Monday, February 20, 2006

We're Moving On Up

The price for homes in the New Orleans area have skyrocketed after the storm according to a story in the Times-Picayune.

During the final four months of 2005 -- the months after Katrina -- the average sale price in the metropolitan area was $215,769, or 21 percent higher than the average price of all homes sold in 2004. In St. Tammany Parish, where nearly half of all the post-Katrina sales have occurred, the average sales price climbed to $225,156, which is 20 percent higher than in 2004.
This article reflects remarks I made in January here. Especially this remark in the article:
"They're coming from Chalmette, Lakeview, Gentilly, the flooded areas," said Al Palumbo, broker manager for Latter & Blum's office on Elysian Fields Avenue. For some, Katrina has presented an opportunity to buy into neighborhoods they've longed to live in. The historic neighborhoods of Bywater and Marigny, for example, are in high demand, Palumbo said.
And my comment:
2. Moving on. Where houses flooded badly, the owners are looking to unload their damaged homes for a song to either move to higher ground - see above - or relocate altogher. This is creating opportunities for former residents to move back to the city.
My wife and I drove through the Old Metairie Country Club neighborhood a couple of weeks ago and were astonished at the number of of for sale signs. Remember, Old Metairie has the highest property values in the state and Old Metairie Country Club is the most expensive in Old Metairie. It's also VERRRRY nice. What I also noticed was the almost total lack of rebuilding in that area compared to other areas of similar property value.

Why that is I have no idea but in other high-priced neighborhoods, home sales are quite brisk.
In Lakeview, however, where nearly every home flooded, some sales are moving forward as investors buy properties ripe for rebuilding. Before Katrina, homes in Lakeview sold for an average of $300,000. During the final four months of 2005, the average sales price for that area fell to $162,000, based on the 14 homes that sold during that period.
This is probably due to people hoping to move up to nicer neighborhoods for half the cost.

If one can deduce the demographics of this real-estate activity, I believe it shows that the middle-class and upper middle-class are mostly staying in the city while the lower-class and much of the upper-class do not plan or can't return. This may reverse the economic decline that the city has been suffering for four decades as I explained here and corbusier here at Architecture and Morality.

In the days following the storm, commentators stated that New Orleans will be more white and more gentrified in the future. Data seems to indicate that it will be more white but I'm not sure about gentrified. It looks like it will be more middle-class and that is a good thing for the future of New Orleans.

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