Orleans dropped 4% compared to 2022, reported the New Orleans Metropolitan Association of Realtors.
Additionally, homes are taking longer to sell, with the average time on the market increasing from 33 to 51 days year-over-year. Notably, even affluent neighborhoods like Old Metairie, Lakeview, and parts of Uptown witnessed declining home prices, a trend persisting despite inflation.
In Orleans Parish, the median sale price for a single-family home decreased by nearly 4%, and Jefferson Parish experienced a nearly 5% decline. The real estate market in St. Bernard Parish saw a 5% drop, while Plaquemines Parish remained stable. In contrast, certain areas in St. John the Baptist and St. Charles parishes observed increases of 4% and 7%, respectively, driven by the recovery of housing stock after Hurricane Ida.
New Orleans Home Prices Still Higher Than Pre-Pandemic
Despite the dip in 2023, New Orleans home prices remain higher than pre-pandemic levels, reflecting the aftermath of a buying frenzy that triggered bidding wars and substantial price hikes. In Orleans Parish, the median sale price of a home reached $337,500 in 2023, marking an 18% increase from 2019. Similarly, Jefferson Parish saw a 21% surge over the past four years. St. Tammany Parish had a substantial 26% increase, reaching nearly $287,000. Other regional parishes have witnessed comparable long-term growth.
Homeowners’ Insurance Adding to Costs
Louisiana is grappling with a significant insurance crisis, leading to soaring homeowners’ insurance premiums for thousands of residents. In Orleans Parish, Citizens Property Insurance Corp. rates, the state’s insurer of last resort, show substantial variation within ZIP codes. For instance, in ZIP code 70127, the average cost per $1,000 of dwelling coverage is $24.76, resulting in an 82% average increase in Citizens homeowners’ insurance premiums for 2023 in Orleans Parish. This surge is affecting approximately 100,000 Louisiana property insurance customers who lost private coverage. Louisiana Insurance Commissioner Jim Donelon approved a 63% average statewide increase for Citizens’ 2023 premiums due to large premium hikes by private insurers. Nationwide, home insurance rates are on the rise to align with inflation, with Louisiana’s elevated risk level adding an extra factor for insurers to consider when determining rates.
Buying a Home in New Orleans in 2024
At Satsuma Real Estate, we hold an optimistic outlook for 2024. Our optimism is fueled by the traditional post-holiday season increase in listings and showings. Moreover, the Federal Reserve’s indication of potential interest rate cuts later this year could prompt many hesitant homebuyers to re-enter the market, even with a modest quarter-point reduction. Finally, Louisiana’s new Insurance Commissioner, Tim Temple, has proposed sweeping changes to state insurance regulations, aiming to streamline processes and make the market more business-friendly.
Regardless, we always recommend working with a knowledgeable real estate agent if you are considering buying or selling a home in New Orleans. A skilled agent can provide insight into the local market, help determine fair property prices, and devise practical strategies to navigate market uncertainties.
Your Satsuma Realtor can help you remain vigilant, adapt to changes, and make decisions based on a thorough understanding of market dynamics. Ready to put yourself in trustworthy, professional hands? Contact our Realtors to help you achieve your real estate goals.