A request we get frequently, typically from out of town buyers, is that they want something they can buy and AirBnB it out full-time. (Here at Be New Orleans, we don’t work with those buyers.)
Here’s the deal though – currently (as of March 2019) no new permits will be given out in the City of New Orleans UNLESS you are an owner-occupant who also files homestead exemption. The other exception to this rule is commercially zoned property. (CPC is trying to mandate only 25% of commercial space can be used as a STR. I don’t know if the city council will let that fly.)
What laws are they trying to change?
Basically, the city will require you to live on the property, full-time, to be able to get a short-term rental license.
You will no longer be able to rent out your property for a few days unless you live in the home.
Currently, the law is, if you don’t live at the property, then you can rent it out for 90 days a year. This law will go away when/if the new rules takes effect.
The New Orleans City Council did suggest that this only affect historic neighborhoods and not all of New Orleans. (Editor’s Note: Not a fan of this…)
When are the laws changing?
We anticipate later this year. The city council asked for the City Planning Commission to review some changes they wanted made to the language. The CPC will then change their recommendations, or possibly leave them the same. Be on the lookout before summer 2019.
How will the New Orleans real estate market change when these laws change?
In areas like the Irish Channel, Bywater, Marigny, Garden District, Treme, and the Lower Garden District – you will likely see more housing inventory.
We can anticipate some price drops, but this isn’t going to be a fire sale. Some may choose to rent to long-term tenants and others will sell the properties. (and let’s get serious, people will illegally shot-term rent the properties out.)
But, don’t count on being able to buy a house in the LGD for $200k. It’s just not gonna happen.
Are you seeing some of these houses already being sold?
For sure! There are plenty of houses for sale right now that you can tell were AirBnBs. We have seen people purging items from them in Facebook marketplaces – along with comments like “selling my AirBnBs, need to get rid of all the goods”.
It’s definitely happening.
Should I wait to buy a house until these law changes?
No, probably not.
If you’re looking in Algiers, Gentilly, Lakeview, Hollygrove, and St. Claude – it’s unlikely you will see many price drops. We could even see price increases if these “investors” know they can legally AirBnB in those areas. (Won’t know until any laws actually change.)
If you’re looking in historic areas, we have already seen the prices stabilize and have seen inventory that is sitting longer on the market. Houses that sit on the market for longer periods of time, we tend to have more negotiating power. But, honestly, we still see some bidding wars for amazing properties. Which tells us that, no matter what, a great property is going to get top dollar.
Living in one half of the house and renting out the other half short-term is perfectly legal. That’s why we don’t think you will see massive price drops. This is a great opportunity for an owner-occupant to grab an already renovated double.
However, many people committed to STRs will get someone to be on the title and live in small unit on premises so that homestead exemption can be filed and they can AirBnB out the rest.
Let’s talk about if it’s the right time to buy – for you. Text us!