In the midst of troubled times, real estate remains remarkably strong. Here’s why.
- The stock market is too volatile for the average investor; bonds and money market accounts are making almost zero returns. That leaves real estate.
- Residential real estate is the choice of people with money because of its security. That choice is being fueled by continued super low interest rates.
- People are spending much more time at home. They’re noticing flaws and shortcomings in their homes, and repairing or improving them. YouTube is their remodeling University.
- Builders, landscapers, and renovators, are busy due to increased housing demand, cheap money, and people’s desire to “fix up” or improve their homes with the addition of a home office, gym room, upgraded kitchens, outdoor space, smart home features, rooms to air B&B, and a general improvement to enhance the living environment.
- Big numbers of Boomers are seeking retirement sanctuary. They’re selling their homes and moving to low stress, low Covid locations.
- 30% or more of those now working from home will either want to, or be told to, stay there…creating demand for a home office. The standard 3 bedroom home has now become the 3 bedroom home + a home office. (Read, 4 bedroom home)
- Desire for better living conditions is driving people from Urban to Suburban. Some are moving because there’s a fear of close (Covid) contact with other people. I’ll add that a chunk of the Urban demographic is aging and now thinking “family”. Family can frequently = the burbs.
- Real estate prices across the nation are increasing due to high demand and low inventory. Every 5% of inventory reduction pushes prices up 1.5%. Greater New Orleans is down 36%. Once they hit the market, homes have a short life span. Buying a home? Don’t dawdle. Get yourself a good agent, or lose out.
Commercial real estate is hurting. Years before it returns, probably in another form.
* Here’s a heads up. Thinking about moving out of the city? Think about Harahan, or River Ridge, on the river side of Jefferson Highway. What happened to old Metairie (tearing down and building, or significantly remodeling), is going to happen there. Why? Remarkably pleasant location. Lower overall cost. Perceived advantages in Jefferson Parish. Better police = lower crime. Better roads. An easy 25 minutes to downtown NOLA. Close to the levee for flood zone X security. And, the paved levee bike path for park-like sunsets strolls by the Mississippi river, runs, or bike rides. Buy there now, prices are very reasonable and that area will experience long term appreciation.
A quick look at New Orleans, and Louisiana as a whole.
- New Orleans fuels 30+ percent of Louisiana’s economy, but NOLA tourism and convention revenue are dead…not predicted to return for 1-2 years.
- Oil and gas, another major revenue generator, is operating at or below basic production cost. Some wells are already shutting down. Fewer rigs are producing. One source said that “helicopter traffic to the rigs has been reduced to a fraction.”
- State tort reform is in the works to improve current Insurance costs. Currently, Louisiana is a tort attorney’s dream causing super high insurance rates.
- There are a number of new faces in the state legislature. Hopefully, they have fresh ideas and a new approach.
- Tax reform with a view toward lowering state tax is also in the works but minus an economy to fuel it, that will be some time in coming.
- Possible tax code reform may make it easier for small businesses to do business.
Where’s the State/City operating revenue going to come from?
- State and National debt caused by efforts to support those caught in the jaws of the pandemic, is soaring. The Louisiana unemployment trust fund is bust. How will this debt be paid? Informed sources say, in part, it’ll be paid off with inflated dollars, and increased real estate taxes.
- Inflation always hurts those living on fixed incomes. Same goods, higher price.
- New Orleans employment is down a conservative 11%. Negative economic impact is greatest with lower paying jobs, the service industry, and small businesses. Larger businesses are better equipped to weather the storm. Say, like chain restaurants versus locally owned independents. A sad statistic for local restaurant fans.
- The pandemic afflicted economy dropped so significantly that any graphed improvement will look equally thrilling because it has no place to go but up. That graph will look like a “V”.
Here’s a peek at the future, and a few tips to keep in mind when making real estate decisions.
- Nationally, Flood Insurance has been approved through 2021.
- According to a recent Loyola symposium, current home demand, and low interest rates, are predicted to last for 1-2 years.
- Are you a builder or renovator? Make sure you satisfy the home office demand, and increase the bells and whistles, and quality, built into your homes.
- Are you a buyer? Buy with the future in mind. A home office, yard space, good kitchens, smart home features, are important. If the home doesn’t have them, see if it has the potential to have them. Remember, you’ll probably sell that home someday and you’ll need to have a great product to sell in order to make the max $$ gain possible. You’ll also need a good agent who knows what they’re doing.
- Are you a seller? Stage, clean, and fix broken things so your home is sold for its maximum value. #1 buyer complaint? A dirty house. Declutter and clean it like your mother’s coming for dinner. Don’t hire inexperience, interview agents and find out who knows the most…that knowledge is your power to make more $$. Call with your questions. 504-579-4717
Once the Covid vaccine is in the arms of a majority of Americans the economy will start on the road to recovery. In the meantime, stay safe and let the scientists tell us what we need to do to stay healthy.
Want more information like this from an agent who really knows? Call me. Get the deep experience you need in challenging times.