Cost of Housing in New Orleans Increases 33% After Katrina says HUD

Results from a Department of Housing and Urban Development survey on the 2009 New Orleans Metropolitan Area Housing found a significant increase in the cost of housing after Hurricane Katrina.

The first survey of its kind since the hurricane devastated metro New Orleans five years ago, found the median monthly cost of housing increased 33.2 percent, from $662 in 2004 to $882 in 2009.  The results offer an extremely valuable comparison on the area’s housing situation post-Katrina, much like a progress report of the redevelopment process.

After the infamous storm, the metropolitan area of New Orleans lost 75,000 housing units – almost 13 percent of the entire “housing stock” in the region. The survey results indicate that the decline in mid-priced rental units, defined as housing that costs between $300 to $600 monthly, is to blame for the increase in the cost of housing. In 2004 there were 66,300 mid-priced rentals but by 2009 there were only 19,300 left. The price of these rentals also increased, with the median rent in 2004 at $689, up to $876 in 2009. This is a 27 percent increase, with numbers adjusted to reflect inflammation.

“The New Orleans metro area suffered a great deal from Katrina, and that suffering extended beyond just the housing stock to include the generations of families who called that area their home,” said Dr. Raphael Bostic, HUD’s Assistant Secretary for Policy Development and Research. “While fewer families remain in transition, we’re seeing significant increases in the cost of housing, especially for lower and middle-income renters.”

HUD interviewed 3,000 households in the region and estimates over 80 percent were forced to move due to the damage caused by Hurricane Katrina. Most families moved at least two to three times, with some having to move as many as 10 times. HUD estimates that 298,000 households were forced away from their homes for at least two weeks after the storm hit the area, and 12 percent still consider themselves “in flux.”

While HUD estimates there were 587,000 residential housing units in the metropolitan area in 2004, there are now a remaining 511,000, down 13 percent since the storm. This decrease can be largely attributed to the demolition of older, single-family homes built prior to 1979. There have been 24,700 new homes built in the region in the past five years, however there are still 72, 500 vacant units in New Orleans. The 2009 survey results show more than 38,000 families who still consider themselves “in transition.”

“This survey presents a startling picture of just how disruptive Hurricane Katrina was to the lives of tens of thousands of families throughout the New Orleans area,” said Shaun Donovan, HUD Secretary. “The numbers also offer clear evidence of where things stood in 2009, providing a benchmark for the Obama Administration’s work to help New Orleans recover and rebuild.”

Though 90 percent of the 252,000 owner-occupied units that reported damage after the storm have received repair, only 52 percent of the owners have reoccupied the homes, and only 25 percent have reoccupied those considered “severely” damaged. Repairs to these homes are mostly funded by private insurance payouts, federal flood insurance, and/or homeowner’s assistance grants through Louisiana’s “HUD-funded Road Home Program.” The next survey of the area is scheduled for 2011, which will offer even more insight into the rehabilitation and rebuilding process of New Orleans.

Written by Kelly Mellott

Reminder: The industry is doing our part to help rebuild New Orleans before the NRMLA Annual Conference on Nov. 2nd. To learn more, see here.

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