Louisiana Housing Market 2023 Report
What is the Louisiana Housing Market Like?
Like many other states in the country, the Louisiana housing market has been increasing rapidly in the past two years. However, the aggressive interest hike policy initiated by the Federal Reserve Bank as a means to slow down inflation, which stands at a forty-year-high, is having a ripple effect on the housing market in Louisiana.
According to data collected in September 2022, the median housing price in Louisiana for $246,200, standing approximately 2% higher than in September 2021. It has dipped significantly after an all-time high of $273,300 in June 2022. The sale volume has also declined by 6.5% in the past year, with 3,285 houses sold in September 2022, compared to 3,458 the previous year.
Properties tend to stay on the market longer than they did at the peak of the market this summer, the median number of days on the market standing at 30 – the same number as last year at the same time but almost twice as many as in June, when properties were available for approximately 16 days.
The number of properties on the market is also slowly increasing, which is encouraging news for house hunters and the slightly declining Louisiana home prices. There were 13,191 houses for sale in Louisiana in September 2022, 4.6% more than the same time last year, bringing the housing supply to 3 months, an improvement from 2 months in September 2021. However, despite these notable improvements, the Louisiana housing market remains a sellers’ market since a balanced market would require five to six months of inventory.
How does the Louisiana Housing Market Compare to the National Housing Market?
Like other states in the country, the Louisiana housing market has been significantly affected by the Fed’s hawkish monetary policy initiated in March 2022. As of early November 2022, the Fed had proceeded with four consecutive 75 bps interest rate increases, with more likely in the works. Mortgage rates have doubled since March 2022, skyrocketing from a historic low to hovering around 7% as of November 2022, a level unseen since April 2008. As a result, the buying power of home hunters has been noticeably diminished, and the average mortgage for a house is about $1000 more than at the same time last year.
Therefore, it is not surprising to observe that Louisiana home prices are decelerating. The inventory remains limited compared to the demand for housing, but experts expect the demand to slow down further as interest rates continue to increase, making a mortgage unaffordable for many, which is a national trend. Nevertheless, Louisiana continues to benefit from the relative affordability of its housing market, with Louisiana home prices remaining below the national average despite recent increases.
Louisiana Metro Areas with the Hottest Housing Markets
The Louisiana housing market is varied, mixing diverse urban centers with rural areas. Louisiana's municipalities cover only 7.9% of the state's land mass but are home to 45.3% of its population, most of which is located along the coast or in northern Louisiana. The southern coast of Louisiana in the United States is among the fastest-disappearing areas in the world as a result of human mismanagement, which is a notable concern for local real estate. Here are the most important Louisiana housing markets in terms of volume.
- New Orleans
- Baton Rouge
With a population of 383,997, New Orleans is the most populous city in Louisiana and the twelfth-most populous city in the Southeastern United States. Boasting an extremely rich cross-cultural and multilingual heritage, it is a significant economic, commercial, and cultural hub for the broader Gulf Coast region. The New Orleans housing market is cooling down fast after two years of frantic growth. As of September 2022, the median housing price stood at $303,000, 13.4% less than the previous year. On average, homes in New Orleans still receive two offers, but only 15.8% sold above the asking price and 96.4% at the asking price.
Baton Rouge is the state capital of Louisiana. It has a population of 227,470, making it the second-largest city in Louisiana after New Orleans. Baton Rouge is a major industrial, petrochemical, medical, research, motion picture, and growing technology center of the American South and is home to some of the most important centers of higher education in the state, including the Louisiana State University and Southern University. The Baton Rouge housing market is still going strong, with the median sale price standing at $229,500, 5% more than the previous year. Homes in Baton Rouge receive two offers on average and sell after 26 days on the market, which is eight more than last year. 97.3% of houses sold at the listing price, while 16.9% of them sold above it.
Shreveport is the third most populous city in Louisiana, with a population of approximately 189,000 residents. Shreveport is the educational, commercial, and cultural center of the Ark-La-Tex region. The housing market remains somewhat competitive, although the median sale price stands at $150,000, 15.2% less than the previous year. The average homes sell for about 4% below the list price and go pending in around 35 days.
Higher Mortgage Rates Could Slow Down Price Growth in Louisiana
The Louisiana housing market is still going strong but showing undeniable signs of slowing down. Louisiana housing prices are decelerating and even decreasing in some areas. The combination of high property prices and high-interest rates is affecting the buying power of home hunters, and many of them are being priced out of the market or are postponing their home-buying plans until mortgage rates fall back to more affordable levels. Unfortunately, since more interest rate hikes are likely until the inflation slows down to the Fed’s targeted rate of 2%, it is expected that the demand – and, as a result, Louisiana home prices – will keep decreasing before it happens.
Key Market Stats for the Louisiana Housing Market
As of September 2022 available data, here are some of the Louisiana housing market key stats:
- Median sale price: $246,400 – a 2% increase compared to 2021.
- Existing home sales: 3,285 – a 6.5% decrease compared to 2021.
- Median days on the market: 30 – unchanged since 2021.
- Months of supply - 3 – Compared to 2 in 2021.
- Mortgage rates as of November 10th, 2022: 7.08%.
Louisiana Historic Price Changes and Affordability
Louisiana property prices have increased significantly since the beginning of the COVID-19 pandemic, as did home prices around the country, but not nearly as much as in many other states. Between September 2019 and September 2022, the median sale price for a house in Kansas went from $210,200 to $246,400, marking a 17.22% increase in 36 months, with a peak of $273,300 in June 2022 before dropping severely in July.
Some areas, including New Orleans, the largest city in the state, have already started declining. Louisiana has suffered several setbacks in recent years, ranging from adverse weather (the state is prone to tornadoes and hurricanes) to high levels of unemployment, which affect buyers’ confidence, especially with the threat of a recession looming on the horizon. In consequence, the Louisiana housing market may be more vulnerable than other states to a recession.
- The Louisiana housing market is still going strong, but Louisiana home prices have started to decline in some areas as a result of the combination of high-interest rates, high property prices, and pessimistic perspectives.
- Louisiana housing prices have increased more slowly than the national average and remain below the national average.
- It is likely that the Louisiana housing market will decline. Nevertheless, it remains, at this time, a sellers’ market due to the lack of inventory.