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New Orleans home prices rise after Katrina

June 8, 2006

By Peter Henderson

NEW ORLEANS (Reuters) – People returning to New Orleans
since Hurricane Katrina have driven house prices up 10 percent
as they compete for the few structures that survived,
University of New Orleans researchers said on Thursday.

Katrina flooded 80 percent of the city, killed more than
1,500 and drove hundreds of thousands from their homes. While
many may never come back, those who return face slim pickings
in a city where entire neighborhoods were destroyed and
rebuilding has begun in fits and starts.

The price of the average single-family home in the New
Orleans metropolitan area rose to $215,179 in the first three
months of this year from an average of $195,377 in the first
eight months of 2005. Katrina struck on August 29.

In Orleans Parish, the county that includes New Orleans,
prices rose sharply after the storm and then eased a bit, in
part reflecting sales of damaged houses. Average prices
remained well above pre-Katrina levels, based on data from the
local Realtors association, UNO professor Ivan Miestchovich
said.

Sales activity was also at healthy levels. About 3,600
houses sold in the metro area in the first three months of
2006, slightly ahead of the quarterly averages in 2003-2005,
when just over 13,000 changed hands each year.

Apartment rents in the city are also up.

In the Mid-City and Lakefront sections of town, both of
which were flooded, rents rose to a post-storm average of
$1,584 a month from $986 before the storm. In the historic
Uptown and Garden districts, which were partially flooded,
rents increased to an average $883 from $791.

HOUSING NO. 1 PROBLEM

“Housing has been THE problem since Day One” after the
storm, Miestchovich said in a telephone interview. “It’s the
chicken and the egg problem. There are lots of jobs, but you
need housing,” he said.

He estimated it would be another year before the economy
showed signs of stabilizing.

Nearly every neighborhood still has flattened or severely
damaged houses, although Miestchovich said it was difficult to
say how much the housing base had contracted. Temporary
trailers sprouting in driveways and front lawns show that many
are rebuilding.

Also, many are hoping for substantial government help,
including $4.2 billion in aid under consideration by the U.S.
Congress.

The city’s population stands at around 220,000, or half
pre-Katrina levels, analysts say. New Orleans nearly emptied in
the immediate aftermath of the storm, but Mayor Ray Nagin and
others predict families will return in droves over the summer
to be ready for the next school session.

Jobs appear plentiful for those returning, with some hotels
and restaurants going so far as to import labor from Russia and
other countries, said Dr. John Williams, head of the
university’s hotel school.

Only about 31 percent of restaurants have reopened in
Orleans Parish, and many are on abbreviated schedules. The
number of hotel rooms is down to about 28,000 from nearly
39,000 before the storm.


Source: reuters



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