Another auction planned next month for properties in eastern New Orleans
Even with a healthy down payment in hand, Shannon Faulstick and her husband, Raymond Jones, couldn't nail down a traditional loan to buy their first house.
ELIOT KAMENITZ / THE TIMES PICAYUNE Raymond Jones with wife Shannon Faulstick and their child Frances on the porch of 1228 Kentucky, a NORA auction property they successfully bid on. The recent NORA auction tested the agency's residential redevelopment strategy."The banks wouldn't really look at us, even though we knew we definitely could afford a mortgage," Faulstick said, blaming the difficulty on her household's variable income: She works as a waitress, and Jones is a self-employed carpenter.
So the couple began scanning notices of public auctions and sheriff's sales for a home they could buy outright. In a split-second, the search bore fruit.
"In a minute, we bought a house," Faulstick said, referring to the shabby but sturdy single-shotgun on Kentucky Street in Bywater that was among 94 parcels auctioned off this month by the New Orleans Redevelopment Authority, the city agency charged with returning abandoned properties to commerce.
The open-outcry auction, held April 2, differed from earlier NORA auctions for properties in Lakeview and Gentilly, which called for sealed bids and generally required winners to commit to living in the property once it was remodeled. Those programs, in neighborhoods where significant flooding spurred a raft of Road Home buy-outs, also accepted bids close to or above appraised value in an effort not to injure the real-estate market.
Another such auction of properties in eastern New Orleans is planned for next month.
By contrast, the latest bulk sale aimed to unload the most desirable NORA-held properties -- many of them designated as historic -- across neighborhoods where the real-estate market has been humming, including Mid-City, Lake Vista, the Lower Garden District, Bayou St. John and Gentilly Terrace. Bids below appraised value were accepted, and buyers weren't required to take up residence in the homes they purchase, NORA project manager Ariana Tipper said.
In both cases, owners are required to show substantial remodeling completed within a year of closing, she said.
With 537 bidders registered and 94 bids accepted, NORA and city officials and even the auctioneer who ran the sale have trumpeted the single-day effort as a sign that interest in restoring dilapidated properties remains strong in a city where one in four housing units is blighted or vacant.
Total bids exceeded $3.5 million. The highest seller was a two-story, single-family home on Ursulines Avenue near Broad Street that went for $185,000.
"There was real enthusiasm, people willing to invest their own time and money in rebuilding neighborhoods. And it was a lot of neighborhoods, not just one or two," NORA Executive Director Joyce Wilkerson said.
Wilkerson cautioned, however, that a key factor of success remains to be seen.
"One of my is sticking points is: Are the people who bid on properties actually able to close on those properties? And can they put the resources together to redevelop?" she said, adding that NORA officials and aides to Mayor Mitch Landrieu have discussed possibly stepping in to supplement the tight mortgage and construction financing market.
"We need to listen, learn and respond," Wilkerson said.
The rebuilding requirement seems to have spurred action in Lakeview, where the first round of sealed-bid closings is nearing its one-year mark, said Ommeed Sathe, NORA's director of real estate strategy.
"A substantial number of people have rebuilt, and there's very, very little blight," he said. "We're seeing a pretty strong level of investment. The neighbors definitely would let us know if that was not the case."
Jeff Hebert, Landrieu's blight czar, said the administration will watch closely to see how many of the properties get fixed up.
NORA officials and preservationists noted that parcels that included structures drew strong demand, calling into question the wisdom of widespread demands for NORA to raze most storm-damaged buildings. Those calling for demolition theorized that vacant lots would generate more interest from buyers and would not scar the landscape as badly as vacant, boarded-up homes.
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"There was a huge tidal wave of people pushing to demolish" all of the properties NORA acquired through the Road Home, Sathe said. "But these properties are so much more marketable with structures."
Though NORA's cache of properties in popular neighborhoods has dwindled, Mayor Mitch Landrieu's administrations is ramping up sheriff's sales to dispose of properties whose owners long have ignored blight judgments. Officials have set a goal of at least 1,000 such sales by year's end.
The presence of salvageable structures, especially ones with historic character, on those lots could create a modest windfall for the city, while boosting the chances that the parcels will be returned to commerce over the long haul, Tipper said.
However, the administration recently undertook a separate effort, financed by FEMA, to tear down as many as 900 buildings damaged by Katrina. A Landrieu spokesman said the strategies can coexist.
Brad Vogel, of the local office of the National Trust for Historic Preservation, pointed out that several homes that sold at the NORA auction for around $30,000 apiece resemble in condition and location other buildings that have been authorized for demolition.
"If a better effort were made to market some of the properties that are going through to demolition, I think you would see more people looking to snap those up," Vogel said.
In addition to maintaining the architectural fabric of neighborhoods, Vogel said saving historically significant abandoned properties from the wrecking ball also increases the chances that a lot ultimately will house an inhabited building again.
Particularly in the city's oldest neighborhoods, tearing down homes leaves slender parcels. "It's just harder to get people to want to build a new house in a old narrow lot, but the historic charm of the old house often overcomes the narrowness of the old narrow lot," he said.
The auction also showed that properties on the fringes of strong markets -- the most bustling sections of Mid-City, for instance -- "behaved more like the core," Sathe said, drawing bids more in line with sale prices in more coveted areas.
Most of the eight properties that failed to elicit minimum bids were either vacant lots or were located in so-called "strengthening neighborhoods" with weak demand, Tipper said.
Sathe stressed that NORA chose the properties it auctioned off based on how sales could boost neighborhood revival.
"Our goal is redevelopment, as opposed to profit maximization," he said.
Since Katrina, NORA has disposed of about 1,250 properties, with purchase agreements pending on about 600 more, Sathe said. In all, about 800 parcels have been bought by neighbors through the Lot Next Door program, which gives neighbors dibs on adjacent lots.
For Faulstick, the recent auction provided a first crack at homeownership. She and her husband plan to restore the property in line with its 1920s-era character, but with up-to-date amenities, including a modern kitchen. The couple also will landscape the small side yard so their daughter, Frances, now 5 months old, has a place to play.
"The magic of that little number," she said, referring to her auction placard, No. 554. "I was like, 'I have a house.' I can't believe it. I was shaking."
Michelle Krupa can be reached at mkrupa@timespicayune.com or 504.826.3312.