DID NEW ORLEANS EAST RECOVER FROM KATRINA? © 2012 by Wayne D. Lewis, Sr. (Part 1 of 2)

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In a previous blog (http://makeyourbestoffer.blogspot.com/2012/10/do-disaster-impacted-homes-recover_4.html), I discussed several areas within the New Orleans area that had been impacted by Hurricane Katrina. Those areas were Gentilly (Area 76), Mid-City (Area 68) and Lakeview (Area 69). 

 

In this latest blog, I thought I would look further into Katrina’s possible impact and how it may have affected another area in New Orleans:  New Orleans East.  New Orleans East is one of the largest land masses in the City of New Orleans, and is characterized by many components.  For the sake of this review, I have focused on New Orleans East as delineated by the areas assigned by the New Orleans Metropolitan Association of Realtors.[1]  Those Areas are (73, 74, 75, 77, 78, 79, & 85).  See Map below. 

 

As we stipulated in our earlier blog, Hurricane Katrina and its aftermath may have caused direct or indirect damage as a result of what happened between August 28 and August 31, 2005.  From wind damage to flooding, there is no absolute determination that will be made here as to which caused damage, directly or indirectly to the homes of this area.  In a number of cases, many homes were in no greater damage than the day before the storm.  Many homes did not flood, or receive any significant wind damage. 

Even as buyers may have noticed that many homes were not damaged, it still may have not mattered to potential homebuyers whether the home flooded as much as how much was flood insurance affected by the waters that breached, overtopped, or destroyed the levees.  The inevitable conclusion is still the same in the real estate industry when it comes to selling homes:  What are the properties selling for in terms of $ per square foot, AFTER the storm? 

We are not discounting any work done in terms of renovations, or how well homes survived the storm, but when it came to appraisals, which is another story, homes that were on the market immediately after Hurricane Katrina had to be compared to homes much farther away than just in their immediate subdivision, or even the New Orleans East area.  Banks were slow to make loans on properties devastated by the floods, or the areas that were near to where homes were flooded.

The question here is, how have homes in New Orleans East recovered from the aftermath of Hurricane Katrina?  Below are several tables.  On the surface, the tables reflect 3 time periods:  the first half of the years 2005 (preceding Katrina), 2008 and 2012.  From the these tablea we will see how many homes sold in the areas associated with New Orleans East (Areas 73, 74, 75, 77, 78, 79, and 85).  We will see the $per sq. ft. sold in these areas, the average sq. ft. of the homes sold, and how many Days on the Market (DOM) the average set of homes stayed on the market.

What you will not see however, but I will reveal at this time is that the homes used for this study were single detached homes, in Excellent or Very Good condition, 3 bedrooms and 2 baths.   For the purpose of this unofficial research here is how Excellent and Very Good  are defined from the New Orleans Metropolitan Association of Realtors,

·        Excellent condition -No functional inadequacies of any consequence and all major components in like-new condition. The overall effective age has been substantially reduced upon complete revitalization of the structure regardless of the actual chronological age.

Very Good -condition is considered as No obvious maintenance required but neither is everything new. Appearance and utility are above the standard, and the overall effective age will be lower than the typical property.[2]

 

 Other factors may have played a role in the sales of these properties, but they are not referenced here, nor were they considered in the final analysis.

 The areas that I have selected are:

· Gentilly Woods (area 73)

· New Orleans East (Areas 74, 75, 77, 78, 79 & 85) See map

Immediate Criteria:  1^st half of year increments-

·         Jan 1, 2005-June 30, 2005;

·         Jan 1, 2008-June 30, 2008 and

·         Jan 1, 2012-June 30, 2012;

·         # of properties sold;

·         average sq ft of living area of properties;

·         $ per sq ft of properties sold and,

·         how many Days on Market (DOM) before being sold

 

 Below are 3 tables separated by their years for New Orleans East.  Here is what we know, based on these tables:

 

Total # Of Properties Sold:  For 2005 (See table 1), 199 properties were sold for the first half of the year ending June 30, 2005 with an average of 28  properties per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).   For 2008 (See table 2), 115 properties for the first half of the year ending 2008 were sold, with an average of 16 properties per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).  For 2012 (See table 3), 82 properties were sold for the first half of the year ending June 30, 2012, with an average of 12 properties per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).

 

What we may observe from this snapshot of information, is that from 2005, 2008 and 2012 revealed a gradual decrease in sales of 3 bedroom 2 bath homes in the New Orleans East area.  Of the total of 396 homes of the three years referenced, the first half of 2005 sales accounted for only 50% of those sales.  2008 only accounted for 29% of those sales, with the remainder of 2012 only accounting for 21%. Most notably, the two years’ sales activity referenced here, 197, post Katrina, accounted for 50% total number of properties sold.

 

Table 1.  January-June 2005

Y2005
Area	#of Prpts	$PerSqFt	Aver Sq Ft	DOM
73	13	$        93.87	1127	61
74	51	$        79.05	1716	50
75	7	$        77.87	1196	75
77	26	$        81.43	1777	62
78	44	$        78.57	1527	72
79	36	$        85.54	2423	56
85	22	$        79.73	1628	102
Totals	199	$       576.06	11394	478
Avg	28	$        82.29	1628	68

Total Days On the Market (DOM):   For 2005 (See table 1), properties sat on the market for a total of 478 days for the first half of the year ending June 30, 2005 with an average of 68 days  per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).  For 2008 (See table 2), properties sat on the market for a total of 483 days for the first half of the year ending June 30, 2008 with an average of 69 days  per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).  For 2012 (See table 3), properties sat on the market for a total of 816 days for the first half of the year ending June 30, 2012 with an average of 164 days  per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).

The Total Days on the Market (DOM) reflected here for the first half of the years 2005, 2008 and 2012 comes to 1779, revealed an interesting increase in the days on the market in the New Orleans East area.  Of the total DOM of the three years referenced, the first half of 2005 accounted for only 27% of the days properties sat on the market.  2008  accounted for 27% of those days that properties sat on the market, with the remainder of 2012 only accounting for 46% of those properties remaining for a longer period on the market at average of 164 days compared to 2005 at 68 days.   

 

Total Average Square Footage:  For 2005 (See table 1), the total average square footage for the first half of the year ending June 30, 2005 was 11394 sq ft, with an average of 1628 sq ft. per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).  For 2008 (See table 2), the total average square footage for the first half of the year ending June 30, 2008 was 12006 sq ft, with an average of 1715 sq ft. per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).   For 2012 (See table 3), the total average square footage for the first half of the year ending June 30, 2012 was 10069 sq ft, with an average of 2014 sq ft. per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85). 

 

Table 2.  January- June 2008

Y2008
Area	#of Prpts	$PerSqFt	Aver Sq Ft	DOM
73	11	$        94.15	1314	51
74	34	$        85.55	1710	63
75	4	$        84.98	1615	81
77	19	$        88.86	1883	83
78	21	$        85.88	1675	65
79	18	$        85.46	1977	72
85	8	$        85.67	1832	68
Totals	115	$       610.55	12006	483
Avg	16	$        87.22	1715	69

Total Average of Square Footage reflected here for the first half of the years 2005, 2008 and 2012 came to a total of 5,357 square feet.  There was a positive increase in the average square footage reflected in the sales in the New Orleans East area.  Of the total Average Square Footage of properties sold of the three years referenced, the first half of 2005 indicated that homes averaged 1628 a square foot, or 30% of the overall total.  2008’s average square footage accounted for 32% of those properties on the market sold,  an increase by 2 points. And finally, by 2012, the average square footage was 2,014 for the first 6 months of 2012, 37% of the total, an increase of 386 square feet over 2005, pre-Katrina.  

 

Table 3. Jan-June  2012

Y2012
Area	#of Prpts	$PerSqFt	Aver Sq Ft	DOM
73	0	$             -	0	0
74	22	$        71.67	1753	173
75	0	$             -	0	0
77	13	$        67.86	2126	143
78	12	$        72.78	1788	109
79	26	$        76.60	2626	213
85	9	$        80.47	1776	180
Totals	82	$       369.38	10069	818
Average	12	$        73.88	2014	164

$ per Square Foot: For 2005 (See table 1), the total average $ per square ft for the first half of the year ending June 30, 2005 was $576.06 sq ft, with an average of $82.29 per sq ft. per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).  For 2008 (See table 2), the total average $ per square ft for the first half of the year ending June 30, 2008 was $ 610.55 per sq ft, with an average of $87.22 per sq ft. per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85).  For 2012 (See table 3), the total average $ per square ft for the first half of the year ending June 30, 2012 was $369.38 sq ft, with an average of $73.88 per sq ft. per area referenced in New Orleans East (73, 74, 75,76,77,78,79 or 85). 

($) Per Square Foot reflected here for the first half of the years 2005, 2008 and 2012 came to a total of $243.39 $per sq. ft.  There was a peak in 2008, only to see a decline by 2012 in the average $ per square ft. reflected in the sales in the New Orleans East area.  Of the total $ per sq ft on properties sold in the three years referenced, the first half of 2005 indicated that homes averaged totally $82.29 a square foot, or 34% of the overall total.  2008’s average $ per sq ft.  87.22 accounted for 36% of those properties on the market sold,  an increase of $4.93 or 2 points. And finally, by 2012, the average $ per sq. ft was 73.88, a reduction of $8.41 pre-Katrina, and accounting for 30%  of the total of the three years referenced for New Orleans East.

 

Metro New Orleans MLS Map:

 

NOMAR Map

 

Conclusively, the New Orleans East area has had its share of struggles over the past 7 years since Hurricane Katrina.  While this study used Hurricane Katrina as a measuring stick in terms of time reference, and the fact that many of the properties in the affected areas were likely impacted by the storm, it should not be concluded that the storm actually damaged the properties included in this study.  But it is safe to say, that the homes that are used in this study were likely to have been impacted by virtue of flooding, wind damage, or any other hurricane related activity that was in proximity to these subject locations. 

 

This has been an opinion of factors related to Hurricane Katrina and real estate sales in the New Orleans area. Your results may vary.  Opinions are only of this blogger and is not affiliated with or the opinions of Gardner Realtors.  You are advised to consult with your Realtor or Appraiser for more up-to-date information.

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[1] New Orleans Metropolitan Association of Realtors-www.nomar.org

 

[2] http://nom.mlxchange.com/ -New Orleans Metropolitan Association of Realtors (www.nomar.ogr.)