In 2022, events in the New Orleans real estate market were similar to, but in one important respect different from, what was happening in other markets around the country. Interest rate increases by the Federal Reserve led to a rapid doubling of mortgage rates – from an average 30 year fixed rate of 3.5% in January of 2022 to an average 30 year fixed rate high of 7% in November of 2022 – and this had the expected and intended effect in the single-family market of slowing appreciation, if not reversing some of the gains from the two years prior. It also led to an increase in single-family home supply to normal levels from what had been historic lows in supply and an extreme seller’s market. So we have retreated from the days of multiple offers, bidding wars and double-digit year-over-year price gains in the single-family market, and we begin 2023 in what is frankly a healthier, more balanced market with respect to supply and demand.
Regarding the downtown condo market, you’ll find below that this market effectively was the inverse of the single-family market during much of the pandemic – i.e., supply increased and prices declined – but in 2021 things began to improve and that trend has largely continued – supply has come down markedly and prices have increased from pandemic lows.
The important difference in our market that I referred to earlier is all about insurance. As a consequence of a succession of hurricanes impacting the state in the last few years, we have seen several carriers go bankrupt and several others exit the state, which has led to significant premium increases, and this doesn’t even take into account increased flood insurance costs arising from FEMA’s new Risk Rating 2.0 methodology for estimating flood risk. And these insurance problems have compounded the affordability challenges arising from rising interest rates (there are, thankfully, some legislative efforts afoot to try to address our insurance woes ).
Despite all this, we are not seeing significant declines in home values, nor is the local market at a standstill. And I am optimistic that with inflation appearing to moderate, the Fed may see fit to stop its rate hikes during Q1 of 2023 and we may return to a strong market driven by healthy underlying fundamentals – the millennial generation (said to be the largest generation in American history) reaching household formation age, the (seemingly enduring) shift to working from home, low single-family inventory relative to medium-term demand, and much more responsible underwriting by mortgage lenders in the last few years.
Let’s start with a look at the single-family market parish-wide.
ORLEANS PARISH SINGLE-FAMILY
Days on market for single-family homes in Orleans Parish are up 23% from the fourth quarter of 2022 versus the fourth quarter of 2021 – from 34 days in Q4 2021 to 42 days in Q4 2022 – but they are actually down 13.5% year-over-year in 2022 versus 2021 – from 37 days in 2021 versus 32 days in 2022.
The sale versus list price differential is down 3.1% in the fourth quarter of 2022 versus the fourth quarter of 2021, from 96% sale versus list in 2021 to 93% in 2022. On a year-over-year basis, the sale versus list price differential for single-family in Orleans Parish is unchanged at 96%.
Now let’s take a look at the downtown condo market.
The median sales price of $352,500 for French Quarter condos in December of 2022 is up 13.7% from a median sales price of $310,000 in December of 2021.
The average sold price per square foot for condos in the French Quarter was at $523 a foot in December of 2022, which despite interest rates and other headwinds, remains very close to a historic peak of $535 a square foot reached in October of 2022. The last time this price per square foot was approached in the French Quarter was April of 2018 when the average price per square foot for condos reached $529 and prior to that the last peak for average price per square foot in the Quarter was when it hit $530 in February of 2016.
Throughout 2020, the French Quarter saw an increase in condo inventory, adding to what was already a very oversaturated condo market. However, the market shifted in 2021, stayed healthy through 2022 and we’ve seen a steady decrease in months of supply from a high of 20.7 months in January of 2021 to 7 months in December of 2022.
Average days on market for condos in the French Quarter stood at 76 days in December of 2022, a 25% decrease from 102 days in December of 2021.
Finally, the sale versus list price differential for French Quarter condos was 95.1% in December of 2022, a 1.3% reduction from a sales versus list price differential of 96.4% in December of 2021.
WAREHOUSE DISTRICT AND CBD CONDOS
The median sales price for condos in the Warehouse District and CBD of $387,500 for December of 2022 was up 26.2% from a median sales price of $307,000 in December of 2021.
The average sold price per square foot in the Warehouse District and CBD of $415 in December of 2022 is down 5.5% from an average sold price per square foot of $439 in December of 2021.
The Warehouse District and CBD, like the French Quarter, have seen a significant reduction in condo inventory since the worst days of the pandemic, from a peak of around 15 months in late-2020 and early-2021 to 5.4 months of inventory now.
The average number of days on market for condos in the Warehouse District and CBD was down 32% in December of 2022 versus December of 2021 – from 95 days in December of 2021 to 65 days in December of 2022.
Finally, the sale versus list price differential for Warehouse District and CBD condos was at 96.3% in December of 2022 versus 97.1% in December of 2021, a 0.8% decline.
Keeping the focus on specific neighborhoods, let’s take a look at the 70115 and 70118 zip codes encompassing much of Uptown. The median sold price for a single-family home in Uptown was $600,000 in the fourth quarter of 2022 versus $597,000 in the fourth quarter of 2021, a 0.5% increase. However, looking at 2022 year-over-year versus 2021, the median uptown New Orleans home price was $625,000 versus $599,000 in 2021, a 4.3% increase. And looking back to 2020 versus 2022 year-over-year, there has been a 21.4% increase in the median sold price for Uptown single-family homes, from $515,000 in 2020 to $625,000 in 2022.
The average sold price per square foot for Uptown single-family homes was $321 in the fourth quarter of 2022, up 3.6% from an average sold price per square foot of $310 in the fourth quarter of 2021. For all of 2022 versus 2021, Uptown saw a 7.9% increase in the average sold price per square foot – from $313 in 2021 to $338 in 2022.
Now moving downtown, let’s take a look at single-family activity in Marigny/Bywater. The median sales price for single-family homes in Marigny-Bywater was $510,000 in December of 2022, which is 2% decrease from the median single-family price of $522,750 in December of 2021.
The average sold price per square foot in Marigny-Bywater was $356 in December of 2022, a 13% increase from an average sold price per square foot of $315 in December of 2021.
Months of Supply for single-family homes in Marigny-Bywater increased 110% in December of 2022 versus December of 2021 – from 2.0 months to 4.2 months.
Days on market in Marigny-Bywater are down 27% in December of 2022 versus December of 2021 – from 44 days to 32 days.
Finally, the average sale versus list price differential for single-family in Marigny-Bywater was 95% in December of 2022, a 3.9% decrease from a sale versus list price percentage of 99% in December of 2021.
I hope you’ve found this end of year market overview informative. If you have any questions, or would like information on any areas I didn’t address, please contact me by email, or by phone at 504-407-9012. And please keep me in mind if you or anyone you know needs assistance with real estate in 2023.