The streets of New Orleans are not only seeing beads and doubloons this time of year, but also lower home prices and a below-average price-to-rent ratio.
According to researchers at Florida Atlantic University (FAU) and Florida International University (FIU), the Big Easy has emerged as the best area to purchase a home in the country based on December 2023 data from the Top 100 U.S. Housing Markets and the BH& J National Price-to-Rent Report.
New Orleans homes are selling 5.09% below the area’s long-term pricing trend with the average home price currently at $235,103. However, the average home price should be $247,721 based on statistical estimates, suggesting that buyers are getting a discount with today’s prices, FAU points out.
At 12.53%, the area’s price-to-rent ratio is below average as well making it preferable to buy versus rent.
“It’s incredibly difficult to time the bottom of a housing market, but New Orleans’ price-to-rent ratio strongly favors ownership over renting at this point and the fact that people can buy at a discount relative to the area’s long-term pricing trend suggests that this is clearly the best buy among the nation’s largest metros,” says Ken H. Johnson, real estate economist with FAU’s College of Business.
The Top 100 U.S. Housing Markets and the BH& J National Price-to-Rent Report are two monthly indices produced by Johnson and fellow researchers Eli Beracha, Ph.D., director of FIU’s Hollo School of Real Estate and William Hardin, Ph.D., dean of FIU’s College of Business as part of FAU’s Real Estate Initiative.
The indices also reveal an area of concern for the average home buyer—the Miami metropolitan area.
“Most of the country’s prices are returning to their long-term trends slowly but surely. Miami is the only place in the country where not only have home prices not gone down as most cities have witnessed recently, but also the price-to-rent ratio is the highest it has been in almost nine years. Additionally, the area’s housing premium is increasing, indicating that local housing prices are rising faster than typical property appreciation,” Beracha says.
The typical home in South Florida is about 36% overvalued, and its price-to-rent ratio is 7.81%, according to the indices.
“This set of circumstances does make me a little nervous,” Johnson adds. “Our prices should be leveling off. While I do not think we will have a crash like we did 16 years ago, this is not a good sign. The patient should be getting slightly better at this point, not getting slightly worse.”
