Have you been on the fence about purchasing a home? Maybe you've grown frustrated looking in this highly competitive market? Maybe credit repair or down payment savings is holding you up? Whatever
New Orleans Real Estate Market Update -- July 2020
Dated: July 6 2020
We all know everyone’s most popular question for their Realtor, “How’s the market?” That’s what we all want to know during normal times. So, amid a Pandemic, it’s especially top of mind.
We’ve seen record unemployment and contracting GDP over that past several months, so what’s the effect on real estate? And specifically, what is happening in the metro New Orleans area?
Surprising Good News
While other indices have delivered dire news, real estate stands out as being quite stable locally. From an industry perspective, residential real estate so far is showing very little effects from the Coronavirus. Much like home improvement giants Home Depot and Lowes, sales are up! And why not? While we're spending so much time at home, what better opportunity to improve your asset?
There are certainly industries where the virus has been brutal, most notably and relevant for New Orleans, hospitality, travel, and tourism. But so far, real estate has proven relatively immune.
Stats and Graphs
You’re probably tired of seeing graphs and curves, especially when the curves are going the wrong way! That makes the stats I have to share all the better. These are local stats pulled from the Multiple Listing Service, which represents a lion share of the existing home sales of June 2020. What seems clear is that the news is good.
First, look at the 10-year trends for Median Sales Price for Orleans, Jefferson and St. Tammany Parishes respectively. This ‘big-picture’ will help you sleep tonight! More than anything, these graphs illustrate the time-proven concept that real estate is a sound long-term investment. These graphs tell me that currently the trend is business as usual.
The second graph is a little more boring, but relevant. Historic inventory Levels of Single Family Resale Homes is showing no significant changes over the last year. We did see a dip during quarantine when some came off the market, but all is relatively stable. In the future, we really want this number to show an increase as new home construction enters the market and blight reduction eases off. Inventory needs to go up as our population increases and ages. It's one of the reasons we see so many new rental communities in Orleans Parish in particular.
Next, the Year to Date Sale Volume for Orleans and Jefferson Parishes shows that, after a slight dip in March/April, the sales have rebounded for an overall YTD increase. Overall, a stable market.
I am not here to fluff up your real estate expectations and it’s time to keep it real. For all this good news, I will offer some reserve. We are still too early in this Pandemic to know that the next year will bring. Even though we would all like to return to normal, Covid is not short-minded and has its own timeline. If the Pandemic lingers, the ripple effects from other industries will eventually catch up to other areas. Layoffs, unemployment, inflation – these are all precursors to possible real estate issues. To what degree, it’s just too early to know.
One area for concern now is the commercial real estate market. Businesses are failing, and others are learning they can cut down on office space because working from home has proven to be a viable part of their business models. Just today, CNBC reported that commercial mortgage delinquencies surged to a record rate in June. Delinquencies lead to foreclosures, and foreclosures can pull down an entire economy. And it's doubtful if these trends continue that residential real estate won't feel the effects eventually.
I’ll keep you updated with market statistics once a month.
Please wear a mask to respect your neighbors and protect our first line workers.
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