Real Estate Market

More bad news for Gulf area home values

by Broderick Perkins

(06/13/2010) Much of the nation is poised to recover from the worst housing downturn since the Great Depression, but the Gulf of Mexico area's housing markets could be in for yet another home value depreciation disaster.

The April 20 explosion and fire that ruptured an oil well, killed 11 workers, sank the BP-operated Deepwater Horizon drilling rig and became the nation's greatest environmental disaster, could also take down home prices in the Gulf by as much as 30 percent -- another 30 percent.

• Also see: HomeAway.com issues marching orders for Gulf area vacation property owners

Since 2005 housing markets in the Gulf have been slammed by horrific hurricanes and a perfect economic storm, all of which have sucked away at home values like a Hoover.

Moody's Economy.com says area home values have declined 34 percent since the peak of the residential real estate market in 2006.

And now, commercial real estate information company CoStar says the economic fallout could clip another 10 percent off home values for the next several years costing $4.3 billion in lost property values overall, along a 600-mile coastal stretch from the Louisiana Bayous to Clearwater, FL on the west side of the state's peninsula.

Real estate broker, analyst and information transparency advocate, fired in March from his job as president of New Orleans' largest real estate firm, outspoken Arthur Sterbcow told Bloomberg last week, home values in the area will fall 5 percent to 15 percent in the next 12 months.

With the hurricane season looming and growing reports about cash buyers and others in the area backing out on property purchase deals, another, more recent forecast is even gloomier.

"Homes along the immediate path of the Gulf Coast oil leak are forecast to decline at least 30 percent in value as a result of the environmental catastrophe," according to housing market forecaster Housing Predictor.

The forecast covers only the immediate waterfront properties in Louisiana and Mississippi where homes and condos have suffered home value depreciation as great as 65 percent since the peak of the market, according to Housing Predictor.

Florida, over speculated during the housing boom, has had one of the nation's worst housing busts. One in every 174 Florida properties received a foreclosure notice in May, the nation's third highest foreclosure rate -- higher even then California, according to RealtyTrac

"Real estate values would also be seriously impacted in Florida and Alabama if the oil reaches the beaches and has a strong likelihood of crippling local economies, sending more homes and other properties into foreclosure," the Housing Predictor reported.

That could include beachfront properties in Florida's Northwest tourism region where the beaches and travel accommodations are often assets of individual vacation rental property owners, rather than hotels and resorts.

The draw of the beaches and vacation home facilities are a major asset for the region's tourism economy.

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