New Orleans property owners are grappling with a stark economic contradiction. While the average home price in the city is 15 percent below the national average, the typical cost of homeownership is 15 percent above it. Michael Mito, Commercial Division Director at United Real Estate | Partners, says this imbalance between property values and ownership expenses is reshaping investment decisions throughout the market. Owners who once planned to hold properties long-term are now reconsidering, as the financial calculus has changed.
This disparity comes from carrying costs — insurance, property taxes, and utilities — that have risen independently of property appreciation. These expenses do not contribute to property value but are unavoidable, regardless of market conditions. For many investors, the numbers no longer add up. When ownership costs outpace the benefits, even well-located properties become difficult to justify.
“The average price of a home here is 15 percent below the national average, but the cost of owning one is 15 percent above,” Mito says. “Those carrying costs do nothing for the value of the property. It’s just what you have to pay.”
Insurance has become the largest driver of this cost crisis. Mito reports that many property owners have seen their premiums double or more in recent years. The issue began when several insurance providers left the region, reducing competition and allowing the remaining companies to raise prices.
Some new providers have since entered the market, but the initial relief was brief. These insurers offered competitive rates to attract customers, only to implement steep annual increases soon after. As a result, insurance costs continue to climb even as the number of providers grows.
“Insurance has gone up a lot here. For a while, we had very few providers, so your choices were limited,” Mito says. “Now some have come back into the market. They were reasonable when they first came in, but each year, rates go up.”
The insurance burden is made worse by property tax reassessments based on the housing market surge in 2022 and 2023. When values spiked, local governments reassessed properties at those higher prices, raising tax bills. Even as home values have begun to decline in 2025 and 2026, those high assessments remain, meaning owners pay taxes based on peak prices even if their properties are now worth less.
Utility expenses have also added to the strain. Mito points to the rapid growth of data centers in Louisiana as a major factor driving up electricity prices. As these facilities consume more of the region’s available power, residential and commercial property owners face higher rates for the same level of service.
This situation worsened when the main utility provider split its gas and electric divisions into separate companies. According to Mito, this change led to immediate increases in gas service costs, adding another layer to operating expenses. “The price of power has gone up,” Mito says. “Part of that is because developments like data centers are taking up any excess power we had, so now we all pay more.”
For commercial property owners, higher utility bills directly reduce net operating income. Even buildings with steady rental streams are seeing profits squeezed as expenses rise faster than rents. With cap rates already pushed up by higher interest rates, these increased costs make it even harder to justify current property values.
The combined effect of rising insurance, taxes, and utilities is a market where ownership economics no longer work for many investors. Mito cites examples where a property’s mortgage might be $900 per month, but with taxes and insurance included, the total monthly expense jumps to $2,200. For owners relying on rental income to cover costs, this gap is unsustainable.
“If your note is $900 for a property, but with taxes and insurance it’s $2,200, it seems upside down,” Mito says. This problem is especially acute for out-of-state investors who bought properties based on prior cash flow projections. As expenses rise and rents plateau, these owners are questioning whether it makes sense to keep properties that no longer produce the returns they expected. Many are choosing to exit the market, which could lead to more distressed sales and open opportunities for buyers willing to accept higher operating costs.
The larger consequence is that New Orleans real estate is being repriced not just by interest rates or demand, but by the underlying costs of ownership. Properties that were once profitable at lower insurance and tax levels are now marginal or even losing money. This is forcing a reevaluation of what makes an investment viable and is likely to reshape the market for years to come.
United Real Estate | Partners is adjusting its strategy to focus on out-of-state multifamily owners who may be ready to sell at a discount rather than continue absorbing losses. Mito’s team is providing market valuations and rental analyses to work with these owners and move deals forward in a market where traditional transaction volume has slowed.
The firm’s approach reflects the reality that future opportunities in New Orleans commercial real estate will not come from appreciation or growth, but from owners who can no longer afford to hold on. As more investors are forced to sell, buyers with the ability to manage higher costs may find value in properties others can’t sustain.
The New Orleans property market is at a turning point. Rising fixed costs — especially insurance, taxes, and utilities — are outpacing both home prices and rental income, fundamentally altering the economics of ownership. For investors, the focus is shifting from chasing appreciation to managing risk and cost. As distressed sales increase and valuations adjust, the next phase of the market will reward those who can operate efficiently within this new cost structure. Owners and buyers alike must now base their strategies not on past performance, but on the real, ongoing expenses that define property value in today’s New Orleans.
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