“In the greater metro area, new-build houses are going to start in the $250,000-to-$275,000 range, and that is going to be super-competitive,” he said. “So, people in the affordable categories don’t get a shot at those properties, even if they can get together the financing with the help of government programs, because market-rate builders are going to go with regular buyers who can close in under 45 days.”
Deborah La Franchi, managing principal of American South Fund Management, which provided equity to VPG to help fund the Banks Apartments and six other New Orleans developments, said the chronic supply shortage at the lower end of the housing market won’t ease without government help.
“We can all read the stats and see who is being impacted,” La Franchi said. “At the lower end of the income spectrum, it has gotten worse. And it is not unique to the South; it is across the country.
“There is a lack of supply of affordable housing, and it is decades from being met if states and communities don’t start building” houses that can be afforded by people of lower and moderate incomes, she said.
Meanwhile, there is an early hint that some pockets of the New Orleans real estate market might cool off in coming months.
Cheryl McAdam, vice president in charge of the residential division at Latter & Blum, said her brokers have started to notice appraisers rejecting more valuations, especially in the $300,000-to-$350,000 category, under pressure from lenders who are balking at suddenly inflated prices.
“We might just be on the very, very front end of things slowing down a bit, but the trend isn’t there yet,” she said.
Aaron Dare, a broker at Crane, said another pocket bucking the trend is French Quarter and Warehouse District condominiums, which had seen a surge in supply before the pandemic. “It’s been that way for some time now,” said Dare. “Condos are selling, just not at the same clip as houses.”
But like others in the real estate market, Dare said the hyper-competition in the market is most intense for the more affordable properties.
“The lower you go the more competitive it gets; there’s just a bigger buyer pool,” he said. “Folks are just having to be persistent and keep after it. It becomes like their second job, making three or four offers that maybe don’t get accepted.”
Jolì Tolbert-Burrell at RE/MAX Affinity, who was Christopher Anderson’s broker in his hunt for a house in St. John the Baptist Parish, advised him to persevere, even after his string of disappointments.
“Navigating the market as a first-time homebuyer, or really anyone in the market right now, you have got to be in it for the long haul,” she said. “I encouraged Christopher not to give up and to be prepared for a $3,000-to-$5,000 increase” over initial offer price within his range.
Eventually, Anderson found a 1,500 square foot, three-bedroom house on a spacious lot that was within his price range at $156,000. It’s close to where his mother lives and within a couple miles of his job.
After he finally closed the sale, he said, “I started screaming. I had tears and everything. I picked up my dog.
“It was a whole emotional setup. I just didn’t know I could get to this point on my own with what I had going on.”