Slammed by the furry of Hurricane Katrina more than three years ago, the Louisiana housing market is struggling to return from the devastating storm. More than 71,000 homes remain damaged and unoccupied in New Orleans alone as the area recovers from the devastation left in the storm's wake.

The housing market in New Orleans is slower these days, pained by the credit crisis and fall out from the storm. However, the prices of homes on the East Bank of Orleans Parish rose along with St. Bernard Parish. But in the nearby area on the West Bank, housing prices have lost more than a third of their value.

The infusion of federal aid will help Louisiana grow over time, but the return to a vibrant economy is expected to take a number of years.

The outlook for New Orleans is not encouraging as residents wait for government programs to assist with repairs amid a growing recessionary economy, and more expected job lay-offs. Housing Predictor forecasts that home sales will remain sluggish through 2009 in New Orleans on average home deflation of 13.0%.

City	Forecast
Baton Rouge	−   4.3%
New Orleans	− 13.0%
Lafayette	−   4.6%
Alexandria	−   5.7%
Monroe	−   3.5%

In Baton Rouge, the housing market is beginning to resemble that of 2002, a post-recession year. Nearly a one year inventory of homes listed on the market for sale is falling in value as foreclosures rise. Following Hurricane Katrina, Baton Rouge netted sales of $470 million more in sales volume than in 2008.

Many perspective home buyers are sitting on the fence in Baton Rouge, worried about the economy and slumping home prices. But the slide in housing values has held to single digit losses in the area, and is forecast to deflate just 4.3% by Housing Predictor in 2009.

In Lafayette, housing deflation has also been minor as home sales slow since it's harder for many perspective home buyers to get financing. Values have only dropped by slightly more than 3% in 2008. But a new state bond program should aid home buyers in 2009 to obtain mortgages. However, the program is not projected to bolster Lafayette home values during the year, which are forecast to deflate 4.6% on average.

In the northern Louisiana city of Monroe, housing boomed after Katrina, but when the credit crunch hit fewer people were buying property and it's expected to remain slower in Monroe in 2009. The new state bond program should also help buyers into homes in Monroe, but with increasing job losses there will be fewer buyers to purchase homes. Monroe is forecast to experience average housing deflation of 3.5% in 2009.

There have already been job lay-offs at Union Tank Car Co. in Alexandria, and additional job cuts are expected for the area. The reduction in the work force was a direct result of the economic slowdown. Demand for railroad cars has dropped as fewer products get shipped. Alexandria will experience a slower real estate market as a result on forecast average deflation at a modest 5.7% for the year. Until the economy turns around there will be housing deflation.