Returnees Face Housing Crunch in New Orleans
MICHELE NORRIS, host:
With more than 100,000 homes in the New Orleans area significantly damaged, the market for habitable housing is tight. Whether people want to rent or buy, prices are going up, in some cases dramatically. NPR's John Ydstie has the story.
(Soundbite of door being unlocked)
JOHN YDSTIE reporting:
At the corner of Jefferson Avenue and Tchoupitoulas, Realtor Tom French unlocks the door of a modest duplex for the first time in more than a month.
Mr. TOM FRENCH (Realtor): I got power.
YDSTIE: Before Katrina, French listed this property for $269,000. He's pleased to see it's virtually undamaged. Like much of historic New Orleans, it's on higher ground near the river. That makes it even more desirable now, says French.
Mr. FRENCH: Thousands of people that are now going to be looking for property because of this shortage of real estate--we're not going to have a shortage of buyers--the number of people who are now even willing to make offers on damaged property pending their improvement is growing.
YDSTIE: In addition to being high and dry, this property has another advantage; it has a rental unit. French says landlords are getting 50 to 75 percent more in monthly rents now than before the storm.
Mr. FRENCH: There's a huge demand for rentals. I would say 90 to 95 percent of the phone calls coming in to our office are people looking to rent. I feel so sorry for a lot of them because they've lost everything and they can't find anything. They want to come back, and there's simply nothing for rent.
YDSTIE: While rents are skyrocketing, French, who works for RE/MAX Realtors, is more cautious than some in predicting huge increases in the prices of homes that didn't flood.
Mr. FRENCH: At this point, it's still hard to tell. We've had people who've rushed to up their asking price, but I'm not seeing them get it.
YDSTIE: At least so far. Among the things that might hold home prices in check, says French, is that lenders will be reluctant to write mortgages at prices above pre-Katrina levels because appraisals will be tied to pre-storm values. Also, lenders require that properties be insured, and insurance companies are reluctant to write policies now. The only way to circumvent all this would be to pay cash for a property.
(Soundbite of door)
YDSTIE: Back in his office, Tom French sits down with Troy(ph) and Amy David(ph) of Metairie. Their home took on four feet of floodwater.
Ms. AMY DAVID: All our clothes and everything is just in our cars in bags and laundry baskets. And this morning I'm, like, rummaging through clothes. And we just want to get some normal life back together.
YDSTIE: Amy and Troy and their two young children need a place to live for at least a year while they rebuild. They couldn't find an affordable rental, so they came to French desperately looking for a place to buy in their old neighborhood. They've already made an offer on a house, but French tells them the seller isn't satisfied.
Mr. FRENCH: Quite honestly, because of the situation, they're coming from a much stronger point than we are.
Ms. DAVID: We just want to get in there, you know, before...
Mr. TROY DAVID: You know, let's...
Ms. DAVID: ...Monday and before the kids start, you know...
Mr. FRENCH: I'm...
Ms. DAVID: I'm just trying...
Mr. FRENCH: Yeah, I'm going to call Sandy(ph) and ask her how quickly can she get this...
Ms. DAVID: OK.
Mr. FRENCH: ...done because they've given us till 8:00 tonight...
YDSTIE: Troy and Amy want to move in immediately and rent the house for a month before closing. But to do that, the seller is demanding an additional $1,500 deposit they really can't afford. Tom French calls the seller's agent to make a counteroffer, the seller balks, and Troy and Amy get nervous.
Mr. FRENCH: (On phone) OK. Bye-bye.
OK, she's not sold on the deposit thing. She wants to protect her people. They're still concerned that you're strictly trying to rent it, and they want to make sure that you truly are buyers.
Mr. DAVID: Tell them to go look at my house. Tell Sandy to go look at my house. I mean, just tell her to go drive at my house and she'll see that I have no other choice.
Ms. DAVID: I mean, `I'm staying there a month' ain't going to do anything for what we need, you know?
Mr. DAVID: Right.
Mr. FRENCH: And I understand that.
Mr. DAVID: You just want to write the $1,500 check and write out the line of credit, just pay the $1,500, we're done with this, so there's no negotiation.
YDSTIE: In the end, Troy and Amy get the house for a few thousand dollars more than they might have spent before Katrina. Realtor Tom French says while home prices may spike over the next couple of months, he's skeptical they'll stay high, especially when rehabbed homes from the flooded areas come back on the market.
Mr. FRENCH: One thing I've found down here is people have a short memory. They're going to walk into this completely rehabbed home. It's going to be disclosed it flooded during Katrina, and it's not going to bother them. They're going to realize these things happen; that's what flood insurance is all about. If you're going to live in New Orleans, you deal with it.
YDSTIE: French rejects the idea that fear of hurricanes will depress prices. He points to Florida, where, after four hurricanes last year, the real estate market remains strong. John Ydstie, NPR News, New Orleans.
NORRIS: You're listening to ALL THINGS CONSIDERED from NPR News. Transcript provided by NPR, Copyright NPR.