Hot New Orleans neighborhoods right now
When real estate agents talk about a buyer’s market, they typically mean an area that has 7 or more months of inventory for sale. How do they determine this? Basically, we look at the number of sales in a neighborhood over the last 90 days, the number of homes currently listed for sale and then calculate approximately how long it would take for all of those homes to sell if nothing else comes on the market.
Inventory levels below 6 months are generally an indicator of a strong seller’s market – these are the most popular areas that attract the highest number of home buyers. If inventory levels are low enough, there may even be bidding wars between buyers that end up pushing the sale price higher than the asking price.
Inventory levels of 6-7 months are considered to be a balanced market – buyers buy, sellers sell and unless there’s something special about a particular property, there will likely be no bidding wars. That doesn’t mean that some homes won’t sell quickly, just that there is a balance between current supply and historic demand.
Inventory levels over 7 months are an indicator of a buyer’s market – there are more homes for sale than can be absorbed by the market in a reasonable amount of time.
Seasonal spikes are not unusual – we often see inventory spikes in January because of the lower number of December sales.
With those numbers in mind, take a look at inventory levels at the end of March
Surprise #1: Michoud/Venetian Isles
Inventory dropped from 17+ months in January and February to only 3 in March. Why? Because after a dismal 2015, there were 10 homes sold in March. That’s 30% of the available listings taken off of the market in just 30 days and more sales than any other month for the last year. The caveat is that it will only take a month or two of lower sales to send the inventory soaring again.
Surprise #2: CBD/Warehouse District
After spending months in a seller’s market, inventory started creeping up in the fall of 2015. We said at the end of last summer that there might be a bubble ready to burst in that area and it looks like it’s developing a leak. Buyers opting for new construction rather than resales and a higher number of available properties both contribute to longer marketing time that sellers are experiencing now.
Surprise #3: French Quarter
The Quarter spent most of last year with an average inventory of 8 months, then spiked up to 35 in January 2016. Spring sales have brought that number down to 13 months in March 2016, still well above the 8 months we saw at the same time last year.
What’s not a surprise?
How hot Central City and Gentilly are right now. They remain comparatively affordable neighborhoods, but prices and sales are on the rise in both. There’s a reason it’s a seller’s market in those areas – as buyers have been priced out of a huge swath of the city, they are moving either away from the city center to Gentilly or venturing a little further off of St. Charles Avenue in Central City.
One thing is for sure….this will be a really interesting year in New Orleans real estate.