HOW LONG WILL THE HOUSING DEMAND SURGE CONTINUE? WADE R. RAGAS, PHD MAI SRA REAL PROPERTY ASSOCIATES, (504) (324-3994) WADERAGAS.COM
LOUISIANA EMPLOYMENT BY METRO AREA DECEMBER 2015, JANUARY 2015 AND JANUARY 2016 (Not Seasonally Adjusted) Metro Area Dec. 2015 Jan. 2015 Jan. 2016 Percent Change Alexandria 62,413 61,897 61,977 +0.13% Baton Rouge 399,929 390,217 396,873 +1.7% Hammond 49,808 49,361 49,099 +0.7% Houma- Thibodaux 90,862 96,506 89,278-7.5% Lafayette 208,774 217,298 205,436-5.5% Lake Charles 97,075 94,260 96,774 +2.7% Monroe 76,114 75,078 75,355 +0.4% New Orleans 563,501 559,519 560,404 +0.16% Shreveport 179,760 181,182 178,160-1.7% Louisiana 2,006,145 2,005,203 1,988,595-0.8
LOUISIANA EMPLOYMENT TREND JANUARY 2016, 2015 & DECEMBER 2015 - SEASONABLY ADJUSTED Category Dec. 2015 Jan. 2015 Jan. 2016 Percent Change Louisiana Employed 2,005,202 2,039,350 2,010,838-1.4% Mining 43,400 54,600 42,500-22.2% Construction 145,000 140,800 148,500 +5.5% Manufacturing 141,000 147,100 140,300-4.6% Trade, Utilities 139,300 394,500 392,000-0.6% Information 24,100 24,800 23,700-4.4% Financial 89,900 92,800 89,100-4.0% Services 211,000 213,800 207,900-2.2% Education & Health 307,500 302,300 309,500 +2.8% Leisure & Hospitality 228,900 225,700 229,300 +1.6% Other Services 74,600 73,600 74,000 +0.5% Government 325,300 328,200 326,000 +0.6% Average Hourly $25.29 $25.28 $25.32 Average Hours 42.3 40.3 40.6 Source: laworks.net; Labor Market Information, Louisiana Employment Bulletin
ECONOMIC DRIVERS NEW ORLEANS METRO International Trade Medical Tourism/Convention Airport Business Services Commercial Construction Residential & Hotel Construction Retail Trade Exports holding, imports down Up, personnel constrained Steady at a high level Steady to up Down Steady or up Up Steady to up
ECONOMIC DRIVERS NEW ORLEANS METRO (Continued) Population In-Migration Housing Prices Orleans Crescent Suburban Metro Housing Prices Chemicals & Refining Petroleum Extraction & Transportation Less to flat Steady to 13% up in second half 2015 Strengthening appreciation 4% - 7% (2015) Steady to up Decline sharply State Government Decline in 2016 Local Government Steady
U. S. GROWTH RATES 2015 TO MARCH 2016 Economy Measure Change Population (Includes Immigration) 3% Employment: 4 th Quarter 2015 2.07% 3 rd Quarter 2015 1.4% 2 nd Quarter 2015 1.19% 1 st Quarter 2015 0.45% Projection 2016 0.7% CPI 2016 1% CPI No Food or Energy 2.0% Industrial Production: 2014 2% to 4% 2015 4% down to -2% 2016-1.7% Source: Crandell Business Index and Various Federal Reports
NEW ORLEANS AVERAGE HOUSE PRICE/FT 10 Years of Appreciation Jan. Aug. 2005 June 2015 Percent Change Over 10 years Per Year Rate of Appreciation Metro Area $196,151 $236,000 20.32% 2.03% Orleans $228,620 $339,743 48.61% 4.86% Jefferson $188,838 $194,510 3.00% 0.30% St. Tammany $212,251 $243,770 14.85% 1.48% St. Charles $177,423 $215,475 21.45% 2.14% St. John $148,794 $148,557 0.00% 0.00% St. Bernard $116,126 $134,562 15.88% 1.59% Plaquemines (Belle Chase) $240,650 $315,974 12.03% 1.20% Tangipahoa $144,746 $165,422 14.28% 1.43% Source: New Orleans Metropolitan Association of Realtors & Wade R. Ragas (Real Property Associates, Inc.
METRO AREA NEW CONSTRUCTION TREND 2014 VS. 2015 Metro Area 2014 2015 Change Baton Rouge 3,257 3,584 +10% Houma-Thibodaux 623 570-8.5% Lafayette 2,114 2,320 +9.7% Lake Charles 1,215 896-26.3% Monroe 487 502 +3.1% New Orleans 2,929 2,542-13.2% Shreveport 1,660 1,074-35.3% Louisiana Urban 12,285 11,488-6.5% Jackson, MS 1,882 1,550-17.6% Gulfport, MS 1,295 1,684 +30.0% Houston, TX 63,678 56,863-10.7% Dallas, TX 40,749 56,401 +38.4% Source: U.S. Census New Residential Construction Reports; includes multifamily and 1 to 4 unit single-family
2014 HOUSING AFFORDABILITY ISSUES Monthly Payment Orleans Metro Average Price 2014 $309,533 $222,852 80% Loan Amount $247,626 $178,282 4% Rate, 30-yr. Payment $1,182 $851 Typical Property Tax Monthly $260 $160 Typical Mortgage & Prop. Tax $1,442 $1,001 Typical Household Income for Median Income Owner Occupant $52,000 $52,000 Cost of Housing to Income 27.7% 19.4% Insurance (casualty, liability & flood) (1.7% - 2.5% of House Value) Total Payment and per Foot Monthly Costs $350 to $825 Monthly $1,792-$2,267 $1.00 to $1.30 Foot Source: Dr. Wade R. Ragas, Real Property Associates, Inc. $252 to $594 Monthly $1,252-$1,595 $0.67 to $0.87 Foot
SINGLE-FAMILY HOUSING PRICES 2014-2015 Parish Zip Code June 2015 June 2014 Increase Jefferson Parish $106 $104 +2% Old Metairie $204 $171 +19% Orleans Parish $166 $155 +7% 70115 (Uptown) $257 $247 +4% 70124 (Lakefront) $189 $173 +9% 70128 (East New Orleans) $73 $74-1% 70131 (Algiers) $91 $82 +11% St. Tammany Parish $113 $106 +7% 70433 (Mandeville) $128 $118 +8% 70448 (Covington) $122 $117 +4% 70458 (Slidell) $92 $88 +5% 70461 (Slidell) $96 $88 +9% METRO NEW ORLEANS $120 $106 +13% Source: GSREIN and Metropolitan Assoc. of Realtors and Dr. Wade Ragas of Real Property Associates, Inc.
Parish SUBURBAN EDGE SINGLE-FAMILY HOUSING PRICE TREND 2014-2015 Price Per Foot 2015 NOMAR June 2014 Change Tangipahoa $90 $84 +7% St. Charles $105 $97 +8% St. John $83 $81 +3% St. Bernard $79 $76 +4% Plaquemines $136 $131 +4% Source: GSREIN and New Orleans Metropolitan Association of Realtors and Dr. Wade Ragas, Real Property Associates, Inc.
MULTIFAMILY RENTS, OCCUPANCY 2015 Submarket Warehouse Dist. to Quarter Two-Bedroom Two Bath Rents $1,442 or $1.70 per foot Change Market Occupancy All Units +$30 94% 0% Change East N.O. $713 -$6 91% -3% Algiers $783 +$0 94% +0% West Jefferson $850 +$10 95% -1% Metairie Harahan, River Ridge $864 or $1.00 per foot +$26 94% +1% $1,116 +$116 97% -1% Kenner $875 +$23 85% 0 St. Tammany $1,047 +$26 94% +1% Source: Greater New Orleans Multifamily Report, 2014
30-YEAR MORTGAGE RATES FEDERAL NATIONAL MORTGAGE ASSOCIATION February 2016 3.75% 2015 3.8 2014 4.17% 2013 3.98% 2012 3.66% 2011 4.45% 2010 4.69% 2005 5.87% 2000 8.05%
REALTOR CONDOMINIUM SALES IN HIGH VOLUME LOCALES OF ORLEANS 2012-2015 Number of Sales in Zip Code Area Year of Sale 70115 University 70116 Quarter 70118 Mid-City Uptown 70130 CBD & Warehouse Total Condo 2012 106 97 38 262 503 2013 103 130 31 229 493 2014 93 104 47 240 484 2015 103 99 33 241 476 Total 405 430 149 972 1,956 Source: GSREIN Multiple Listing Service & NOMAR & Wade Ragas Real Property Associates
2016 STRONG TRENDS 1. Sunbelt, active retirees, 65 an over increased relocation 2. Oil regions for fracking, before Arab/Iran supply expansion, 75% price declines, price may stabilize $45 3. Enormous turmoil in Europe & Middle East and emerging markets; increased U.S. dollar 4. Relocation of world wealthy to U.S. 5. Likely continued low interest rates 6. Worldwide slow growth or recession 7. Little inflation of 1% or deflation 8. Unpredictable presidential election 9. More Internet-oriented marketing 10. 24/7 cities capture more of the growth
OIL DISRUPTION ON WORLD ECONOMY 97,000,000 Barrels per day $105 Per barrel before Saudis $35 Per barrel after Saudi oversupply $70 Loss in revenue per barrel $6,790,000,000 (billions a day) $2,478,350,000,000 (trillions a year) Loss per day world wide oil industry Loss per year at $35 from normal revenue
SAUDIS, U.S. AND RUSSIONS ECONOMIC DISRUPTIONS Each about 10 million barrels a day Same $70/barrel loss in revenue a day $700,000,000 (seven hundred million a day each) 365 days Loss in revenue per year - $255,500,000,000 (billions of dollars each per year)