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Where is the Condo Inventory in New Orleans ? The supply has Dwindled and the Demand is Steady

     The New Orleans Condo Market is doing well but not great.  One of the reasons is lack of supply of nice condos that meet the needs of the buyers in the market.  When you take out the condos that are over priced and have too many negatives there are not many nice units left.  Each week I expect to see more listing and they do not come.

    I have had several new contacts this week of people wanting to purchase.  Once I run their criteria in terms of price range, specific area, bedrooms, parking, and amenities they are lucky to have 3 nice things to look at.  This is not the norm.  Interest rates are at 3.5% and less so the demand is there but supply is trailing.

    I have had two clients that want to live in the Federal Fibre Mills that are friends of past clients.  There is nothing on the market.  There are 140 units in the complex.  I cannot remember a time when there were no units for sale.  There is only one unit for sale at the Cotton Mills less than $200,000. I had a listing that lasted three weeks and sold last week at the Cotton Mills.  This is a great place to be for under 200k.

    This is holding true in the French Quarter as well.  We tour the new listing in the French Quarter every Tuesday as agents to get a preview of new listings.  There has only been a handful in the last month.  We generally get free lunch as we tour. That is gone now.

    The Warehouse District, French Quarter, Garden District, Lower Garden District and Uptown are seeing the same shortage of inventory.  Even the suburban market of Metairie, Harahan, River Ridge are showing less new listings.  I can now count more ferns on the photo below that I can with most requests that I get.

Fern City in the New Orleans French Quarter

       The one area where there is a reasonable supply is in New Orleans in the lower price ranges.  This is where you would think the opposite would be true.  I am showing a client tomorrow some units under 160k and we have 5-6 decent choices.  They are looking for a weekend place in Uptown New Orleans which is a trend.  People are expanding their search when they know more about the City of New Orleans.

     Best approach with current clients is to put them on a watch list based on their criteria so they they can see new listing, under contract status  and sales.  They can see them daily or several times per week.  I still tell them we should look at the complexes where you would expect condos to come up for sale so they can better make a selection when one does come up for sale.  This is easier in areas that have larger condo associations.  Much harder in the French Quarter, Garden District, and Lower Garden District where the condo associations tend to be smaller.

     The best solution is this case is to let clients look at sales over the past year to get an idea of what the condos looked like and what the prices were.  The prices are trending upward to a degree but appraisers look in the rear view mirror to figure out the present value.  You get a lot of inexperience on this end as the comps are fewer and the appraisers come from all over and are not as familiar with the market segments as they should be.

    The cause of the shortage is a little harder to figure out.  One reason is that few new condos have been developed in several years.  Many people are getting very good rents and have opted not to sell at this time.  Some of the possible listings are being rented for good returns while the owners may not be able to get all their money back today.  Add in the increased demand and you see inventory moving quicker. 

    The peak of the New Orleans Market seemed to be in 2007 while prices did drop up to 10% in 2008-2009.  We are getting back to those prices once again where people can now sell and break even.  its hard to tell the future but it looks so much better than it did a year ago.  The housing market was getting better then.  I figured out the condo market follows the housing market with a delay for whatever reason.

Warehouse District Profile 

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The value of having an HO6, “Condo Insurance” for your New Orleans Condo is Important-Just ask Issac..

     Issac was the recent Hurricane that swept through New Orleans last week.  The tropical winds lasted about 36 hours and dumped about 10 inches of rain.  I know first hand of two condo associations in the Warehouse District that has damages to the roof and in came the water.

     You would first think that the condo association’s insurance would cover all the damage.  The problem here is that the deductibles for wind and hail are high and may not kick in until $100,000 to $200,000 of damage has occurred.  Even then it will not cover possessions and build-outs in the condos.   So the condo association has to dig into reserves to cover the roof and other damage that may have occurred.

    All lenders now require the condo buyer to have an HO6 policy just in case this happens.  It happened last week to about a dozen owners that I know of.  They generally require a 40-20 policy or more depending upon the condo and its value.  The 40k is for things like floors, cabinets, and appliances.  The 20k is for possessions.  The deductibles are lower than the master policy.  The lender will have a formula for what you need.

     The HO6 policy cost about $700 to a $1,000 per year.  Cash buyers are not required to get the insurance but they need to have to policy for peace of mind.  It is not a common occurrence but it does happen and with first hand knowledge you had better get a policy and upgrade it from time to time.

    Both instances centered around the roof leaking.  Many of the roofs in the Warehouse District are flat and that seem to be where most of the problems do occur.  But not always.  I know of one several years ago where a water pipe burst after a transformer exploded.  The shock busted the water pipe and after 10 minutes of running it left several units damaged.  It does not take a busted pipe long to ruin things.  This does not happen often but it does happen…..

    So if you do not have your own condo insurance policy, then you need to get one or roll the dice.  If you have one it may be time to review it and check it out. 

404 Notre Dame Street View Below

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Beginning Your New Orleans Condo Search On Line…..

      Starting your New Orleans Condo searchis much like window shopping except most shopping begins on the Internet for most buyers in today’s Real Estate Market.  The Internet search will give you the price, location and a few photos.  Some better than others.  Its the best way to window shop to get ideas of what is on the market. 

    Once you have done your window shopping you will know when its time to get serious about your purchase.  You will need more than what you see on the Internet.  You will start looking for an experienced agent…There are always things we need to know in order to get you started.

Questions an Agent will Ask

Condo Searching in New Orleans, Finding a condo

         You can use any number of real estate searches that are on line. Some are better than others. Feel free to use my Nola Home Search Site where you can save your searches.  You can ask me to set up some basic parameters where you will receive regular e-mail updates on a regular basis as new listings are added to the New Orleans MLS. 

      You can see where condos are being reduced in price and fall into your price range.  It will also show you when a condo is sold or goes under contract.  You will also have a mapping feature and no one will call you to ask for business.  Many of the oter real estate sites are just created to sell leads to agents and real estate companies.  They are paying to play.  You have no idea if you are getting a knowledgeable or experienced agent.  All agents are not equal in their knowledge of the New Orleans Condo market. 

Where to Start your New Orleans Condo Search

          The best thing about looking is that I will know in most cases if the condo is not a good buy, in an unsafe area, is just way overpriced, or that the building just needs too much work.  I can always get you down to 5 good choices or less once I know what you are looking  for and answer the above questions for me.  It may take some time or a great deal may just pop up where you have to act quickly.  I try to see as many new listings each week as I can by going on a property tour or when I am showing clients.  When you have sold several hundred you tend to know what to expect.

        I too am often surprised so we look at those that look good or ones that I have not seen in several years.  I still enjoy looking and I know you will also.  That in a few paragraphs is the way to start your search.  Then I jump start the process whne I receive your all.

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First Time Buyers are in the Market Again ! Maybe a condo is the best way to start…in the New Oreans Real Estate Market

     We are beginning to see an increased interest in first time buyers coming into the housing market.  Some of these buyers want a home and some may want a condo as it is generally more carefree and less expensive than a home.  The cost is just a lot less than owning a home in most cases. 

     A new buyer can get into the neighborhood where they would like to be with a much lower price tag than a home.  These are the areas where condo sales have been best.  Its only natural for people to gravitate to demand areas.  Its all about location and the life style that that location offers.

    The interest rates are below 4% at the present time. I got quoted a rate today from my favorite lender where your principal and interest is $442.10 if you borrowed a $100,000.  Borrow $200,000 then you double that and you are at $884.20.  These are fantastic rates and rival any in the last 40 years.  You just pay your equity down much faster.  Add in the interest deduction on your income taxes and its just a winner.

402 Julia Street, The Lofts, New Orleans Warehouse District

        The other item many first time buyers overlook is the cost of ownership of a home versus a condo.    The insurance cost is becoming  a larger and larger factor in owning a home.  I am working with two new buyers on a home and their flood and home owners insurance is going to be $2400 a year for a home around $140,000.  Its close to $200 a month.  Then you have to pay for water and utilities.  The exterior upkeep with time or money. This is going to average at least 200-250 per month over the term of ownership if nothing major goes wrong. 

     When buying a condo the insurances are in your condo fees.  The water, exterior maintaince, upkeep of the property are in your condo fees. The fees for a 140k condo are generally less than $250 per month. In Jefferson that number can be less than $200 per month.  Many condos include the Internet, cable, gyms, pools, courtyards, and management fees in your monthly condo bill.  The amenities do matter if you are on the go and need to concentrate on your work while not over paying for a place to live.

Condo Amenties in New Orleans Condos

 

    In  the end your cost could be as much as 50% less owning a condo over a home in the same price range.  This is because in a condo you are part of the condo association where these cost are less because they are shared among all the owners.  You do have to pay for an HO6 policy for the interior of your unit plus contents.  This will run $700-$800 per year.

    Its a lot of numbers to digest.  Once digested this may be a good move.  The condos will generally be smaller than a home but much more updated in terms of applainces, kitchens, baths ect.  Most have been recently redone in the last 10 years.

    Then the last thing but not the least is that there is no more rent to pay to someone else.  You are basically renting from yourself.  Paying $1500 per month is $36,000 for two years and you will never see that money again.

Federal Fibre Mills Condos, The gym, New Orleans Warehouse District

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New Orleans Condo Market begins to shine…..as Summer begins..

     I listed this condo for in the New Orleans Warehouse District for $429,909 that I had listed several years ago that we had to end up renting as the market was soft and few lookers.  I just listed it again on Monday of this and already have 5 agents wanting to see it this week. .  What does this say about the New Orleans Condo Market…… This one is located at 909 Lafayette Street #9. Will have more on this one later….. 

909 lafayette windows view 1

    The demand is up in most areas if the condos are priced correctly.  Not many will over pay and buyers are doing their homework in an ever greater degree that in the past.  The nice things in the 200k-350k range are selling rather quickly. 

    The ” Premium New Orleans Condos” that I call the ones that have many positives and few negatives are the best buys.  People will pay for what they want.  These are the condos that will sell quicker and actually appreciate faster.  The so called ” Good Buys” may not be that good.  Its not all in the square footage price.  There are always going to be pluses and minus factors on most units.

    The Square footage numbers do not price into account correctly many factors that other areas may not have. The views, parking, common areas, ceiling heights, quality of updates, balconies, front units, porches, large windows, natural light, floor plans, historic feel, exposed brick flooring are all factors that are hard to calculate….But they can be compared to other like units.  This is where a good realtor can give you guidance.  My thoughts always think about the resale value.  

909 lafayette Condos, windows den1

909 lafayette street

 909 Layayette Building

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Doctor loans in New Orleans from Patterson State Bank, Residents, Doctors

    Many residents or young doctors decide on a condo as a first step in deciding where to live.  The program offered by Patterson State Bank is very hard to beat.  I do not know all the details but Barbara Deichmann will know all the answers 504-616-8067.  She said it is very easy as all the loans are approved in house and the loans stay at the bank.  I have known her for years so she is no fly by night lender.

    Its a great deal for New Orleans residents at any of the local hospitals where you may be heading.  Best to call Barbara to get all the details about the New Orleans Doctor Loans for 2012.

    I just found out about this as I sell condos to doctors all the time and was looking for something like this.  I have had bad experiences with the few out of town programs that I have been involved with.  Never had an issue working with Barbara.  An in house program allows for swift answers to you questions. 

    The rates are 3.3% with nothing down.  Yes 100% financing.  The term of the loan is 5 years amortised over 30 years.  It is like a balloon note but they will work with you at the end of the term if you need more time.  You can get the loan now even though you are starting in July.  Lets get you settled now with the loan and then I can find you the best possible condo that I can.

     Some Quick Facts on the Numbers

         Renting for 4 years at $1200 pr month is $57,600 and that goes to your landlord never to be seen by you again. 

      Borrow $200,000 and your principle and Interest is $875.91 per month.  You will have condo fees and taxes to add to this.  The total outlay will most likely not be much more than the $1200 in rent.

     Your reduction in principle or your equity after 4 years is $16,698.66.  The number increase monthly.  You can deduction the interest as a home owner to the tune of $25,345.02 over the four years.  Let Uncle Sam help you out now as you will certainly help him out later.  This really lowers your out of pocket expenses by almost $400 per month.

     If your condo goes up in price by 1% you will gain $2000 in one year.  Prices are trending up in New Orleans and the  total appreciation can easily be $10,000 over the 4 year period.  People I sold the last 2 years are up in almost all cases.  I do not expect to have the down trend that we had in 2008-2009 period.

     So its worth calling Barbara at Patterson State Bank 504-616-8067.  And call Eric for the condo or home ideas. I have some starting as low as $109,000 with an easy ride to most all places where you would be.  That is $477.37 per month on the principal and interest with condo fees of $152 per month. Your total cost will come in under $800 per month for a new place.

Foggy Jackson Square in New Orleans

       To make this picture become clearer just ask questions and get some answers.  This is what we do well.  Its a big decision but we can make it a little easier for you and it can be cheaper than renting.

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Warehouse District Condos in New Orleans, A few favorites but not many…It may be time to begin your search !!

       The Warehouse District Condos are getting harder to find as the new listings have been coming in at a trickle.  The prices are on a gradual uptick.  Many of the condos in the 200k range only stay on the market for several weeks.  The rental demand has been way up and there a few places to rent.  There has only been a handful of foreclosures in the area and could count them on one hand over the last year.  Foreclosures were at most 10 units spread over the past 4 years or so.

      I had a couple of recent sales where my client was the only one to see the condo because it sold on the first day that it could be shown.  Missed out on a couple as well as my client could not react fast enough.  Always a good idea to start looking several months before so you can get an idea of the trends in the neighborhood.

     There are a couple of nice things available but the parking does not come with the unit.  Parking can generally be found but may have to walk a block or so.  This is not a big deal for a second home buyer but it is a big deal if you live there full time.

    You can still get a nice one bedroom in the 185k range to 220k that has been updated and has parking or access to parking.  Many of the two bedrooms will have parking but the prices start in the 280’s range for the 900 sq. ft size and go up from there. 

Warehouse District in New Orleans

           The Warehouse District is attracting more second home buyers than ever before.  The Warehouse District has become a place where there is always a lot of things to do.  The World War II Museum is expanding.  The Convention Center has been having a great year. The Saints weekends have been becoming larger and larger.  So just a lot going on each and everyday.

       The new VA hospital and LSU Medical Center are in fact going up and people in the area know that this will bring in more people that will desire a lifestyle of the New Orleans Warehouse District.  The movie people love the area as a base of operations.  Some of these people start off as rents and then become buyers in New Orleans. 

         I still get a lot of request for second home buyers who want to look but are not quite ready.  In each category there are only a couple to look at.  The good ones will go before they get to see them or can make up there mind. These buyers have to get started early.  Start looking on the Internet. Get financing in order.  Begin to look at some other great areas where the supply and prices may be lower.  

Warehouse District Profile

        In short the market is good to very if the condos can be financed and they have most of the things people are looking for.  Buyers are still just not going to buy anything so it has to be prepped for sale and be at a reasonable price.  Buyers can generally get financing in most of the condos with interest rates at about 4%.  Always best to stay with a local lender so the process is smooth and you can close on time.  

       This will give you a great idea of the  New Orleans Warehouse District Lifestyles. The future of the area looks bright so now when rates are look and prices are still good, the next several months is a window that may soon close…..

 

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Second Home Market for New Orleans Condos has been extremely good of late…

      The second home market for a New Orleans Condo has dramatically changed in the last six months.  Its been up , up and selling.  All the nice things are selling in most of the areas where second home people do buy.  Now many second home buyers are staying in the condo longer and coming more often.  The areas where buyers look has expanded to almost all the areas in New Orleans where there are condos. 

      Several years ago the French Quarter was the place to be.  It still is in demand for the nicer and more expensive units.  The slowest segment of this market is the ultra small units while the nicer more expensive condos are selling briskly.

Coloseum Square in New Orleans

     More and more buyers are willing to look in other areas as well.  The Warehouse District has been doing well for the past 4-5 years for second home buyers.  Now we are seeing people venture to all areas of the city.  Most want a place where they can walk to restaurants, shops and be near the St. Charles Ave. Street Car line.  The areas in the Lower Garden District, Garden District, Uptown are all getting attention this year.

     The area between Magazine and St. Charles has been one of the better areas for all these reasons. Its just easy to walk to places and find things that have that New Orleans feel.  You can walk to a variety of stores and restaurants that you will not find elsewhere in the United States.  You can mingle with people from all walks of life.  Talk about the Saints and Politics and you will get a lively discussion from most locals.

Magazine Street Merchants

    The interest rates for second homes remain low at about 4% if this is going to be a second home.  Always best to use a local lender who understands the New Orleans Market.  Stay local and be happy and satisfied.  I can always recommend the best as my job depends upon it.

     One question I am always asked is about renting the condo when the owners are not here.  All the condo docs are going to say not leases for anything less than 60 days and more.  This is a city law so all condo documents are going to state this.  Many are longer terms for leases. 

     I am always asked about flooding as well. Very few of these areas flooded during Katrina or during the recorded history dating back to the 1750’s.  This was and is still high ground. 

    The good to great rental business is for people wanting corporate places for several months at a time.  These could be people on a short assignment for a variety of jobs.  The movie business has been booming and it takes several months to shoot a movie.  There is a lot of construction going on and people need places to stay.  Companies are not moving people as much but pay a per Diem to someone on a temproary  job that could last months.

       These people do not want to stay in a hotel.  I have a good friend and past client Ann Beck who specializes in this segment and she says her business is booming.  She can get you set up once you purchase according to the rules and regulations.  Let her screen the clients for you.

St Charles Ave Streetcar, New Orleans Real Estate

        The street car is only $1.25 for a one way ride and runs from 6 am to midnight.  An all day pass is only a couple of bucks more.  Not bad for the oldest running streetcar line in the United States.  Plenty to see along the way….

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Where is the Inventory in the New Orleans Condo Market?

    The inventory is selling and a buyers choices are somewhat limited in 2012.  This is a drastic change from this time last year.  In the last month I have sold 4-5 condos as soon as the buyers saw them.  In the last week I have seen 5-6 sell within the first week they were on the market.  Some seemed to be good buys and others not so good. They Sold Quickly….. 

   1.  The interest rates are still very good. At around 4% for a 30 year fixed.  A client of mine got   3.25% today for a 15 year loan.  People are feeling better about the economy and New Orleans.  There is a general feeling that the rates will not stay this low once we get to 2013.

   2. The condo foreclosures in this market are far and few between. I can count the nice ones on one hand over the last 18 months.  This part of the business in New Orleans Condos never amounted to more that 3-4% of the business and they sell within days of hitting the market.

    3. Many of the buyers are buying second homes as they find New Orleans a great place to visit and be for more extended periods than in the past.  Many have plans to stay longer and longer if their jobs permit.  Many are not anchored to a location where they can work.  This is a new factor that was rarely seen a couple of years ago.

    4.   The condo sales have followed the the housing sales.  The New Orleans proper real estate market started improve last Spring.  The delay for condos was 6-9 months before it really started improving like a rocket…..This housing huge as people who cannot get into a house will settle for a condo based on price.

     5.  Few new projects have been created in the past 4-5 years since Katrina.  Developers are thinking about it again.  The lenders have created problems for not wanting to finance new projects, basically Fannie Mae does not want to finance new condo projects.  They are behind the curve or at least in New Orleans.

      6.  Many of the sales are cash sales which mean these buyers do not have to stress over notes or face issues with lending.  Many others put 30, 40, 50% down with plans to pay them off in the coming years.  This is a great sign for the future.  New Orleans had a good number but this year 30-50% of my sales fall into this category.

     Its not however happening in all areas of New Orleans.  This dramatic uptick is in The French Quarter, Warehouse District, Lower Garden District, and Uptown.  Some the other areas will come in to play as a cheaper alternative.  It will just take time to spread.  Its tough to fight the trends unless you can figure out the next trend.  I think I may know the answer…….The outlook is Sunny for New Orleans.

Barker House Condos Balcony in French Quarter

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Condos in the Lower Garden District, Volume, Demand and Quality pick up…

      The Lower Garden Districtis what I am calling the area between the Warehouse District and the Garden District.  The area between St. Charles Ave and Magazine Street is an area where I am selling more and more condos for a number of reasons.  You get more for you money, many are very historic in nature, and people like the neighborhoods.  You can walk the Garden District to stroll down Magazine or a 15 block walk to the French Quarter or just take a short cab ride.  The Super Dome, New Orleans Arena and Convention center are within a long walk or very short ride.

       The majority of the condos have been converted from old homes or apartment homes.  In the early years of the conversions the developer would do a little remodeling and turn them into condos.  Now we are beginning to see a more upscale developer who is doing a total rehab down to the studs.  These are going to be more expensive but they are also more in demand. 

       The biggest reason that the sales are picking up is that you can get a real New Orleans feel with high ceilings, large windows, porches, balconies, wood floors and the things that people like about the historic home feel.  This is the segment that has shown the best strength and will continue to do so.   The better the conversion the more in demand they will become.

     Coliseum Square Park and the surrounding area is the center of a real “comeback feel”  neighborhood.  You can walk to St. Charles Ave. to take the Streetcar or walk a couple of blocks to Magazine Street which is undergoing a renewal in the area as well.  You can see it in the remodeling, restoration, and type of business that is moving into the area.  You also have movie studios and sound stages moving in as you get closer to the Mississippi River.   

Lower Garden District Statue

     I have now sold 7-8 condos in this area to people who wanted second homes in other areas and could not find what they wanted so I suggest they look in this area.  Several wanted more space as they wanted to live there full time.  They found what they needed here as well.  This has all happened in the last year and I am only one agent.

     These sales have come in a lending environment that has not been kind to new condo developments but the sales are beginning to pick up with a higher degree of cash sales and buyers putting down more cash.  This is a good omen for the future.  You do have some local lenders that are easy to work with and understand the local real estate business.  The supply of units is down but I can see the demand coming back.

     I wrote an earlier article on the Garden District Garden District Condos which is doing as well but has very little inventory.  Below is one of the many historic homes you  find in the area as well.  Condo prices are following the housing demand but tend to trail it.   

        New Orleans Homes, Front Porches get a star

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Eric Bouler Realtor
Gardner Realtors
Metairie - New Orleans, La. USA