Mortgage broker Britt Tate spends her days helping people get the loans they need to buy a home. So he’s keeping a close eye on how inflation, rising interest rates, and other factors are affecting homebuyers in the New Orleans area.
Still, Essential Mortgage broker Tate was stunned when he recently tried to calculate and estimate how much more it would cost to buy a home in the New Orleans area today compared to a year ago. It was made.
In Orleans Parish, rising costs such as home prices, mortgage rates, and homeowners insurance have prompted real estate expert estimates and The Times Picayune.
The same is generally true for St. Tammany and Jefferson Parish, where total costs are up about 50% and 47% respectively.
“We all know house prices are high and interest rates are high, but it doesn’t really hit you until you see the numbers like this,” Tate said. Yes, it’s really starting to impact the market.”
How to read numbers
To keep track of changes, The Times-Picayune commissioned real estate experts to study home prices in the parishes of Orleans, St. Tammany, and Jefferson.
In New Orleans, the median home price for Fall 2021 was $332,500.
The interest rate at that time was about 3%. Assuming the buyer paid his 15% down payment, that would be about $1,191 per month. Throw in the typical tax rates for parish property taxes and homeowners insurance, and his total monthly costs come to $1,946.
By 2022, the median selling price of a home in Orleans Parish has risen to $361,800. If the same homebuyer cut the price again by 15%, the monthly bill could be $2,015. The rise was primarily due to rising home prices and mortgage interest rates rising to around 7%, but also increased taxes and insurance premiums, pushing total monthly costs up to $2,906, a year About $1,000 more than before.
Mortgage lenders generally recommend that buyers spend no more than 35% of their gross income on housing costs. So last year, a homeowner who wanted to buy a median New Orleans home had to make about $66,000. Today they need to make her $96,000.
“In practice, 30% is ideal, but people tend to push it closer to 35%. I see a lot of people really feeling the pinch.”
Jefferson and St. Tammany parishes have slightly lower median sales prices for suburban parishes, but the cost of buying a home is rising at about the same rate as Orleans parishes.
Using the same calculations as for Ohlins, the monthly cost of an average-priced home in Jefferson is $264,450 in 2022 compared to $247,680 in 2021, or $2,100 to $1,430 per month, including taxes, insurance and interest. jumps up to
In St. Tammany Parish, where median home prices rose from $259,000 to $289,000, monthly mortgages rose to $1,634 and total monthly expenses, including taxes and insurance, jumped from $1,555 to $2,336.
These increases do not take into account monthly flood premiums, which increased 18% this year for the majority of Louisiana policyholders as FEMA rolled out a new Risk Rating 2.0 system.
But the increase is not over. The new rating system limits annual premium increases to 18%, but there is no cap. FEMA has released data showing that the average Louisianan can expect a 122% increase in his tax rate by the time the new rate is fully implemented. Rate hikes will be phased in over the years.
Flood insurance rates vary greatly from region to region and even from house to house.
Justin Thibodeaux, an agent at the Hartwig Moss Insurance Agency, said everyone is speculating on what will happen to homeowners’ premiums as more and more insurers exit the market.
“This is a very real problem,” said Thibodeaux. “After we started seeing light at the end of the tunnel, Ian showed up and it’s very gray now. I’d like to think we’ve peaked, but that’s not what the country’s experts are saying.”
Insurance agents, real estate brokers and mortgage lenders say they see the impact of rising costs in several ways. The deal takes time to close as the buyer hunts for lenders and insurance companies.
Brokers are trying to be optimistic, saying the market remains healthy. But they do admit there are warning signs out there.
Latter and Blum agent Alex Peet said:
Thibodeaux said insurers are also cautious about policy making.
“Some insurers only want to underwrite homes with roofs that are five years old or less, requiring owners to have exceptional or better insurance scores, which are primarily derived from credit ratings. There is,’ he said. The lower your credit score, the harder it is to get insurance. ”
As a result, young buyers, first-time buyers, and those who can no longer afford a home are staying away. We are trying to find solutions for working with them, including creative fundraising tools such as
“There are ways to get into a house that don’t break the bank,” Tate said.
But he warned that with rising insurance rates, buyers need to be aware of the true monthly cost of owning a home, not just monthly mortgage payments.
“Buyers are always advised to wait until a home is contracted before asking for an insurance quote,” said Thibodeau.