Apr 232014
 
Before and after photos of 1800 Martin Luther King Boulevard.

Before and after photos of 1817-19 Martin Luther King Boulevard.

Jean-Paul Villere

Jean-Paul Villere

It’s no secret to those that have dipped their toe in the water of New Orleans real estate recently that the stream of activity resembles more of a rushing rapid with unexpected twists and turns included.  The tone of the market possesses a buzz that surprises even the most seasoned flippers and investors, and it shows more promise than concern.  We all know these things ebb and flow, but it’s the perception of spaces that is changing the fastest, the intangible becoming realized in the tangible.  More specifically, let’s look at a cute double that recently flipped in the heart of Central City, but hold on to your hat.  And, as usual, for clarity/disclosure, I did not participate in any part in any of these sales; effectively, I am only an observer fascinated by the pace at which these changes are taking place.

Two years ago, a poor-condition side-by-side shotgun home at 1817-19 Martin Luther King Jr Blvd came on the market for $35,000 on March 6, 2012.  Not without its charms or potential, the dwelling sits on the market for a few weeks before going under contract on March 23, then going to sale 2 months later for $29,000 cash on May 14.  A full-on renovation ensues which one may imagine takes longer and costs more than the party to the transaction anticipates; they usually do.  Nonetheless the market moves along, hammers are swung, paint is applied, and voila on Nov. 12, 2013, roughly a year and a half from its initial sale date 1817-19 Martin Luther King Jr Blvd returns to the market as a beautifully restored multi-family home at an offer price of $369,500.

And then a long cold winter sets in, all holidays come and go, and a new year is born.  At some point, a price reduction takes place to $349,500, and on Jan. 8, 2014 it goes under contract.  The act of sale takes place four weeks later on Feb. 7 via a conventional loan, and the sold price?  $326,000.  Or if you’re a price-per-square-foot kind of person (and you should be, for the record), that’s $151 per foot — which is comparable to prices in the Riverbend, Freret or Broadmoor, but this time in the heart of Central City.  This is of course not a fairytale, but very real facts, supported apparently even by an appraisal given the flip had to pass underwriting somewhere some way.  And bottom line: it’s great.  A home is put back into commerce, tax dollars are collected, and many jobs are created.  The rebirth of New Orleans and her many and varied neighborhoods may be measured quite literally in the interests of buyers.

Lastly, allow me a query to you the reader: are you surprised?  I, for one, am not.  Nothing surprises me in New Orleans real estate anymore.  But I ask, as a general survey, because this whole article was born out of a recent conversation with a non-realtor colleague.  His initial position (and again go back to perception), prior to this flip being brought to his attention, was that perhaps some day in the near future he may find himself an low-price double in Central City, say around Jackson and Baronne.  The crux of this, then, is the changing definition of affordable.  Surely this varies from party to party, and that is exactly what drives the marketplace.  The old adage in real estate is that highest and best use always surfaces for all real property.  Again and again.

Jean-Paul Villere is the owner of Villere Realty and Du Mois Gallery on Freret Street and a married father of four girls. In addition to his Wednesday column at UptownMessenger.com, he also shares his family’s adventures sometimes via pedicab or bicycle on Facebook, Twitter, and YouTube.

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  • Harvey the Rabbit

    Oh my lord, I can’t help myself, but I’ve got to comment on this. This is the craziest residential market I’ve ever seen! Just 2 and half years ago I almost bought a 3400 sqft two story double in average condition in the actual Garden District, not the Garden District realtors advertise in their listings which could be in Central City, I could have bought that place for $340k. Now somebody has paid almost that much for half that house on MLK in Central City. P.T. Barnum would have been a top agent in this market. I understand there are a lot of folks in town who inexplicably have more money to than they know what to do with these days, but what really makes me want to make a run on the bank and bury my savings in a shoebox in the back yard is the fact that the house appraised!!!!! Holy shnikies!!! I mean we’re still recovering from the subprime debacle that ranked our economy and now it’s happening all over again in our little island of residential real estate sanity during those times. It’s like New Orleans is a magnet for financial morons who’ve move from other parts of the country to repeat their mistakes with the little monry they had left after they had to short sell their mcmansion in Phoenix or DC or their condo in Miami. Well guess what? I hope you clowbs pay cash for your slice of heaven, because once you’re in Nola and making Nola wages for a few years you might not be able to afford that house you paid a 150-300% premium for. Unfriggin’ believable!!! I apologize for for the rambling rant and the name-calling but it’s cheaper than therapy. And don’t even get me started on rents!

  • George Oliver

    Nothing surprises me either about New Orleans real estate, but that’s not necessarily positive. As a returning native and retired teacher, the cost of renting is a real strain for a single person on a fixed income, or anyone who is working class. Buying a house is even more challenging, especially when you want to buy a house as a residence in a community, rather than as a business commodity. As long as real estate is mostly a cornered market by investors, I’ll have to struggle to find something I can afford in a neighborhood I can live in. To say with a straight face that “the best use always surfaces for real property” could only be uttered by an investor. After two years, I’m beginning to think that returning to my hometown was a mistake; hundreds of thousands for a renovated shotgun or double is beyond a “changing definition of affordable.” It’s just a game being played by people for whom houses are not homes–they’re profit makers. Those of us who are trying to rebuild our lives here may be the losers.

    • Uptowner

      George, it’s apparent that things have become absolutely insane with the Uptown residential real estate market over the past couple of years. I bought, renovated, and live in half of a double I picked up in 2012, which has appreciated beyond what I had anticipated by a long shot. I work in commercial real estate and kind of saw this coming to an extent, but nothing like this. Luckily for me, I got into both my home and my investment before things REALLY took off.

      I can speak from both sides – owner/resident and investor. Unfortunately, many returning locals are coming back to this craziness, which appears to be sustainable on the surface as long as the city continues to boom and good jobs/educated people keep coming here… What I’m saying is that this probably isn’t a bubble. It’s tough for me to think ahead about moving on to another house (upsizing at some point) because I’m also scared to be priced out of my neighborhood, which I’ve grown to love so much. I do find it sad that many can’t afford to get back into their old ‘hoods but that’s the nature of the free market, like it or not. With all the hate for capitalism and “wealthy” people these days, many don’t want to hear that. I am not wealthy by any stretch of the imagination, I don’t come from family money – I saved and renovated by myself after renting for several years and working after college. People like you need to embrace the market’s rise and consider investing and renovating yourself. Perhaps you can make a buck rather than being sad and watching others do so. Take a look at Mid-City (or Central City, as Jean-Paul shows), it’s the next to boom. Just my two cents -

      • Zac Sieffert

        As somebody who relocated back to the city three years ago from Los Angeles, and lived through the real estate crash, I can tell you that it is always a bubble.

    • Craig

      “It’s just a game being played by people for whom houses are not homes–they’re profit makers.” Well said. My thoughts exactly. And ff the prissy developer who bought on my block talks about the value of my house one more time she’s going to be made to understand it’s my HOME, not an engine for profit to vultures like her.

  • lc

    At this point, I’m unsure if I should be scrambling to buy before things get any crazier, or if I should just wait until this tide finally ebbs.

    I have no interest in being on the front lines of gentrification, but I’m afraid that’s becoming the only option (outside of Jefferson Parish) for young adults looking to buy for the first time.

    Wow. I’m still blown away. Over $300k for a Central City double shotgun. It’s promising for the city as a whole- but it effectively pushes all middle class out of the real estate market in OP.

  • Craig

    At least these people put it on the market after renovating. It’s getting tiring seeing the recent transplants snap up the precious little affordable housing with a cash offer (which, let’s face it, keeps the middle class family demographic out of the competition), renovate it but then rent it at precedent setting top dollar for the neighborhood. Now that middle class family, who would have likely been great neighbors, certainly can’t even afford to rent the house at double what the mortgage would have been. And now there’s steady streams of transient renters who eventually find out that $1500/mo to rent 800sqft just isn’t that sustainable on a bartender/barista salary. The Californians are slowly but surely pricing everyone else out of this city. I wish I shared the author’s optimism for “more promise than concern.”

    • ILikeMokum

      A-FREAKING-MEN

    • Uptowner

      I agree with you that the cash offers are killing locals. Someone was looking out for me to get mine at a traditional 80/20 loan.

    • Lyle Luquette

      Locals had 40yrs to buy this property. You want movies filmed down here, but you don’t want movie producers, actors, agents, and set designers buying the property. I’m sorry but this city is changing, and it is for the better. You have people with real money moving into this city, they are investing in real estate, trying to make this the best city possible. And you are complaining about gentrification and moving to Metairie. Shame on you, locals complained for years about dirty politicians, bad roads, and rundown homes, but did nothing about it. I’m sorry that new homeowners and transplants do not put up with that situation. I’m sorry that you think St Claude and Franklin looked better before Katrina, when it was heroin alley.

      • Craig

        Spoken like true transplanted gentry. Hopefully you don’t buy a house in my neighborhood. There’s enough a-holes here already.

        People are not “trying to make this the best city” they are trying to make a quick buck at the expense of the folks who have endured many hardships living here.

  • KurtB

    And out comes the complainers. “The market is nuts…too expensive…blah blah.” Easy solution: rent or buy where you can afford. A friend of mine has been trying to sell a nice little shotgun in great shape by Earhart a few blocks off Carrollton for 50k with no luck whatsoever. Buy over there & clean up the area!!! It’s much better than Detroit or Cleveland where prices have plummeted over time & the city is drained of brains, tax dollars, & is bankrupt.
    Of course it’s great if you own & tough if you rent or want to buy now. That’s life. I want to live on St Charles Ave in a mansion. Guess what? I can’t afford it. I don’t let it keep me up at night. I’d rather see business activity & properties being renovated than rust, rot, & stagnation. These are good problems people!!!

    • Craig

      Perhaps you should disclose that these are good problems *for you* considering your insulation business. Get off your high horse.

      • KurtB

        I DID have an insulation business… not that it is relevant to this discussion whatsoever. Energy bills are high regardless of houses increasing in value. Cost of fuel is much more important…but obviously you are an expert right?

  • Pistolette

    What you’re referring to is almost entirely driven by outsiders from cities where $350k buys you a studio size condo in the suburbs. So being able to buy a single family home in the middle of an urban area at the same price is a bargain to them.

    I’m hoping that NOLA has finally had its breakthrough role, and that like other iconic cities, the romantic illusion will be sustainable for a long time. Because if the newcomers get bored with us, it’s quite scary to think how far we’d fall from numbers like these.

  • Roland Deschain

    As a potential first-time home buyer in the next few years, this market is extremely depressing. I don’t see a short-term ebb as long as New Orleans stays trendy for 2nd-home-buyers from out-of-town.

  • Harvey the Rabbit

    You’re right, it is supply and demand. Once supply catches up with demand, as is always the case, the property values are going to come back down to something more reasonable and everyone who bought in the bubble is going to wish they hadn’t got caught up in the hype. The lenders that let a house appraise for far more than it was worth are going eat it. How can I be so sure? Because it happened 6 years ago all over the country and I choose not to ignore the lessons from the past.

    • SafetyDance

      I don’t see where the new supply is going to come from? There may be a steady trickle of renovated houses coming up around Orleans parish, but there are no new houses being built in the Uptown/Garden District area. All the new money coming into the city is aimed at these areas, no one is going to move from NYC or SF and live in Metairie.