New Orleans housing market shows signs of recovery amid rate cuts

NEW ORLEANS (WVUE) – Soaring property insurance premiums in Louisiana, coupled with elevated mortgage interest rates, have long weighed on the New Orleans metro housing market. But Jamie Hughes is starting to see signs of a rebound.

“I feel like we’re coming out of the rough spot now,” said Jamie Hughes, a Realtor with Reve Realtors in New Orleans.

According to the New Orleans Metropolitan Association of Realtors, home sales in August in Orleans, Jefferson, and St. Tammany parishes rose compared to the same month last year. With the Federal Reserve’s recent interest rate cut, Hughes believes more local inventory could move, especially if mortgage rates drop below their current level of around 6%.

“If we go under 6%, I think that will bring a lot more buyers back into the market. There were many that were sitting on the sidelines for the past couple of years for various reasons,” Hughes said.

Although additional rate cuts are expected in the coming months, some potential homebuyers may delay purchasing in hopes of securing lower rates. Still, Hughes cautions against waiting too long.

“I think the time to buy is whenever you find the right house that you can afford. And waiting may not help you. You can always refinance, but when rates get lower, the competition in the market gets higher, and you may not get the house you had your eye on,” Hughes said.

The effects of lower interest rates may ripple beyond residential housing. Businesses and consumers looking to borrow could also benefit, according to Jim Spiro, managing director with Morgan Stanley in New Orleans.

“Businesses should benefit nicely because they’re constantly borrowing money and trying to grow their business, trying to expand, perhaps trying to hire new people,” Spiro said.

However, the local real estate market faces deeper structural issues. Professor Ken Johnson, a real estate economist at the University of Mississippi, points to persistent population decline as a core challenge.

Johnson, who analyzed housing prices and rental trends in the New Orleans metro area, described the region as “perhaps the toughest” market in the country. He attributes the struggle largely to a shrinking population.

“There’s just not enough demand. As your population either slowly grows or declines, and New Orleans is slightly declining right now, you eventually start to have vacant houses, which become blighted houses. It’s like throwing gas on a fire at that point in time. So that decline in population, you just lose demand for housing,” said Johnson, the Christie Kirkland Walker Chair of Real Estate at the University of Mississippi.

Johnson believes it will take more than interest rate cuts to stabilize the market. But given the sluggish pace of home sales over the past two years, any momentum is welcome.

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