June 30th, 2013 categories: Market Trends
When looking at the Metro New Orleans Condo market it is like a tail of two cities. The Orleans Parish Market is very hot and the Jefferson Parish Market is still soft. The prices in New Orleans are much much higher than in Jefferson. The West Bank condo market barely exist, but this is nothing new. The demand is pushing prices up in New and there is not a lot of inventory for sale.
The rental market is softer in New Orleans than it has been in quite some time while the Jefferson rental market is doing very very well. There are just more places to rent as sellers can afford to hang on to property as it goes up in price. Maybe we are getting close to a bubble….
Interest rates are going up steeply in the short term. They went from 3.5% to 4.5% in the last 30 days. One of the steepest upticks in years. All because the Federal Reserve says they may not buy as much debt as they have been doing. Its like borrowing form yourself. Actually it is like printing money.
Its hard to see interest rates taking off again. The USA is the largest borrower in the world. They are borrowing a trillion a year. The current debt stands at 16 trillion and quickly heading to 20 trillion in 2-3 years. If the government has to pay 5% then their borrowing cost would be 5 x 20 trillion or a trillion per year. Then you would be borrowing a trillion and another trillion to pay the interest on the debt. Not sure this makes a lot of sense unless you know math…..Just my Two Cents…
It hard to tell which door is going to open next.
We are seeing a lot of cash sales as people are not getting a great return on their money and they are so many uncertainties in the market. We will see fewer and fewer refinances as rates rise and generally you need to get a rate 1.25% below your current rate to make it worth while. The older folks that used to be a big source of condo buyers is not there unless it is a second home. This means they are staying put.
There are not a lot of young, young first time buyers either. Not sure what the reason is for this. It could be that the down payments need to be 10% to get the best rates. Takes a while to save this on starting salaries these days…Loans are still tight and other loans are becoming a factor…The car note and student loans do add up decreasing a persons buying power.
Certain sellers have been coming up with “Dream Land Prices” that make no sense at all. It gives agents a place to show while the price drops. Other sellers price it right and it is gone is 10 days in most cases in New Orleans. Much longer in Jefferson.
These are a lot of currents to think about. Stay around another 30 days and things will change. With that said June , 2013 has been one of my best sales months ever in 15 years of real estate. Five cash sales in a row may also be a record. Which door is next….