The Times Picayune ran an article this Sunday looking at recent home sales in the Greater New Orleans area, and it concluded that the housing market in the city of New Orleans was surprisingly strong.

There are two markets in New Orleans right now, damaged and undamaged homes, and while prices of damaged, unrepaired homes in hard-hit areas have understandably fallen from their pre-Katrina values, the price of undamaged homes continues to rise.

But that doesn’t mean flooded homes haven’t been selling. In the past eight months, real estate researcher Wade Ragas counted 9,925 homes sales of which 1,783 were flooded or heavily damaged homes. Some of the buyers are owner occupants who are taking this opportunity to buy into areas they couldn’t afford before, but the majority of buyers are investors speculating on the market. They are either going to repair the homes and resell them, or, given the strong rental market, many of them plan on renting the homes.

The paper reported the sales for the 70117 zip code (which includes Bywater and most of the Marigny neighborhood) as having gone up an astonishing 212 percent. Working in this field every day, I knew that the homes I was selling, while they’ve had healthy appreciation, are not selling for more than double what they were before Katrina. I think what’s happening here is a strange, statistical quirk.

In addition to the relatively undamaged areas of Bywater and Marigny, the 70117 zip code also contains the neighborhoods north of St. Claude Avenue as well as the Lower Ninth Ward, all areas that had lower price tags before the storm and that received a significant amount of damage from Katrina. I think what’s happening is that before the storm, there were equal home sales in all parts of the zip code which resulted in the lower price tag areas dropping down the average sales price. After the storm, however, there have been very few sales in any of the 70117 neighborhoods except the higher priced Bywater and Marigny areas, which has resulted in a much higher average sales price.

Having said all that, homes in Bywater and Marigny are a great value and continue to appreciate. They just haven’t appreciated 212 percent.

I think the same numbers glitch is at play in zip code 70116 which contains part of the French Quarter, Treme and Esplanade Ridge neighborhoods. There prices of undamaged, single-family homes went up 86 percent. Flooded homes depreciated 49 percent.

In the 70130 zip code, which contains parts of the French Quarter, Warehouse District, and Garden District, there were no flooded homes. Unflooded homes, however, appreciated a mere 9 percent since before Katrina, which our president at Latter & Blum, Arthur Sterbcow attributed to the already high price tags in those areas.

One big surprise to researchers was that the West Bank of New Orleans, which largely escaped the hurricane’s wrath unscathed, appreciated less after the storm than before. Before Hurricane Katrina, the West Bank was appreciating 8.5 percent. During the eight month period after the storm, it has appreciated just five percent.

More numbers?

In 70115 unflooded homes appreciated 18 percent and flooded depreciated 58 percent. In 70118 unflooded homes appreciated 17 percent and flooded depreciated 63 percent. In 70119 unflooded homes appreciated 39 percent and flooded depreciated 54 percent. In 70122 unflooded homes appreciated 65 percent and flooded depreciated 42 percent.