French Quarter, Marigny and CBD buck the housing slump. What’s behind their growth?

In early March, Tray Gober, a personal injury attorney from Austin, bought a historic Creole cottage on Royal Street in Faubourg Marigny for $1 million. He and his husband had become regular visitors in recent years, so they decided to make New Orleans a second home. Gober’s law firm remains based in Texas, but he now splits his time between the two cities.

“With remote work I can do depositions from Royal Street as well as from Austin,” Gober said.

While home sale prices slumped across most of the metro area during the first half of this year, neighborhoods in the French Quarter, downtown and parts of the Faubourg Marigny and Treme bucked the trend with double-digit price increases.

That’s largely because of out-of-town buyers like Gober, who are scooping up condos and carriage houses for use as second homes.

Residential sale data for the first half of 2023 suggests that more than three quarters of buyers purchasing property downtown, where most of the available housing stock consists of condos in newly constructed or converted older buildings, don’t live in the city of New Orleans. Half are from out of state.

In the French Quarter and Marigny, nearly 40% of the buyers were from outside Louisiana. The others were locals who may live on the northshore or in Metairie but want a small place—colloquially known as a pied-a-terre–for weekend use.

What is typical of these buyers, whether local or out-of-state, is that they have the financial wherewithal to purchase a second home or investment property in a neighborhood that doubles as a popular vacation destination. As a result, they have been less affected by the interest rate increases and crippling insurance hikes that have hamstrung most buyers and dampened market activity as a whole.  

“These second-home buyers can often pay cash, which means they’re not dealing with interest rates,” said David Favret, a broker with Reve Realty. “And with condos, because expenses like insurance are shared among multiple owners, the impact of premium increases is not as great.”

Demand for character and sophistication

During the first six months of this year, the median sale price of a single-family home was down 3.6% across the nine-parish metro area compared to the same period in 2022, according to the New Orleans Metropolitan Association of Realtors. In Orleans and Jefferson parishes, the declines were nearly twice that steep.

But in 70116, which comprises the lower half of the French Quarter and parts of the Faubourg Marigny and Treme, the median price increased 10% from $423 to $466 per square foot.

In neighboring 70112, which includes the upper half of the French Quarter and the Central Business District, the increase was even greater – jumping 15% from $386 to $444 per square foot.  

An analysis of residential property sales recorded by the Multiple Listing Service, which does not include those that were listed for sale by owner, suggests that buyers like Gober are not unique.  

In 70116, more than 50% of the 80 properties sold through the MLS were purchased by out-of-town buyers. At least 40% were from out of state, according to property transfer records and data from the Orleans Parish Assessor’s Office.

Veteran French Quarter real estate agent Michael Wilkinson, who owns French Quarter Realty, attributes some of the interest to the COVID-era housing bubble that, in the case of the French Quarter, grew more slowly than in other segments of the market but shows no signs of bursting.

“We saw a lot of people during COVID decide they were just going to get out of New York or California and go to a smaller place with character or sophistication,” Wilkinson said. “So they came here.”

Also making the French Quarter attractive is the fact that a growing number of single-family homes have been subdivided in recent years into multi-unit condos, which sell for a higher price per square foot, but because they’re so small, are more affordable for a buyer looking for a weekend pad.

“I think a lot of people like the condo concept,” said Micah Lowenthal, a broker with Latter and Blum. “A lot of them are buying second homes. We’re starting to see younger people in their 30s and 40s, too.”

The area also continues to attract a steady of stream of regional buyers. Faubourg Marigny resident Allen Johnson owns one of nine condos in a historic building on Chartres Street. Two units were purchased earlier this year by California buyers. One is owned by a resident, whose permanent home is Uptown. Another is owned by a couple that also live in Lakeview.

“I’m the only full-time resident in the building,” he said. “That’s a big difference from how it was 10 years ago.”

Market aberration

In nearby 70112, 75% of properties were purchased by out-of-town buyers and 50% were buyers from out of state, according to an analysis of MLS sales during the first six months of 2023.

Much of the recent activity in that ZIP code, however, appears to have been driven by the sale of high-end condos in just one building — the California Building, which was purchased last fall for $38 million by a group of northshore developers. They converted the 166 luxury apartments, which were newly renovated at the time of the purchase, and begun selling them as condos.

Of the 66 sales in 70112 during the first half of the year, 43 were in the California building. Of those, all but four were purchased by buyers whose primary residence is listed outside of New Orleans. The majority were from out of state.

But the California Building is something of a unicorn. The building is located on the edge of the French Quarter but is in a zoning district that allows for short term rentals. Plus, its previous owner had a hotel license that went with the sale of the building.

In YouTube videos, the current owners have marketed the units as short term rentals, touting their investment potential.

Most of the other sales in 70112 were units in 1201 Canal, a luxury high rise. Most of those units also were purchased by out-of-state buyers.

“There has been significant development in the condo market,” Favret said. “That is driving a lot of growth in that area.”

While a handful of other ZIP codes saw small, single-digit price increases during the first half of the year, including 70005 in Old Metairie, 70118 Uptown, and 70130 in the Warehouse District and Lower Garden District, the double-digit growth downtown suggests the city’s historic core and entertainment districts are a big driver. 

Longtime Canal Street retailer David Rubenstein said a growing percentage of his customer base is made up of “regular visitors” who have bought property and now consider New Orleans a second home.

Veteran real estate agents like Wilkinson, who started French Quarter Realty some 40 years ago, says he’s seeing more out-of-state buyers than ever before.

“But it’s always been a popular place for a getaway,” he said. 

(Leah Clarke contributed to the reporting of this story.)