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The average sales price of undamaged homes in Orleans Parish has soared higher than storm surge in the eight months since Katrina, while flooded homes are discounted to about half the average prices of a year ago.

Jefferson and St. Tammany parishes appear to be more stable markets, with post-storm prices having jumped about 11.5 percent over prestorm values. For St. Tammany, that's a slight quickening of the market above the 9.2 percent increase noted in 2004 prices, while in Jefferson, the rate of increase has been level for the past two years.

The run-up in Orleans Parish prices for undamaged homes is the most startling number in a metrowide report on real estate sales prepared by Wade Ragas, the founder of Real Properties Associates and a retired finance professor who has studied the local market for 25 years.

From January to August 2005, Orleans sales were appreciating at a record pace of 29.6 percent. Since Katrina, the average sales price has climbed 26.2 percent for undamaged homes. In other words, in the past 18 months, New Orleans' undamaged homes have increased in value by 55.8 percent.

In the past eight months, there have been 9,925 sales in the metro area, and of those, 1,783 were flooded or heavily damaged properties that have lost an average of 45 percent of their prestorm value creating an average sales price of $122,000, according to the report.

"There's two markets going on, but the amazing news is that unit sales volume (for a 10-month period) has exceeded pre-Katrina sales," Ragas said. "The good news is that this is a strong market." The level of unit sales indicates a strong desire by many to return home or to invest in local real estate.

Ragas created the report based on observation of neighborhoods, databases containing flood-level information, and sales data from the New Orleans Real Estate Metropolitan Association of Realtors.

Metrowide, the average sales price of nonflooded houses was $129 per square foot as of June 15, or $247,418, based on 8,142 post-storm sales.

Sales of the flooded homes are a sign that both speculators and returning New Orleanians are looking for bargains, specialists say. It's both a good sign and a bad sign, said Chris Inman, president of Coldwell Banker TEC Realtors.

While acknowledging that there's no easy way to separate the speculators from buyers planning to live in the purchased housing, Inman said he assumes that speculators are now driving the Lakeview market in damaged properties.

Lakeview development

A quick drive through Lakeview on Friday found two developers who back up claims that speculators are working the Lakeview market, snatching up properties that they will renovate and then rent out. Craig Ritz of River Ridge and Bruce Gaubert, who lived in Lakeview and owned some rental property before the storm, said they are both investing in properties for rental, not for rehab and resale.

Rents, Gaubert said, will be stiff, comparable to those of the Warehouse District before Katrina. A two-bedroom apartment he was repairing Friday rented for $800 before the storm. It will rent for $1,100 now, Gaubert said.

Ritz will be asking $2,500 to $3,000 a month for a townhouse he built on Soniat Street and he had almost sold for $289,000. When Katrina hit, the buyer balked.

Both men said that the skittishness in the market is helping drive rents up because people are wary of buying during uncertain times. They both agreed that a season of no storms and fulfillment of state and federal promises will go a long way toward recharging consumer confidence.

Lakeview, the largest chunk of ZIP code 70122, consists of about 7,000 homes and was inundated by Katrina's water from the 17th Street Canal breach.

The 89 flooded properties that sold in Lakeview in the past eight months brought an average of $53 per square foot, or $115,732, according to the Ragas report.

Before Katrina, that kind of money would have bought nothing more than the lot, leading brokers and agents to conclude that the flooded houses are selling as tear-downs for new home construction.

Ragas' figures do not include properties sold directly by owners without use of a broker, a type of transaction that many say accounts for the bulk of the Lakeview market. But Ragas said his study has captured at least 75 percent of all single-family transactions.

Coldwell Banker's Inman said he thinks that after a spurt of activity in Lakeview and the rest of the 70122 ZIP code, the market there is slowing.

Wet and dry

"Two single-family home markets have emerged in the New Orleans areas in the wake of the storm," Ragas said.

In some dry areas, the change of values is staggering. For example, in Central City, mostly ZIP code 70113, two dry homes sold for an average increase of 86 percent above prestorm values. The sales prices of two flooded properties fell 40 percent below the pre-Katrina average.

But in ZIP code 70130, comprising the Lower Garden District and the Garden District, both of which were spared flooding, prices in the past eight months rose in value to $472,553, a modest 8.6 percent improvement on the prestorm eight-month average price of $457,543.

The relative lack of appreciation is because of the high price of the housing, said Arthur Sterbcow of Latter & Blum Realtors. Sterbcow said there is a 12-month supply of houses in the area priced above $500,000.

Ragas' report shows that price appreciation was averaging 38 percent annually before the storm in the unflooded area that has come to be known as the "sliver by the river." But Ragas said that pace of appreciation was faltering in the months before Katrina. "These are definitely not sustainable prices now," he added.

Uptown, mostly ZIP code 70115, saw prices climb 17.5 percent based on 222 sales of undamaged homes for an average sales price of $444,835, a leap over the pre-Katrina average cost of $390,981.

Of the 22 sales of flooded properties within that same ZIP code, the average sales price fell 58 percent to $145,227.

Low appreciation

One of the surprises in Ragas' study is the lack of strong appreciation on the West Bank of Jefferson Parish -- just 5 percent during the eight-month post-storm period. Before Katrina, the area was appreciating at an annual rate of 8.5 percent.

Similarly, in the 70114 ZIP code that includes Algiers Point, an area that was seeing average annual appreciation of 18 percent before the storm, based on 115 sales, prices have risen only 4.8 percent to $167,497, based on 103 post-storm sales.

In lower coast Algiers, which includes English Turn, post-storm values have climbed 4.8 percent to $235,428, based on 354 sales.

In areas totally inundated by floodwaters, prices have plunged predictably, a drop of 44 percent in eastern New Orleans, for example.

In St. Bernard Parish, with 373 sales recorded, prices plunged 61 percent from a pre-Katrina per-square-foot cost of about $75.

Ragas pointed out that the most active ZIP code for flood-damaged sales was 70124, east of City Park, where 242 sales of damaged homes closed at $78 per square foot, for an average discount of 51 percent.

During the months before Katrina in 2005, the Orleans average sales price was $228,362 and on pace to realize an appreciation of nearly 29 percent, Ragas said.

Surburban sales

In St. Tammany, the market may be even stronger than Ragas' numbers show, local real estate agents said.

Barbara Blades, president of residential sales for Prudential Gardner Realtors said she believes nondamaged homes are selling at 30 percent above prestorm levels while Coldwell Bankers Inman concurs.

"Talking to my north shore managers, they say sales are still holding very, very strong. Thirty percent appreciation (for undamaged homes) is a very safe number," she said.

Ragas conceded that reporting problems may make for more conservative numbers in western St. Tammany and that 25 percent appreciation is probably close to the norm.

Ragas said it was more difficult to determine which of the sales in western St. Tammany were of damaged properties; much of the destruction was caused by wind rather than flooding. Damaged-home data was more readily available for eastern St. Tammany, the heavily-flooded Slidell area, where post-storm undamaged homes climbed in price 11.8 percent and damaged homes fell 51.7 percent.

Jefferson Parish wasn't spared Katrina's wrath, but flooded and wind-whipped houses often sustained less damage than in Orleans. Parishwide, 1,938 Jefferson homes have sold since Katrina. The prices of the 490 listed as flooded dropped on average by 26.8 percent while the 1,448 undamaged homes rose on average 11.4 percent to $275,304.

The average sales price for undamaged homes in Jefferson was $214,800, while the sales price for damaged homes was $146,777. East Jefferson has seen most of the sales activity.

In St. Charles Parish, overall unit sales have risen by 25 percent since the storm. The LaPlace area in St. John the Baptist Parish saw prices rise 19 percent to $97 per square foot, while sales volume soared 25 percent to 421 units in the eight months that ended in June. The average sales price rose to $220,358, compared to a prestorm average of $177,423 and 2004's average sales price of $123,795.

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Greg Thomas can be reached at gthomas@timespicayune.com or (504) 826-3399