A year ago an estimated 150,000 units of New Orleans housing stock, and more significantly the lives of their inhabitants, were thrown into turmoil by Hurricane Katrina. With the close media coverage of the aftermath, outpouring of sympathy by Americans across the country, and controversy and intense scrutiny over the rescue and disaster relief efforts, it would have been reasonable to assume that determination and inertia would be on the side of rebuilding the city. Unfortunately, this has not been the case. The transition from recovery to rebuilding has not been smooth for New Orleans. The re-elected mayor has announced that a neighborhood-by-neighborhood rebuilding plan will not be ready until year's end, fanning the flames of frustration over the apparent ineptitude of multiple levels of government to effectively coordinate a new plan for the city. In the meantime, any further delays in a set plan will allow the severe housing shortage to persist, which in turn limits the number of displaced residents and workers returning to the area.
With the slow progress of a homecoming, economic activity has been slow to improve. In the 12 months ending June 2006, the area shed 183,800 jobs, down 30 percent from one year ago. Nearly all employment sectors posted double-digit declines from levels seen one year ago. The current lack of a clear rebuilding plan has kept hiring in the area at a minimum, particularly in construction. The service sectors, which as of June accounted for 37 percent of the area's employment base, posted the largest decline from levels one year ago, down 40 percent for a loss of 107,700 jobs. It is not clear when, if ever, New Orleans will achieve pre-hurricane levels of population and employment.
There are still signs of life and determination in the city, despite the lack of progress in urban planning. In May, the city hosted its annual Jazz Festival, and while attendance was not near the levels that had been seen in year's past, the event helped to revive some visitor travel. As additional supply in the commercial market comes online, rental rates will decrease, making the area more attractive to new businesses. While housing remains in severe shortage, activity toward rehabilitation and demolition is well underway. Across the hardest-hit parishes in the area, the pace of demolition has increased over the last six months while the number of permits issued for rehab has almost doubled. As the housing market in New Orleans has tightened, rental rates have increased 39 percent over the year, and home prices continue to spike in suburban parishes.
New Orleans is a tragic situation, but one that government and industry can hopefully learn from to improve the process of rebuilding disaster-stricken areas. There is still more groundwork to be laid before the real rebuilding begins, but once it is finally set in motion there will be new opportunities for the building industry in the city, hopefully to rebuild The Big Easy better than it ever was while still preserving the culture and charm that made the city famous.