Economic and real estate experts presented a mostly bright outlook for the New Orleans area at a forum Tuesday at Loyola University.
The oil and gas industry, which is getting a boost from hydraulic fracturing in Louisiana, is making natural gas produced here the cheapest in the world, the forum was told.
The expansion of the Panama Canal will add hundreds of trucking jobs in the metro area. And the Affordable Care Act could provide a tremendous source of revenue for the city’s new downtown medical complex and, in turn, support even more jobs.
“There’s an enormous capital investment coming,” real estate consultant Wade Ragas said at the New Orleans Metropolitan Association of Realtors’ third annual Economic & Real Estate Forecast.
The upward job growth could result in higher home prices, more sales and a smaller supply of homes available in the area.
C hanges in the National Flood Insurance Program and persistent issues with crime threaten to stymie the progress, Ragas said.
“I’m still concerned that’s going to be the thing that’ll undo so much,” he said of the crime problem. “It’s more difficult to fix.”
Even so, Ragas said, New Orleans is a city in high demand.
Despite a 3.6 percent climb in the average price per square foot of a home sold in New Orleans, up to $142 in 2012, sales have risen 6 percent.
“We’ve got high demand for owner-occupied luxury housing, particularly Uptown,” Ragas said. “But that’s spilling over into the Lakefront.”
And on the north shore, custom home builders are fielding more requests for new construction, he said.
What’s more, consumer confidence is stronger in the New Orleans area than it is nationally, Ragas said.
Beyond local confidence, an improving national public perception of the region is boosting its prospects, said Michael Hecht, who rattled off a list of reasons to be bullish on New Orleans, including the growing interest the city is receiving from highly technical companies, such as software developer ChenTech.
The Miami company will open a software development office, employing 50 computer programmers, in New Orleans’ Central Business District by the end of the year.
“The population is becoming more diverse. The population is becoming wealthier,” said Hecht, president and CEO of the regional economic development group GNO Inc. “But most of all, the population is growing.”
Still, Hecht called changes to the National Flood Insurance Program the “elephant in the room.”
The Biggert-Waters Flood Insurance Reform Act of 2012, which is aimed at stabilizing the flood insurance program, will likely mean higher insurance premiums across coastal Louisiana and could stop the region’s momentum, Hecht said.
Under the new rules, older homes will no longer be grandfathered into the insurance program at lower rates.
The law also will eliminate subsidized insurance rates for certain areas.
In coastal Louisiana, homeowners already are reporting spikes in their flood insurance bills of 400 percent or more.
“How do you buy a house when you don’t know what the carrying costs are going to be?” Hecht said.