WWL>Topics>>12-4-13 1:10pm Angela: on the cost of living, part 1

12-4-13 1:10pm Angela: on the cost of living, part 1

Dec 4, 2013|

The first of two hours where Angela examines the cost of living in New Orleans. Guests include real estate analyst Arthur Sterbcow and Ivan Meistchovich and Dr. Walter "Dub" Lane" of UNO.

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Automatically Generated Transcript (may not be 100% accurate)

Well welcome and I'm delighted to be here today. You know it's a great today it's not cool like we want it to be for the Christmas holidays which you know once it's still a great. And I'd love to stay in particular because this is to show I've wanted to do really from the moment again at the station and that is talking about the cost of living. We're gonna do two full hours on this and I say that because if you have any thoughts on and any questions have we got the experts in ten. In our own studio and let me start from the very beginning a big selling point for the Crescent City has always been our low cost of money. But many say that's changing why. Today we're gonna spend the next two hours looking at real estate rent taxes insurance child care health care. And the cost and ease of doing business in New Orleans. Has the cost of living gone up since Katrina. Is it affecting who can live here. We have expert witness. Arthurs Turco. A local real estate analyst and broker. I've been missed a bitch director of the institute of economic development and realistic research at UN now. And doctor Walter doubling. Associate professor of economics and finance at UN. In the next hour we're also going to be joined by Michael Hecht who was president and CEO -- you know ink. Jim O'Donnell in our insurance commissioner. And Carol Williams the Orleans parish tax -- So again if you have any thoughts on this any questions for experts give us a call 2600870. I cannot thank -- enough for -- I think that over and over. First familiar expert your busy people and you have so much knowledge and and this is my honor that -- here so. This really started because a young woman I know. The single woman who loved living in New Orleans in the mid city area. But ultimately moved recently to Jefferson Parish. And she mentioned to me that she did this for financial reasons works full time is very good job. And said she was paying just a tent over what -- and pay for rent got much more than she was living in new round. But it was made up because her insurance went down. -- Texas went. So that sort of rang a bell. Are we getting too expensive. So -- looking that your eyes. Has the cost of living gone up significantly since Katrina. -- that your hands but of course the cost of living across the United States is it is CPI that was called the Consumer Price Index. Is basically the measure of inflation and it's gone up about 12%. Since. Hurricane Katrina since August of 2005. So yeah everything's gone up. We've had a few categories that have gone up more than maybe some other areas insurance for one. But without a doubt it's it's going on up in a course on the housing side of it. It's certainly -- the average sales price has gone up about 11%. Before. Since Hurricane Katrina. So it hasn't quite kept up with the inflation rate in an -- but it's been close. But the real distortion in the market has been rattles. The Reynolds have gone through the moon. And a lot of that because of the new construction it's coming in the market that's putting a lot of pressure and existing housing stock and the existing housing start it was just destroyed. So the average rents believe or not you're going up. -- won the order of 78%. From before Katrina. So it did just trauma and that's racing so -- apartment complex is coming out of the ground. Trying to do assimilate these folks but not nearly enough to accommodate the low and moderate income in the area. Okay it it's because from the get it right. After because we didn't have an -- and I knew knew of people who who rents doubled overnight because there's didn't fly and so that and we understood that I think on a certain level. But at the same time. Now you're saying we have more housing coming up more rentals coming up. That isn't going to level off the price that they're just going to take advantage of the higher prices. Yet they're coming up in higher price points then what's the majority of the folks in Orleans can really afford to be honest about it. -- -- they had a very nice luxury apartments in 900 dollars 12113 hundred dollars a month. But there -- a lot of folks did that is still looking for 450 to 650 dollar monthly rents and that's really what their income can afford. It's very tough. Yeah -- like that decides what one of the library do. What what agree with a with a war that will offer saying here that week you when you look at what happened post-Katrina. Within a matter Opel what those four hours we have 80000 or more or units around units. In the in the World Series destroyed or significantly damaged and you know had to be you know in the process now of replacing those -- naturally to that kind of a sudden and severe impact. Almost immediately you. Of increasing our -- by about 45%. Fulham you know the end of 2000 with the in the 2005 that fairly but the big -- just one year. What happens what happened since then is that there was also. Even for low and moderate income people -- number. Well it was providing vouchers. For people to rent property. And those vultures were paid to -- rank structure that reflected the immediate. Post-Katrina. Increase in in average rents. So yeah. And and what's happened is that they do is ought to pointed out. That rent structure has pretty much stayed at that higher plateau -- It's wavered up -- -- a little bit but not much it depends where you wore. -- and can't move actually -- -- to the other but the thing is. What's happened is the new property on virtually every apartment complex. That's been built in the world in this in this city proper. Since Katrina. Has said layers and layers upon layers of different kind of fine thing. That has really -- I call it anymore because a lot of the tax credits low income housing tax credits historic tax credits. No bond bond money you name it it's very little -- -- very minute part of it. Has been conventional finding it rental housing. And so those those projects -- properties of Colombian. Fairly expensive prices per unit the cost -- you know some of these has been upwards of 300 350000. Dollar unit. Which in the conventional more it would be so where it can row on -- Thirty to 150 so. And so those units of communism. Hi -- split through. And has been in most of them have mixed income home. Unit in them meaning that there are people little living in those properties that are not market rate rent dole attendance. Those folks are some formal -- slopes to the do some kind of culture may -- -- 40% of all average median income of fifty or sixty or something of that nature so you've got to you've got what you higher cost. And you've got to. Pretty much appeal -- city. If you would on when it -- mentioned and many of the properties. And that has over the past 45 years tended the problem that higher place to rent. Ivan -- is exactly on point is that a lot of that public money was directed towards new apartment complexes. And unfortunately. They they'll. You know had to be paid for by higher paying -- And what should have happened is a lot of that money should have been. Put back into smaller rental properties little mom and pop shotgun doubles little small. Properties that was the bread and blotter of New Orleans housing before Hurricane Katrina. And so if it head out a multiplier effect. Not only did the tax money go to those larger cup apartment complexes as you said layers and layers onion skins of funny money. But. It basically. Decimated the the market for the small rentals. So those tennis that would have gone into renovated small mom and pop Reynolds. They rated -- so there was no economic incentive to restore those shotgun doubles in those old historic neighborhoods and that's why you see a lot of -- like they are today. Yeah I think the thing that's a good point is that you know historically when you look at. You look at in the -- Orleans market we have historically in a mom and pop rental market. You know the shotgun -- which is the bread and butter you know housing market view of going back into the good view of the thirties and even before then. It was a traditional formal housing in terms of bubbles three plex is four plex is. And at some point many years ago it did an analysis of our our real our inventory of rental units. In those small properties. When compared to all the markets and we clearly. Amongst major US cities throughout the country all the US cities around the country. We the highest percentage -- two before and we dwelling units. In the in the country and that's because of the you know the traditional way that people you know would would get into housing. And because we we have a fairly. -- High density. Narrow lots and and and cramming more people into the old reports of the city. So there was an attempt to try to two road home program the small rental program that was an attempt to. Put some of that federal money the through the CD BG program. In -- bringing some of those small properties back on track. And I think it was just some limited extent it was a it was a little bit successful. But still was going on -- is that. News those into that program also offered some incentives. In that the again no cultures that were being made available for people to -- In those smaller scattered site housing units. We're also fairly generous so who if pummeling toward a what I am going to do them one great model rent. To that level and take advantage of the subsidies that much attention getting. And of course think it was also was what got -- in here to post-Katrina. Is is the view of the obvious impact of other operating cost. That even you know that's small and large apartment owners incurred. First and foremost being insurance. And then property which of crept up also. That we're gonna pick it up right there I appreciate everything you're saying we're gonna take a break we'll be right back we're talking about the cost of living in the world financial under the W. We are talking about the cost of living in New Orleans it's a fascinating subject. A lot has changed post-Katrina. And again we have three incredible guys here now and we will be having others joining us in the second hour. We have doctor don't blame me if I've been mr. Obama. The rest of my civic why do my struggle so easily and Arthur start -- again appreciate you're all being here. We're talking about real estate we're talking about rental in particular. But at W has some thoughts on what to Ivan and -- 2%. The guys want to pick up when Ivins last comment about them -- taxes and I think he hasn't changed since. Katrina. But one thing it's really important is that the way that. The property taxes in Louisiana are set up. Are ones with with the because of them the homestead exemption we have a huge number properties -- be anything that means that the Milledge is have to be pretty high for everybody else. And that he mostly hits two groups the high income people with a big value houses but it also -- renders his Rangers don't have homestead exemption exemptions. So built into their. And rental payments are these insurance payment but there's talking about and also these are high really high property taxes. But rents have as you -- have gone up 78%. That's enormous 7%. And I would ask -- also is didn't isn't this also because. After Katrina a lot of them feel a -- first win in the rebuilding housing. And all those people whether housing knocked out -- and Reynolds. And of course that drove up the price and then afterwards they moved back in the housing but the money to go into rebuilding Reynolds has not been any winners much of the made -- -- Rebuild owner doctor Michael does is. Look at the electorate that those that you expect for the small -- program. That you know the duplex is things like that that was what that was relatively small amount of money. That that actually was taken out of the CB DG 0800 billion whatever laws. To go into that ticket program. I think another thing to and this has really that maybe Michael active and excel work and can address this as well but I think one of the things we have to be aware of is that he's in the rebuilding process of recovery process. Was greatly helped along by a wave of people who moved into the war area from all the ports of the country. I know in particular that included lots of young people ought to students. Word role and Ivy League schools in the northeast along the East Coast of and whatever I mean are good in the first semester we -- back get -- on campus that you would in January of 2006. I was teaching a class of economic development policy implanting it in that particular. Class I had my students from you know plus ahead six students from MIT who who -- world class and MIT. And getting credit for that court while taking Michael as with my by you -- students so we have students from hand from. Colombia from although police. One of the things that struck me in talking to some of these sentences that. They were here and Mohammed. Who pretty much well heeled folks from the northeast. Would -- the subsidize their visit here to the -- area. And -- those closest state around in the the entrepreneurial class that that I'm sure that. Michael address. Basically alive and it has migrated from the north east and they'll the people here help rebuild them about those folks. Is that they look at two -- square foot for more -- we rented an apartment is being up bargains. OK so there you know and they look at Neil hamburger that might cost. Twenty dollars. You know if you're from New York from Boston or whatever. Not a bit deal -- what you want to candle so that is that to some extent. I think we have we know we hit and and thank god for those people because they these these folks have made tremendous impact. Or in the recovery and moving our CAD in our region. But I think they came into the mindset. That. Will -- with this is really low cost area and you know then we can pay more or prices go up. We are used to that we're used to high cost structure. Because we that we grew up we want this. -- -- -- where you know what -- and that can also be said of those who remain in Hollywood south the people have come in and the high tech kids enough and I hit it as -- -- onto can Norris. That's the key is -- are these salaries commensurate. With the pain of higher rents. And I'm reminded of the woman who now runs the New Orleans museum of -- was and I discussion group with the advocate. And they were talking about this very issue and she said she was unable to hire a couple of people because they could not afford to live in New Orleans. Meaning those salaries that she could offer. Inning nonprofit arts oriented thing. We're not going to allow that some may be by. Industry. You might be able to -- deep -- the average household income before Hurricane Katrina was about 41600. Dollars and some change. But 416 it's now about 48000. That's inflation adjusted. So what does that mean it means the salaries here in New Orleans. Have going up 15% more than what you would be expected inflation to adjustable so actually average salaries here have going up. But you have to look at that's why. Is because a lot of the poor moved out right distorted the salary structure here so again. It's it's the low and moderate income to have taken the biggest hit. And you certainly see them in the Reynolds because a lot of those folks -- -- certain low and moderate but even the middle income used to be able buy houses. And now they're not there renting. Why they ran in the the credit crunch across the country had caused a lot all across this is a national phenomenon it's not just here in New Orleans. All across the country. There's been a movement towards rental properties away from single family homes because you have to put more down it's time organic credit qualifying a lot a lot of different reasons there were a lot of generous programs some way too generous I don't disagree. But before Hurricane Katrina you know we were selling. You know my goodness. About a 1076. Houses per month. Now we're -- in about 974. That's 24%. Decrease in homes per month being sold in the greater new -- area right now. So they have to -- Al population's only dropped from that he and read a million to. They're moving into the rebels and a lot of times they're doubling up with their parents their doubling up so they're putting more pressure and two people can a formal maple higher rent. Which makes it tough and -- single person. We have a caller Donald from New Orleans. -- But I haven't -- you expected -- comments earlier. Great not only doing pretty good upward -- agree with -- Sort of ready to keep his background of and I were to go small rural program. We were to get -- was more stories that don't state and it just was small but important. And emotional trim levels association. -- statistical information form rush subsidized housing programs that we're doing. The housing authority knew what was put these are being as a. Shouldn't we let. I would begin to. Belgian people. But they sure there. In addition of that seal population -- the housing supporters are suitable for good. There's a part of 20000. People -- formal question and and rebels systems. Which is also bird population. Sort of follow throughout the which you -- it about housing inspection programs. Everybody has been small pox. We will land lords. Propofol was almost going 9000 units note predicting -- doubles and hope that only -- shortly before. People on board and there apparently mom and pops. The high cost of construction utilities. Always close to wishing associated drop in the cost of supply and demand with. I would it would actually use and so again. You're dealing with 30% of the population at least -- is below substituted in income. I would want to comment at least operatives. And before you mentioned that -- again thank you so much -- for calling and we will pick it up there -- and we have to take a break for news let's go to Chris Miller in the newsroom. Our subject today is the cost of living and we've really had a great talk in the first thirty minutes on housing. Both rental and single family homes and what's happened to prices post-Katrina. We're going to continue for another hour and a half so please stay with this but it really broaden out at this point I think in -- your comments on beyond housing. Are constantly. Right I mean you know we think of ourselves as a low cost down and Ivins Communists are perfectly. Correct -- people come from the coasts. And come to the world as we look really cheap. Because you know you would need an estimate say if you move from nor wants New York City you would need 42%. Higher income to afford the same. You know standard of living so that's huge difference between us in New York City or San Francisco or Honolulu or some of the other high cost ones. But in terms of the national average there's a lot of rankings. The -- into burning bright near the metal OK when that one has us three or 4% below average when as 3% above average. But overall we are kind of right -- that the US average. Four cost of living. You know we do a little bit better of housing group actually is is an area that's. Which helps us out a little bit lower than most and housing. Anderson up groceries are a little bit high compared to some of the other ones. But you don't taxes actually go and and we're. High side and an overall taxes I'm very interested in that let me go back to the food and misses a little anecdotal thing. I go to an exercise class these are my people and so I asked us that today we're gonna do a show on cost of living. What are your thoughts to any person they yelled out food. Here I'm thinking housing taxes senator they said food and you're saying that in your studies that food is more higher -- I was with -- we've been kind of compare studies at Houston that's obvious to those. And we -- We're slightly below Houston most of things especially -- we actually better and better in Houston redolent housing but groceries were -- out restaurants were lower. We at W better restaurants but they're cheaper hunt but but though on groceries with every we're actually slightly above why he's that. I don't know that market but I'm guessing it may be. That we really don't have the national chains and supermarkets in here quite and we Wal-Mart and but our how our our grocery market at a major changes of the last couple years and a moving towards a much more like arouses the regional change like that we mean you know it may mean the pattern with the competition is in the grocery business here. Compared to say other places that that might be part of I don't know but back to the taxes and you're saying our taxes are now considered god we will we're rink -- -- which when you're talking -- but it's really sales taxes -- world -- that we -- that -- that bad. Income taxes in a week here that some other people they seem kind of excitement. You know overall in total. Tax burden. We -- like number ten in the country total expert because we have income and we have property and we have sales. You know some -- states don't have the income they don't have the properties have the sales we -- all three elements -- one of -- feel that our sales and obviously when times. But isn't it one of the highest in the United States yes and and and in part in -- and is and has two parts through now what percentage is also which things -- tax. But on both of those the other -- really high and sales tax which also again. -- low income people disproportionately I was about to say that Indian and in the income taxes you -- or not. Not and you were kind of blow when at all for all of together we are ranked number ten in the country in terms of tax. What about insurance well. That's another -- -- -- although all of the story and begin there and especially when you don't automobile insurance in New Orleans spirit -- you know terrible -- hello Jim Donald who is Andre join us -- right area you do would Donald computer we -- talk a bit more about that but but we know flood insurance we got a big issue there. With what's happening when we would flood insurance. But overall we -- -- insurance blue origin cost high in part of that is due to. On our legal system you know that we are two very litigious state in and that considered drivable cost and makes it shows up so that shows that the insurance. -- always have to say this even though I'll have fifty lawyers combing and that's okay. But -- many years ago we didn't show and there are more lawyers in the state of Louisiana and all of Japan. So I have to make a living right on. -- -- Yes but don't give me startled will -- a but when -- in -- But -- But again let's let's go back to. Overall would you gentlemen say then we have -- Recent higher than normal cost of the effort. We're actually about average hour average you know housing costs is again just a little bit below the national average now. Before keep Katrina it was well below okay but but it's it's definitely changed and came Melamed I'm glad to hear that we're not done the super high. One more break stay with us we'll be right back we're talking cost of living. My three new best friends and dubbed Ivan and Arthur were talking about the cost of living and -- -- let's talk about. Something -- thought about health care cost. That's a national institute national institute help us put out a study looking mostly Medicare data. About different high cost cities for doing the same type of things which controlling you know we know our health care cost Louisiana power or hide because we have a lot of overweight people we've got a lot of sick people -- just our overall health index is pretty low. But even adjusting for all of that. The ten. Highest cost health care cities in the United States six of Cameron Louisiana. Now it doesn't include New Orleans it does include Metairie Metairie is number ten. And then they're somewhat -- -- number three Alexandria is number five floppy at number six reports seven. So we've got a Baton -- number eight so that -- but this would apply it in general all over Louisiana we are really a very high cost area. For health care that we shall open premiums show opened -- a lot of the facts and that is based on pore health. No no that's based on. I think that we just an average -- a real good study that was done comparing McAllen which is number two in the in the country to El Paso, Texas two very similar cities. And they really showed it's really culture in some areas doctor just perform more unnecessary tests they charge higher prices. In India did these are all adjusted for health conditions this is for same -- of this email -- will cost you a lot more in McAllen. Or you know New Orleans and it will be in Portland Oregon and Kansas City or someplace else. So we just the culture. Of the positions in terms of how much. Procedures they do it may be no -- necessary. I think -- open and equipment it hearkens back to what we were talked about the last segment. Because of litigious nature and the number of attorneys we have in the state. Doctors or very many doctors friends of mine who -- doctors will be glad to tell you in this at least privately. That that happens because these they're constantly looking over their shoulders. That possibility of a malpractice suit or so -- formal litigation even the threat of litigation and so. It's you know it's -- cover yourself type of book a mentality with the medical professional lets say that's a good thing. And it's saying that you know that -- there are a lot of dots that need to be connected that particular -- right there. Connects back to. The litigious nature our our system. But if you were saying in the commercial -- health care costs nationally are going to go a lot we certainly understand that. But that is an impact how much money we have for other things like -- or buying a home or. With with health insurance premiums going up for permitting people. Because partly this obamacare among other things is requiring people to buy kind of more insurance than they previously did insulting a lot of sick people and putting them on insurance that didn't have answers before that but those things you know that with the no pre existing condition exclusion and things like that. So that's going to be raising premiums. Well -- there was simply planning well you know what your if your paying a little bit more remote for your health insurance premium. And a little bit more months for your flood insurance that leaves less to put into buying a more so that's gonna affect the housing market. But that's that's capsule correct. You know -- right now the city it's considered to be on affordable if you're spending more than 35%. Of your pretax income on housing and utilities. So you're paying 35% more for housing utilities you have definitely overextended yourself the proper number should be under 30%. And right now it's it's just a pretty high percentage of folks in the greater New Orleans area that are paying more than 35%. So. When they have to double up in rentals or found some other ways to to save money oh with parents or whatever. But I do see some folks either on grants that are just over extending themselves. And again with these. New flood insurance premiums property taxes. Health insurance. You know they've got to looked on the road a little and I don't live not in the now but really plan a little bit four or some of the uncertainties that are coming down path. Enjoy you know -- you you use an example earlier a friend of yours who basically moved out BC the event moved out to Metairie. And I think one of the things that is happening is that people are being or relocating from areas where they -- could afford to live. Two places a little bit more affordable if you look Egyptian care -- Said for the list that were years in our housing study. Jefferson Parish particularly east Jefferson turned out to be one of them. Best bargain that's available war renters. In terms of average ransom note which you get for the rent and everything else. So that doesn't surprise me on the flip side though she did you know when you look what happened in mid -- you had the equivalent of an economic atomic bomb. Dropped into the middle of this city we call it the only issue BA complex. So you put that. In the middle you put that in the city along with some of the other pressures that are going on of people that are being priced out of say the downtown area. Out of the warehouse district on the -- paraded like a lot of a lot of people wanna live in the downtown area. But they just can't afford to go month per square foot -- Or they can't afford the 300 before it all square foot for a Condo. So that they might pay so it's so it's kind of vote. Of continuous movement of people going to be doubtful I'll until the landscape of the -- -- here begins to release settle out. Stay with this will continue this right after this I'm Angela under the if you will are three men are gonna stay with this and this next hour we're gonna be joined by Jim O'Donnell and insurance commissioner. Harold Williams of Orleans tax assessor and John-Michael. -- with the -- you know so stay with this now let's go to the newsroom and Chris --