Do you remember all the talk about the “condo craze” after Hurricane Katrina? I was one of many experts who talked to Six on Your Side and other media about the surge in condo sales after the 2005 storms. It seemed to make sense that condos would increase in popularity because they offered people temporary homes, smaller homes, or a place that shared increasing costs like insurance and maintenance.

Looking at the data from 2006, it seems that prognosis was good, or at least good for all of New Orleans except the two areas that have the most concentration of condominiums, the French Quarter and the Warehouse District.

The number of condo units sold in 2006 rose by anywhere from 13-489 percent versus the number sold in 2004. This held true across the New Orleans metro area except in the French Quarter and the Warehouse District, where there was a 49 and 45 percent decrease respectively from 2004 to 2006, according to information from Realtor-assisted sales in New Orleans and an interview the Times Picayune held with real estate data guru Wade Ragas of Real Property Associates.

So what’s going on? Why are the two areas that have the highest concentration of condos faring the worst while condo sales in other parts of town are hot?

In talking with other agents, lenders and brokers that specialize in the French Quarter and Warehouse District areas, I’ve believe it’s two things – supply and price. For the past twenty years, the prices in the French Quarter have been steadily rising while many new condo projects have been smaller projects of 3-15 units that have come on the market slowly over a number of years.

Most, but certainly not all, the people who owned these condos were second home buyers. After the storms of 2005, the natural uptick in inventory has included condos in the French Quarter. Between 2004 and 2006, the number of condos listed for sale was up more than 100 percent. That was to be expected. After something as big as Katrina, I expected that a lot of properties were going to change hands as people made plans about their future.

What surprised me was that prices in the French Quarter continued to go up despite the huge increase in inventory. During the first few months in 2005 (that’s pre-K), the average price was roughly $350 per square foot and rising fast. Now the average is more like $440 per square foot and I’ve seen some condos listed for $600 a square foot.

The past five years have seen tremendous increases in the value of property in the French Quarter, and many agents thought it would naturally increase even more after Hurricane Katrina, because it was in an area that was, to quote the three favorite words in a post-Katrina realtor’s vocabulary, “high and dry.”

However, many other areas were high and dry as well, and they didn’t have twice as many units on the market. The result has been a decrease in units sold in the French Quarter, with only a small decrease in value. The properties that are priced in the high $300 to low $400 per square foot are still selling, while the condos who’s owners wanted to speculate on rapidly rising value, are languishing on the market, prey to that 49 percent decrease in sales.

The moral? I’ll tell you what I’ve been telling my clients. If you’re interested in the French Quarter, don’t let these figures dissuade you. It’s still blue chip as far as New Orleans investments go. Just realize that there’s a lot of inventory out there and you, as a qualified, ready and willing buyer are in the driver’s seat. Look for square footage prices in the upper $300’s, and you’ll be making a solid investment.

If you’re selling in the French Quarter or Warehouse District, price it to sell. I can meet with you to give you an honest assessment of what that means.

Also, don’t forget my favorite neighborhoods, Bywater and Marigny, which are 19^th century neighborhoods within two miles of the French Quarter and which have their own unique character and charm.