According to a recent study, a Louisiana city has been identified as the most challenging in the country to own a home, and experts advise against purchasing property there even with the decreasing house prices.

In a ranking of 100 major cities across the United States, New Orleans received the lowest score for residential real estate, pointing to reasons why it may not be a favorable location for homebuyers.

Conducted by the University of Mississippi, the research led by real estate professor Ken Johnson and Dr. Eli Beracha analyzed data on inflation-adjusted house prices and rents in various American cities.

Their method is meant to help ‘readers gauge local premiums or discounts and make informed real estate decisions.’

What they discovered was a real estate disaster unfolding in the city. ‘This might be the toughest city in America to own real estate,’ Johnson told Daily Mail.

The study reveals a market caught in a double negative – where home prices are not only trending downward but are currently sitting well below that declining trend.

‘New Orleans currently is 14 percent below their long term pricing trend. That’s the biggest discount out there,’ Johnson explained. ‘And what really makes this bad, though, is that the long term pricing trend in New Orleans after adjusting for inflation is actually sloping downwards.’ 

This creates what Johnson calls a catastrophic combination.

New Orleans was ranked dead last out of 100 major US cities for residential real estate and the findings reveal why it may be the worst place in America to buy a home (Pictured: New Orleans Bourbon Street and French Quarter)

 Pictured: Homes in the French Quarter of New Orleans

The University of Mississippi research, led by real estate professor Ken Johnson (pictured) and Dr. Eli Beracha, used data to track inflation-adjusted house prices and rents across major American cities 

‘So you’ve got two things working against you: The average home price is trending down, and the current prices are even below that trend.’

The average New Orleans house price was $312,000 last month, down 4.0 percent since last year, according to Redfin data.

But the true devastation becomes clear when accounting for inflation.

Prices are ‘below where they have historically [been] or where they historically should be,’ he said.

Baton Rouge fared only slightly better, coming in at No. 92 on the dismal list of America’s worst real estate markets. 

House prices in New Orleans and Baton Rouge, in common with all the other cities in the study, generally have been rising nominally for decades.

But it’s a different picture when inflation is taken into account.

In Johnson’s study, New Orleans and Baton Rouge are among only 10 US cities that have seen inflation-adjusted house prices sliding downward since 2000.

Pictured: A Spanish French-inspired building with iron metal balconies in the French Quarter in New Orleans

‘After adjusting for inflation, 10 of those cities were actually declining in value on average… That was shocking, so it kind of says that home ownership might not be the guaranteed best path to wealth creation.’

The other eight cities losing value after inflation adjustment are: Bridgeport, Hartford and New Haven, Connecticut, Chicago, Illinois, Cleveland and Akron, Ohio, Detroit, Michigan and St Louis, Missouri.

But New Orleans is a stand out, even among this group.

‘Detroit, has been trending downward slightly, but right now their prices are above that trend – so they’re bucking the trend,’ Johnson explained. ‘New Orleans was not.’

Johnson points to multiple devastating factors crushing New Orleans’ real estate market, including a lack of recovery from past ecological issues.

‘With hurricanes, it has a lot to do with city governments not responding with [appropriate] economic development that should be going on in the city.’

But he emphasized one factor which he says is especially damaging: population size.

The study reveals a market caught in a double negative – where home prices are not only trending downward but are currently sitting 14 percent below even that declining trend

‘Perhaps the biggest thing that’s happening in New Orleans that is really hurting the values… in the last 10 years, the population of New Orleans has gone down 3.3 percent. [That] doesn’t sound like much, but populations during that time should have been up about … 8 to 9 to 10 percent… so population should be growing, but it’s actually shrinking.’

For those living in New Orleans, the decision between renting and buying has become complex.

‘New Orleans right now, their average rent is $1,655 – this is all units that are rented, homes, apartments, condos, etc,’ Johnson explained. 

‘In order to be able to afford that typical rental unit in New Orleans, a household will need to make $66,000.’ He said the average annual income in the city is ‘around $69,000.’

His advice: rent instead of buy, to stay on the safer side. 

The average New Orleans house price was $312,000 last month, down 4 percent since last year, according to Redfin data. Pictured: Downtown New Orleans is seen in this file photo

For risk-takers, however, there might be opportunity.

He said the only reason to buy now is if you are a risk taker. You may pick up a bargain but in the long term be unable to sell it for profit.

Still Johnson is optimistic about New Orleans’ long-term prospects.

‘There is a turn around point with almost every major American city. Probably the best example is Atlanta, Georgia, and I’m going to go way back, but going back into the ’80s, most people [had] given up on Atlanta,’ he said, calling it now ‘one of the most vibrant [cities] in the country.’

‘Most cities are going to rebound… I can’t think of one that has just continually gone downhill,’ he added.

The key, according to Johnson, is government action: ‘Usually a turning around point [is when] the government – the local, city and county governments… – they get their act together, if you will, in terms of economic activity, economic growth, economic development.

‘They start to attract capital within jobs into their particular metro area. And cities do rebound.’