Current New Orleans/Metairie, LA Housing Market

[Amanda Vu]

Hi, I am just starting out as a very much so newbie rental property investor! Would anyone here be able to guide me in terms of figuring out whether or not the housing market in New Orleans/Metairie, LA is at its peak right now? I understand you gain the most in profit when you purchase a housing property when the housing market takes a little fumble, but I have no idea how to figure out whether or not this is the case right now in that particular area. Also, for those of you kind enough to be able to answer this for me, how did you go about gathering the info necessary for your response? I would love to be able to do the research on my own but just don't know where to start exactly. 

[Braden Smith]

Hi @Amanda Vu. I am both an investor and a licensed realtor in New Orleans. I actually live in Metairie. @Bobby Shell is right that taxes are high in Orleans Parish, but Jefferson Parish has much lower taxes, as do other surrounding parishes.

As far as the market is concerned, our peak was 2015-2016. In 2015, Orleans Parish saw a 14% increase in the average home price. That was followed up by another 3-4% in 2016, so we had an almost 20% increase in values in those two years. This is when we saw some really rapid appreciation. OP ended 2017 down about 3.5%, and up about that much at end of 2018. So those two years kind of cancelled each other out. 

The market has definitely changed and shifted. For 2019 prices have been stable with a modest appreciation. We are returning to a more normal market.

You can go back and look at the records for 100+ years and you will find that real estate is cyclical. It follows the same 4 phase cycle over and over again. 

Phase 1 - "Peak" - - Unit sales increasing, Prices increasing, Inventory decreasing

Phase 2 - "Correction" - - Unit sales decreasing, Prices increasing, Inventory increasing

Phase 3 - "Trough" - - Unit sales decreasing, Prices decreasing, Inventory increasing

Phase 4 - "Recovery" - - Unit sales increasing, Prices decreasing, Inventory decreasing

In our are we are in Phase 3 of this cycle, which is known as the "trough" where you see unit sales decreasing, prices starting to come down some, and inventory starting to increase.

Keep in mind that New Orleans tends to buck the national trends when it comes to real estate and the economy as a whole. We have a very unique real estate market here, and it can be difficult to get a grasp of it. We have the lake to our north and the river to our south, and there is only so much land in between. We are not a sprawling metropolis that just keeps growing and growing. 

I can tell you with absolute certainty that the New Orleans market is completely saturated with investors. There is an extreme amount of competition out there. It has gotten very difficult to find a good deal and when you do there is almost always someone willing to pay more than they should for any given property. I have made half a dozen offers in the past week or so and have gotten beat out on every one of them by investors willing to pay more than me, which means they are willing to accept very small profit margins... or maybe they just don't know what they are doing. 

But there are good deals to be found in any phase of the real estate cycle. It easier in some phases as compared to others, and you have less competition at times. You just won't typically find them listed for sale anywhere. You have to go direct to seller and find off market deals. You need those truly motivated sellers that have a real reason and need to sell, not just a want.

The key to any type of investing, whether it be buy and hold, rehabbing/flipping, etc is to know your numbers and stick to them. There are guidelines to follow and they work. Stick to your numbers and don't allow your emotions to make decisions. You must remain logical and rational in this game, or you can lose out big time...