Associate Zachary Rosenberg recently attended the 5th Annual Economic & Real Estate Forecast Symposium sponsored by Commercial Investment Division (CID), New Orleans Metropolitan Association of Realtors (NOMAR), and the Louisiana Chapter of CCIM. The annual seminar, which was held at Loyola University on October 12 and 13, 2015, provided a stage for national and regional experts to share their insight and predictions about the economy and real estate markets.
According to Mr. Rosenberg, “The main takeaway is that the local economy and real estate market have continued to trend upward since Hurricane Katrina and the recent financial crises, but they still have a ways to go, especially given the recent downturn in the oil and gas industry. While many of the presenters painted a less than rosy future for the national economy, most agreed that the greater New Orleans’ real estate market was very strong, and they were extremely optimistic in the market’s potential to grow in the coming years.”
HIGHLIGHTS OF THE 5TH ANNUAL ECONOMIC AND REAL ESTATE FORECAST SYMPOSIUM
Housing Market Trending Upward
Paul Bishop, Vice President of Research for the National Association of Realtors, noted that the national housing market is continuing to slowly trend upward since the 2007/2008 recession and that it is close to 2005 levels. However, he also noted that on a national level, buyers are constrained by a limited inventory, and stressed the need for new homes in order to meet future demand and avoid a housing shortage.
Increase in Economic Growth in the Parishes
Jerry Bologna (Executive Director, JEDCO), Quentin Messer Jr. (CEO, NOLA Business Alliance), and Brenda Bertus (CEO, St. Tammany Economic Development) participated in a panel discussion about the regional economy. Since Hurricane Katrina and the financial crises, all three parishes have seen significant increases in economic growth and development, and all panelists were excited about the potential for new business growth in their parishes.
As the three parishes continue to attract new businesses and development opportunities, they will continue to stimulate the parishes’ economic growth, thereby opening the door to even more real estate opportunities. The three speakers also stressed the importance of the three parishes collaborating and working together to stimulate economic growth, particularly in developing a cohesive transportation system that seamlessly connects all three parishes.
Condominium Market Poised for Increased Sales
Wade Regas, PhD, MAI, talked about the local condominium market. Condo sales in Orleans Parish have remained steady since 2012, but Dr. Regas predicted that the CBDand French Quarter would see significant increases in condo sales over the next few years due to the new medical district. However, in order to sell the future units, he cautioned that jobs must continue to be added downtown, and the city must find a way to create an efficient transportation system from the CBD and Warehouse District to the burgeoning medical district.
Oil and Gas Industry Downturn
In one of the more somber presentations of the seminar, Gifford Briggs, Vice President of the Louisiana Oil & Gas Association, detailed the recent downturn in the oil and gas industry. According to Mr. Briggs, the recent fall in the price of oil has led to a significant economic crisis in south central Louisiana, with many small, independent companies feeling the strain. As a result, the region has experienced a large number of layoffs. The number of producing rigs in Louisiana is at an all-time low, and he does not see things changing in the near future. The state budget, which derives a significant portion of its revenue from oil and gas production, has also felt the effects, and Mr. Briggs expects budget cuts and/or tax increases to make up for that shortfall.
Growth in GDP and Labor Rates
Adrienne C. Slack, Vice President of the New Orleans Branch of the Federal Reserve Bank of Atlanta, taught attendees what factors the Fed analyzes in determining whether to raise interest rates. Typically, the Fed looks at GDP growth, labor rates, and inflation. According to Ms. Slack, the GDP and labor rates have steadily grown throughout 2015 and she anticipates that trend will continue through the end of 2015. While Ms. Slack did not predict whether the Fed would raise interest rates this year, she did tell attendees to keep an eye on inflation rates, which could ultimately determine whether the rates are raised.
Development is Robust for Now
Matt Schwartz (Principal, Domain Companies), James Favrot (President, Favrot & Shane Companies), and Michael Bucher (Development Director, Stirling Properties) participated in a panel discussion on current and impending development projects in the greater New Orleans region.
Mr. Schwartz was very excited about the development in downtown New Orleans, but warned that it may start to slow down because there are fewer buildings left that can be developed with historic tax credits. He stressed the need for new policies and tax breaks in order to facilitate future downtown development.
Mr. Favrot described several new projects in Jefferson and St. Tammany Parishes, and predicted that the next five years promises even more construction and development in those areas.
Finally, Mr. Bucher reported on the retail environment in the region. Although retail sales and development have somewhat cooled over the last 18 months, it still remains a very strong market with many exciting new opportunities and projects, particularly within the new medical district.
Strong Regional Real Estate Market
In one of the last presentations of the seminar, Guy Williams, President of Gulf Coast Bank and Trust, talked about the current difficulties of obtaining a mortgage in the aftermath of the Great Recession and the Dodd-Frank Act. In Mr. Williams’ opinion, the Dodd-Frank Act has actually hurt the consumer by making it more difficult to qualify for a mortgage, especially for lower-income applicants. Despite the complications brought on by the Dodd-Frank Act and the negative effect it may have on the residential real estate market, Mr. Williams nevertheless sees a strong regional real estate market with the potential to continue growing in the near future.