|
Sellers in New Orleans Home Market Desperate to Sell |
|
|
|
|
Written by Administrator
|
|
Wednesday, 25 July 2007 |
Hurricane Katrina’s aftershock has left a surplus of high-end homes in coastal Louisiana and Mississippi that leans on a spike of insurance costs squeezing many out of the market. Another tumbled domino is the exodus of many professionals such as doctors out of the area. Economic development experts throw caution that with more professionals leaving the place and far from returning will result to a stunted recovery of the region.
Brookings Institution’s demographer William H. Frey calls the legion of professionals as “the backbone of the community” that will support the tax base.
Almost two years have passed since the strike of Katrina and New Orleans' population rises with about 60% of the pre-Katrina level residents. But the Louisiana State Board of Medical Examiners reports that nearly 900 doctors have left New Orleans from July 2005 to March 2007. University of New Orleans’ Center for Economic Development and Real Estate Market Data’s Director Ivan Miestchovich says that there is a deficiency in white-collar jobs. He says that although sectors of education and construction are coming back, they can’t afford $500,000 and above worth of homes. It becomes a highly important concern as most of the homes in the New Orleans market are of high-end price.
A visiting fellow at the Brookings Institution, Christopher B. Leinberger explains that turbulent transportation system and crime rates have plagued New Orleans when Katrina left thus many "upper- and middle-income households,” who are capable of relocating in better places have left.
Many are still on the brink of leaving the area as recovery is still a bleak vision. Residents have become frustrated with the city government.
New Orleans sellers are putting out extras in order to sell. For example, home insurance premiums worth a year and state grant money. Since Katrina’s grave impact, insurance rates have nearly tripled thus pulling down sales and downsizing homes for some. Former assistant Louisiana state treasurer admits that now insurance has become a crucial factor in deciding on a home purchase. President of Latter & Blum Arthur Sterbcow says that a healthy real estate market average supply of homes for sale must only be 5 months in clearing that inventory. However, New Orleans now has as much as twice that supply. The higher the price the higher the pile of supply thus the area’s inventory worth 10 months has costs from $300,000 to $325,000 comparable to homes with price tag ranging from $750,000 to $1 million, which is a 23-month inventory.
Senior economist with the National Association of Realtors, Lawrence Yu cites a different scenario immediately after Katrina where prices were high as buyers with damaged homes hustled to find other housing. NAR says that in the fourth quarter of 2005 average prices rose by 27% coming from displaced-resident buyers. But since sellers have outnumbered buyers, prices have decreased in months. The average rate declined by 10.9% to $155,900 in the first quarter of 2007.
In response to the decreasing number of professionals in the health care industry, Louisiana offers bonuses, loan repayment and as much as $110,000 worth of moving expenses to keep the doctors and nurses in the area.
Gulf Coast Association of Realtors’ Jim Atchison highlights the high costs of homeowners insurance as a major factor in the drop of home sales. Insurance price has inflated mortgage payments making them unaffordable. He cites some clients interested in homes in the coast worth $400,000-to-$500,000 have received $10,000 to $12,000 a year of insurance quotes that are as much as three times more than what they’ve spent in pre-Katrina days. Atchison says that in order to attract buyers they incorporate the concern on insurance quotes in houses for sale, telling prospect buyers that the purchase of a house depends on finding an affordable insurance. Some sellers would go as far as paying for insurance premiums of their clients for at least a year.
Vanessa Arellano Doctor
http://realestatepress.org |
