New Orleans real estate: a mushy gold rush
By Michael Giusti • Bankrate.com

Real estate markets across the U.S. are hot, cold or lukewarm. In hurricane-ravaged New Orleans, the market's just a soggy mess.

Not that it's all bad. The market in the Crescent City has a new golden rule: If your house didn't flood, has electricity and is in an area with a viable school system, it's gold.

That new landscape has sparked something of a gold rush prompting people to quickly buy up any reasonably priced house on the market, says Arthur Sterbcow, CEO of Latter & Blum Inc./Realtors, one of the region's largest real estate brokerages.

"We are in one of the most active markets I have ever experienced. It is both the best and worst of times -- it just really depends on what side of the (17th Street) canal you were sitting on when the levees broke," he says.

The 17th Street Outfall Canal is a fortified, levee-encased drainage canal that separates New Orleans from its biggest suburb, Jefferson Parish.

The canal was built to carry rainwater from a massive pumping station within the city out to Lake Pontchartrain, which borders the city to the north.

During Hurricane Katrina, the storm surge flowed into the lake and subsequently into the 17th Street canal, as well as two other similar canals. That rush of water overwhelmed the flood protection, sparking much of the now-famous flooding.

Although news footage following the hurricane showed a city almost entirely under water, those pictures did not tell the whole story.

While Hurricane Katrina destroyed or damaged entire neighborhoods throughout the metro area, many more were left standing and in relatively good shape. According to Louisiana State University economist Loren Scott, the storm rendered about 267,000 of the metro area's 565,000 homes uninhabitable. As hordes of evacuees now make their way back into the city, demand for a place to live is growing every day.

High and dry
Independent levee systems run along each side of the 17th Street Outfall Canal. Following the storm, the Jefferson Parish side remained intact, sparing at least half of the metro area's homes from storm-surge flooding.

But even on the New Orleans side, not all homes flooded. Several areas of the centuries-old city were built on relatively high ground. Higher areas tended to be the older, historic areas along the Mississippi River that were built before modern technology allowed the swampland that much of the city sits in to be reclaimed.

Those neighborhoods, such as historic Uptown New Orleans and the Garden District, were generally high enough -- most were about 4 or 5 feet above sea level -- to be spared when the floodwaters rushed through the streets.

This geography has left thousands of buyers all competing for the same reduced pool of homes.

"We are just having a record-breaking year," Sterbcow says. "We were already very active before the hurricane, but nothing like we are seeing now."

Sterbcow says his company was founded in 1916, and the month after the storm it had the best month of its history.