New Orleans Housing Market Assessment

Overview and Major Conclusions

New Orleans Housing Market Assessment

Overview and Major Conclusions

Presented to

State Bond Commission

March 17, 2011

Purpose and Outcomes

• Comprehensive supply/demand analysis• Extensive primary data collection• Forecasts of future demand• Geographically nuanced data:– Planning Districts in

Orleans Parish– Census “places” in

St. Bernard Parish

Orleans Parish

St. BernardParish

Major Conclusions

• Small oversupply of rental housing– Minor by historical standards

• Occupancy rates are improving• Surplus of for-sale housing• Forecasts suggest a healthy rental market

Small Oversupply of Rentals

Recent “boomlet” is small by historical standards.

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1893

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Permits Occupancy

REITs& FHA

DEREG,S&Ls, &1981TAX ACT

1986 TAXREFORM

Post-KGO ZoneLIHTCs

Source: US Census Bureau, Residential Permits; Occupancy Figures from UNO Real Estate Center Surveys

Small Oversupply of Rentals

Construction activity has dramatically slowed.

Small Oversupply of Rentals

Rents have stabilized – small increase from 2009 to 2010

Affordable Housing Needs

• 28% of pre-storm units had rents under $500 – current total is 12%

• Nearly 50% of pre-storm units had rents between $500 - $800– current total is 17%

• Acutely felt in deeply affordable category:– 70% of those under 50% AMI have excessive housing costs

• Contributing factor – loss of affordable market rate housing

Occupancy Rates Improving

Occupancy rates have stabilized since 2008.

Surplus of For-Sale Units

• Owner occupied units in 2005 that no longer have a homestead exemption• Highlights increase

in single family rentals

Surplus of For-Sale Units

Listings increased by 14% Rents per square foot declined by 8%

Surplus of For-Sale Units

Units sales have decreased Days on the market have increased

Surplus of For-Sale Units

Prices increased from 2009 to 2010 but remain below their 2006 peak

2006 Peak

Demand Forecasts

Surplus of 2,062 units

Deficit of 5,401 units

New Orleans:Planning District ProfilesNew Orleans:Planning District Profiles

District 1CBD, Warehouse District, French Quarter

• Highest sales prices in the city• Strong appreciation in sales prices• Highest median rents in the city• Largest concentration of jobs and amenities• Post-Katrina recovery largely complete

District 2Garden District, Central City

• High sales prices• “Middle of the pack” along several measures:

– Appreciation in sales prices– Median rent

• Strong post-storm recovery• Second largest concentration of amenities

District 3Uptown, Broadmoor, Hollygrove

• High sales prices• Relatively high median rents• Moderate appreciation in sales prices• Third highest concentration of jobs and amenities• Second strongest recovery among Eastbank districts

• Relatively affordable sales prices• Rents are characteristic of city overall• Strong appreciation in sales prices• Moderate pace of recovery• Major concentration of employment and amenities• Major locus of public investment - over $3 billion

District 4Mid-City, Gerttown, Esplanade

District 5Lakeview

• Substantial decline in sales prices• High priced area nonetheless• Second highest in median rent• Strong recovery in light of flooding• Primarily residential area

Photo by Infrogmation (flickr)

District 6Gentilly

• Extremely affordable area• Little appreciation in sales prices• Moderate pace of recovery• Primarily residential:

– Limited commercial amenities– Some major employers but fewer jobs than other districts

District 7Bywater, St. Claude, St. Roch

• High values sales prices for homes in excellent condition• Highest sales price appreciation in the city• Extremely affordable rents• Recovery varies by sub-area• Moderate concentration of amenities and employment

District 8Lower 9th Ward, Holy Cross

• Slow pace of recovery• Most affordable for-sale market in city• Extremely affordable rents• Few jobs and fewer amenities• Tremendous appreciation in sales

prices:– Make It Right homes– Renovated homes in Holy Cross

District 9New Orleans East

• Strong recovery in light of flooding• Extremely affordable for-sale market• Low to moderate appreciation in sales prices• Extremely affordable rents• Significant public investment - Road Home grants• Moderate concentration of jobs and commercial activity

– Lacking basic retail

District 10 and 11Village De L’Est, Viavant/Venetian Isles

• Strong recovery in light of flooding • Most affordable rental market• Strong sales price appreciation:

– Small inventory– May reflect major renovations/updates

• District 10 is major employment center

• Few amenities in either District

District 12Algiers

• Affordable for-sale market• Little appreciation in sales prices• Relatively affordable rents• Strong post-Katrina recovery• Moderate concentration of jobs

and amenities• Significant public investment -

Federal City

District 13English Turn

• High real estate values• Significant decline in sales prices• Strong post-Katrina recovery• Uniformly residential community

www.gcrconsulting.com

504.304.2500 800.259.6192 fax 504.304.2525

2021 Lakeshore Drive New Orleans, LA 70122

UNO Research & Technology ParkAdvanced Technology Center

imiestch@uno.edu

Ivan J. Miestchovich, Ph.D.UNO Institute for Economic Development and Real Estate Research

504.280.6904 fax 504.280.3952

405 Kirschman Hall2000 Lakeshore Drive

New Orleans, LA 70148