May Stats: We're in a Buyer's Market?

For the first time in five years, the real estate market in New Orleans favors the buyers. The shift from an extreme seller's market to one that's favoring the buyers has happened quickly. 

Demand was pretty well exhausted when mortgage rates hit historic lows. From 2020 through mid-2022, lower monthly payments made buying a home in New Orleans attainable for many first-time buyers. Once the mortgage rates climbed, which coincided with a steep rise in the cost of homeowner's insurance, demand dropped sharply.

Demand in Orleans Parish hasn't been this low since 2013. The inventory of homes for sale - the supply side - has finally reached a "normal" level. But with so few buyers in the market right now, we have 6.5 months worth of homes on the market right now.

Six months is the benchmark for a balanced market, so buyers have the upper hand right now. Slightly. To provide some context, in May 2009, when we were in the worst of the financial/foreclosure crisis, there was 13.3 months worth of inventory.

All of this means the real estate market in New Orleans, while still healthy, looks a bit different than it has in the last few years. Buyers, you might be able to see a property twice before putting in an offer. There's room to negotiate on both the purchase price and for inspection repairs. In fact, we're seeing an increase in the number of homes falling out of contract. That tells me buyers are confident in their ability to find another option, because inventory is up.

Sellers' expectations should reflect the current market conditions. There's no need to fire sale anything, but prepare to have some flexibility. Selling your home after the first weekend on the market is now the exception rather than the rule. Expect it to take a month to get under contract, at least. (By the way, that was absolutely normal in the pre-COVID market.)

As for the rest of this year, I'm not anticipating any big changes in the near future. I think the market has found its new level. Experts don't see any major swings in mortgage rates coming this year. I don't see a flood of inventory hitting the market any time soon. So get used to the new normal, which bears a resemblance to the old normal.