New Orleans is widely perceived as a rather bohemian place where living is easy and cheap. However, that’s far from the modern truth. Homeowners in New Orleans spend nearly 1/3 of their income on housing-related costs.
That’s the third highest total in the country. So, why is housing so expensive in the Crescent City? Ali Bustamante, Professor of Economics and Finance at UNO, emphasizes that while home values are typically below the national average in New Orleans, the housing costs beyond the purchase of the home have increased drastically. Those costs include home insurance rates, utilities, and other surrounding fees that accrue as part of the purchase of a house.
“One of the things you have to keep in mind is that, when you look at home values, typically New Orleans is below the national average.
Right now, the median home value (in the area) is about $305,000 vs $360,000 nationally,” Bustamante points out. “However, that’s just the home value itself,” he adds. “What we know is that housing costs have been increasing drastically when you take into account home insurance rates, utility costs, and the broader costs of living in New Orleans that have risen drastically in the past couple of years,” Bustamante went on to note.
For those who have found it hard to keep pace economically in the region, you're not alone. Bustamente gave some sobering numbers when it comes to how much money home buyers are having to sink into their new investments. "You're getting hit from so many different place. Housing costs have increased about 2%, so now they're about 13% above the national average when you factor in home insurance rates and utility costs ... we know that our homes are not of the highest value in the country. However we do know that it is getting a lot more expensive here than it has been over previous years," he notes. So, is there any way to turn the upward trend around? Ultimately, Bustamante believes job growth in the region is the path to turning things around.
"We need to diversify our economy to make sure that we're not just getting job growth, but good job growth," Bustamante says. That will lead to higher incomes and more people putting down roots and buying homes in the region. While many in and around New Orleans have pointed to a limited footprint size as a reason for lack of expansion, Bustamante is quick to point out that the region once housed a much larger population. "We've had twice the population that we have now in the past, so we know we have the land to capitalize on, it's just a matter of utilizing it in the right way," he emphasized.