The number of home sales in the greater New Orleans area dropped sharply in April as the coronavirus pandemic locked down the economy, but prices mostly held steady as many sellers withdrew their properties and took a "wait-and-see" position amid the unprecedented market conditions.
Real estate experts said it is now impossible to predict what will happen to home prices in the next few months as there are so many unanswered questions about the economy — the labor market especially — that need to be answered.
"The market hangs in the balance," said Aaron Dare, a real estate broker at Tommy Crane Group in New Orleans.
"How buyers and sellers will react in the coming weeks and months will depend on how the stock markets stabilize, whether we maintain low interest rates, the opening of the economy, advances in COVID-19 treatments and pending vaccines, etc.," he added.
According to data tracked by Crane, the number of single-family homes sales in "new, excellent, very good, and average" condition that sold in Orleans Parish in April was 184, down 30% from the same month last year. In Jefferson Parish, 240 homes sold last month, down 21% from the previous year.
The number of houses listed also fell sharply: down 11% in Orleans and 18% in Jefferson. However, the closing sale price as a percentage of the initial listing price held at steady at about 97%.
As always, the overall market data can mask wide differences between ZIP codes and within neighborhoods.
Lacey Conway, CEO at brokers Latter & Blum, said they've seen a drop in transactions since the shut-down, though brisk business in the first two months of 2020 had seen the firm's volume and value of transactions both up 30%.
"Looking at these numbers (for April) can feel very scary but business is getting done," she said. Desirable houses in sought-after neighborhoods still have no problem being sold, at least so far.
Latter & Blum broker Margaret Stewart said 510 Iona Street in old Metairie, had 10 offers soon after being listed immediately after the stay-at-home order. It sold above its $1.27 million listing price in less than 30 days.
"There are still bidding wars even in these crazy times," Stewart said. "It's a function of location and opportunity and this was a chance to get into Metairie Club Gardens," a sought-after neighborhood for well-to-do young families.
But even some of the higher-priced properties in desirable neighborhoods are showing signs of weakness, especially for the kind of Warehouse District condominiums aimed at out-of-town buyers where supply had already reached saturation level.
"The condo market is always the first to get hit and takes longer to come back," said Dare, who notes that New Orleans is particularly skewed toward those spending discretionary money on a second home. "I think the high end will feel the pinch more quickly."
The middle and the lower end of the home market is more dependent on employment trends, which had helped push up prices for homes in some parishes.
St. Bernard Parish had been posted the biggest price gains in recent years, said Wade Ragas, a market analyst and former director of the Real Estate Market Data Center at the University of New Orleans.
St. Bernard home prices gained 12%, to $112 per square foot, last year and had continued to push ahead this year to $117 a square foot until the pandemic hit, said Ragas.
But that's not likely to last now, he said. "Just six weeks into this event and we've already had a pullback in the number of houses sold of about 17% (for the Greater New Orleans area) and in the number of houses listed for sale of over 30%, so the market is adjusting pretty fast," he said.
"What makes markets work is changes in employment growth," Ragas said. "We were on the verge of very strong employment growth, with wage gains all across the metro area through February of this year and no signs of a major problem except for the oil and gas industry."
But that has come to a crashing halt with the sudden and massive rise in unemployment and there is no way to predict the pace of economic reopening or how long the jobless rate will last.
"What we know is that we haven't seen the bulk of unemployment claims yet," said Ragas. "What we don't know is how long before we turn around and gain jobs rather than lose jobs."
As well as putting a lid on home sales it is changing the way people are thinking about their homes, Conway said.
"We've been seeing a lot of companies saying it's OK to work from home and I think that's put a lot focus on the home for people living in the city and asking, 'Could I be happier with a little more land, a bigger house?'" said Conway.
"I think that is adding to the movement we've seen where people are pushing to the north shore and other suburbs looking for the bigger house, more land and away from the condo in the Warehouse District."
Ragas expects demand for apartments might move toward roommates sharing costs, though he notes that occupancy rates so far have held near 94% in the suburban Jefferson market. "The Central Business District is vulnerable to job furloughs and layoffs which makes retaining or growing technology oriented space crucial and difficult," he said.
The pandemic has also changed the way brokers have had to do business. They've canceled open house tours of properties and have seen a huge surge in virtual tours.
Marcel Wisznia, the architect and developer behind The Garage, a $49 million apartment and condo complex on Carondelet Street in the Warehouse District, said they've created Youtube channels and 3D tours via Matterport, the property video platform that reported a 620% rise in camera sales in March.
"This is a very unique time," said Wisznia. "All of us who play in real estate we just don't know what is going to happen."
He said that the pandemic has certainly hit condo sales, but apartment leases have been helped by an influx of medical staff.
