In a recent social media thread, I saw someone sharing a home for sale in their neighborhood, asking their friends if they knew someone who would like to be their neighbor. Most of the people replied with positive messages like “they’ll be getting a great neighbor” or “that’s a beautiful home”. But then there was the person who angrily declared that the REALTORS set home prices too high and are pushing people out of areas.

Let me let you in on a secret. While real estate agents play a role in the home buying and selling process, we don’t set the prices of properties ourselves.

The market is the ultimate price setter, along with other factors.

Location

Like any other real estate market, location has a significant impact on property values in New Orleans. Which neighborhoods are considered high demand may change over time, but they have always commanded higher prices.

Condition

Homes that are well cared for, with upgrades or remodels, will often command a higher price than those that are poor condition. We’ve found that buyers are a little more hesitant to take on a fixer-upper, either because their financing won’t allow it, or because they don’t want to deal with supply chain issues that could make improvements more costly and time-consuming.

Supply and Demand

When there’s a high demand for homes, like we saw during the pandemic, prices tend to rise. Low interest rates and the ability for people to work from home created a perfect storm of demand for homes, leading to bidding wars and buyers paying more than the list price in order to win that contest. Those sales became the comparable properties used by REALTORS and appraisers to determine values across the city. That’s the market responding to supply and demand.

As interest rates have risen, the demand has lessened slightly, but the lower demand is not because REALTORS price homes too high. It’s because the cost of insurance has doubled and tripled in some areas, making the monthly mortgage payment much higher than many buyers are willing to commit to. You can always refinance for a lower rate when they change, but unless there is a big change in how insurance is priced, it will remain the biggest factor in our local market.

While REALTORS can help their clients study the current trends, we don’t get to decide the market influences on home prices.