The aftereffects of Hurricane Katrina are still reverberating across the Gulf Coast real estate market, creating mini-booms in areas that were spared the worst damage and slowing sales to a crawl in the hardest-hit communities.
Mississippi's coastal Hancock County is a microcosm of what's going on throughout the region, with much of the sales activity shifting toward Diamondhead, a town 15 miles north of the Gulf that was left in relatively good shape. "The residential land prices in the north end of the county, above the Interstate, probably will have doubled in the last six months," said the county's Chancery Clerk Tim Kellar. "That is the result of folks leaving the south end and going north."
Meanwhile, the waterfront cities of Bay St. Louis and Waveland have few habitable homes left for sale, leaving real estate agents to market little other than gutted-out houses or vacant lots. From December through mid-March, only 13 single-family homes were sold in the two cities through the Multiple Listing Service, although a handful of other homes likely were sold directly or before they made it to the listing service.
A similar pattern has been seen across the Gulf Coast, resulting in minor booms in places like Baton Rouge, La., Hattiesburg, Miss., and inland areas of the Gulfport-Biloxi region.
For those deals that are getting done, prices seem to be roughly comparable to what they were before the storm, real estate agents say.
"Values are probably equal to what they were pre-storm, and 2005 was our best year even with the storm," said Herb Dubuisson Sr., president of Coldwell Banker Alfonso Realty in Waveland. He said business seems to be picking up a bit in recent weeks.
Gutted houses changing hands
It is hard to say exactly how prices are holding up because there have been so few sales of homes in move-in condition. Most residential sales have been for gutted-out houses, some of which sell for little more than the value of the underlying lot. All told, nearly 11,000 homes were destroyed in Hancock County, which had only about 43,000 residents to begin with.
"Those houses that are damaged but repairable are the main thing that’s selling now," said Dubuisson. "Very, very few of the undamaged homes are being sold."
After factoring in the estimated cost of repairs, those gutted houses are selling for about pre-storm prices, he and other agents say.
A gutted three-bedroom, two-bathroom home in Waveland, featured previously on MSNBC.com, recently sold for $83,000, compared with a pre-storm value of about $130,000, said real estate agent Chari Rapp. A "very, very nice house" in Bay St. Louis, which would have sold for $275,000 before the storm, recently went for $115,000, reflecting the substantial repairs needed, said Dubuisson. The lot alone was worth about $45,000, he said.
Vacant lots, particularly those along the water, seem to have held their value. On North Beach Boulevard in Bay St. Louis, where waterfront properties were scoured clean of any structures, one typical lot is listed at $395,000.
"The waterfront properties -- I don’t care if it's canal, river, bayou, bay or Gulf of Mexico frontage -- they have retained their value," said John Harris, an associate at Latter & Blum in Bay St. Louis. He said residents – and developers – are drawn to the water despite the lingering horror of the hurricane, which killed 53 people in Hancock County and more than 1,300 overall.
While prices may be comparable, there is no comparison with the level of interest and activity that prevailed in the months before the storm, said Harris. "Before the storm the real estate market was at its peak," said "Everything that wasn’t nailed down was selling."
Damage doesn't necessarily deter buyers
Many sales that were pending before the storm failed to close, generally because the property was badly damaged or destroyed. But some of those deals were put back together later at reduced prices. Harris mentioned a waterfront property in Pass Christian that was in contract for about $1.9 million that sold after the storm for $1.3 million even though the home was completely destroyed.
"I said, 'Are y'all aware we had a hurricane?'" Harris said.
One thing that appears to have survived the storm intact is the phenomenon of Old Town Bay St. Louis, where homes command a significant premium over similar properties elsewhere in the area. The commercial section of Old Town, closest to the water, sustained heavy damage, and officials have not yet determined how to rebuild it. But the residential section of the neighborhood was spared the worst ravages of the storm.
Read previous related story: Real estate market meets cold reality
"There's still some of the charm left in this little area here," said Nancy Sorak, an artist and retired municipal judge who recently bought a two-bedroom, two-bath cottage for $175,000. The roof, damaged by Katrina, had been replaced, but ceilings in two rooms still needed to be repaired.
Nancy Sorak faces minor post-Katrina repairs in the two-bedroom cottage she recently purchased in Bay St. Louis. (David Friedman / MSNBC.com)
Sorak described the repairs as minor and said conditions were far preferable to what she faced at her former house in Waveland, a century-old converted one-room schoolhouse that was destroyed by the storm.
Fleeing a 'war zone'
"(Here) I can look out and I can see green," she said. "If I lived in Waveland, I would just be in a war zone. I might as well be in Iraq. This is where I plan to live."
Harris marvels at some of the prices paid for homes in Old Town, both before and since the storm. "You can’t imagine the excitement that was here before the storm," he said, citing as an example a planned 1,300-square-foot condominium near the beach that sold for $625,000 even before construction started. That project fell through, but more recently a three-bedroom house in Old Town that was rehabilitated to "pristine condition" after getting six inches of water in the storm sold for about $400,000, comparable to its pre-storm value, Harris said.
Harris himself has contributed to the excitement of Old Town. The 68-year-old New Orleans native lived for many years in Pass Christian before setting down roots in Bay St. Louis, building an impressive 3,200-square-foot home on Main Street, not far from the Methodist church with its storm-toppled steeple. The gracious home with its seasonally decorated moose on the lawn was completed only five years ago, but it has the look of a much-older building. Inside the house is crammed with paintings, overstuffed furniture and collections of glittering china, jewelry, silver and crystal, giving it the comfortable look of a place where guests are common and welcome.
With its 10-foot ceilings, two master suites, large open kitchen and four bedrooms, Harris and his partner "overbuilt the neighborhood" by $200,000, he said. But now the market has caught up, driven in part by the thriving art scene that has coalesced around the old core of the city. Harris is getting ready to put his house up for sale, asking $845,000. The house sheltered seven people from Katrina and has been completely restored since taking on just an inch and a half of water in the storm.
Harris and his partner plan to spend summers in Upstate New York and winters in Bay St. Louis, where they plan to build a new, smaller home on property adjacent to their current residence.
"I’m not giving up on Bay St. Louis," he said. "Bay St. Louis, Waveland, Pass Christian were just wonderful communities – great lifestyles, very artsy, good politics, good times, good food, beautiful plantings. And it will be back."
Health concerns remain
Still, there is no doubt that the market presents certain challenges to a real estate agent. Some privately question whether a house that has taken on several feet of water can be fully rehabilitated, even with bleach treatments and new Sheetrock. Many residents still suffer from a hacking cough they blame on Katrina and wonder about the long-term potential for mold.
In Waveland, there is little habitable property to sell, although Harris recently listed an unusual property with seven bedrooms, four and a half bathrooms and 5,300 square feet. The structure was formerly home to a Mormon couple and their 13 children, Harris said, although with his Realtor's imagination he said it would be perfect as a bed and breakfast.
"I really think if you build it they will come," he said, noting that the potential market of New Orleans is just an hour away. "People want to get out of New Orleans, even for a day."
Any new owners will have their hands full as the property took on 2 feet of water, and the lower floor has been gutted to the studs. The asking price is $335,000.
Despite such heavy damage, homes are holding their value in a simple demonstration of the law of supply and demand. People who are nervous about living in a hurricane zone seem to be far outnumbered by residents looking for a way to get back to the place they call home.
The state of the real estate business in the Bay-Waveland area is similar to what is being reported across the rest of the hard-hit Gulf Coast: The pace of business has slowed, but prices are steady to higher.
"There were a few cases of people in the very beginning who left here and moved to Diamondhead and made a big mistake: They sold too cheap," said Dubuisson. "Now it's settled down. There are not any so-called steals."
Demand for commercial space strong
In fact, demand for commercial space is relatively strong, he said, in part because contractors who are rebuilding the region need space to store vehicles and warehouses for their equipment and supplies. Contractors also are desperate for worker housing, meaning the residential rental market should be strong for several years, he said.
The observations of Dubuisson and others are consistent with a federal study released March 1 that showed real estate price increases in much of the Gulf Coast region after the hurricane, along with a sharp drop of activity in the most heavily damaged areas.
In the Gulfport-Biloxi area, for example, prices were up more than 8 percent in the final four months of the year, compared with the May-August period, according to the study by the Office of Federal Housing Enterprise and Oversight. Sales activity was down about 20 percent over year-earlier levels.
Even in New Orleans prices were up 6.5 percent in the months immediately after the hurricane – at least in areas that sustained the least amount of flood damage. In the areas of heaviest flooding, sales activity was down 95 percent.
"At the end of the day the price impact of an event like Hurricane Katrina will be a direct function of both supply and demand factors, and obviously Katrina took a lot of supply off the market," said Andrew Leventis, an economist with the federal agency who worked on the study.
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First of all, I fell so sorry for all the people, who suffered Katrina. I'm admiring everyone, trying to get back to normal life. Americans are very strong and hardworking people.
But that’s America! America is not what you see in movies. What you see in movies – is a fantasy world. That’s how everyone would imagine a perfect country.
I was living in America for five years. I learned a lot. It was really interesting time. But I left to Europe. I left, and I’ll never look back.
America was The Great Country and I believe it will be the Great Country, but it is not a Great Country right now.
Robert, UK (Sent Apr 6, 2006 6:15:08 PM)
It's great to see these guys are getting on theit feet again!
James Martin (Sent Apr 6, 2006 6:59:08 PM)
Good Luck!!
Peter (Sent Apr 6, 2006 7:24:41 PM)
I spent very little time in New Orleans and the southern states, but was warmly welcomed being a travelling canadian. When the storms came, just after leaving, I was very upset. Since then I've wondered what had happened, and I only hope people return to this beautiful area. I believe it is prime real estate and what is probably bargain priced. Bets luck. (no spam please)
Ben Roy, Squamish BC canada (Sent Apr 6, 2006 7:59:15 PM)
Yeah, the prices are just wonderful. What people seem to forget is that the median income for the Gulf Coast area prior to the storm was about $27,000. Now, with unemployment, you can only imagine what the median income is. So, when was the last time you heard of someone making $27,000 a year being able to afford these prices????? People are screaming about unemployment and unemployment benefits, but the starting salaries are absolutely ridiculous. "Brain drain" does not even begin to describle the situation here. As a college-educated woman with a masters, I was offered $6-$8 an hour without benefits for a job that would have commanded at least $40,000 for a recent graduate in any other city. The best part was there was no healthcare benefits, either. When I questioned the woman giving the interview, she stated, "you do not look sick. Beside MS does not have an HMO, so we can not offer a plan." I could not even believe what I was hearing. It was bad before the storm, but, now worse with Katrina. Until people recognize this situation, those of us that are not in the category to afford an $800,000 house will be left unheard and without affordable housing.
MB, Bay St. Louis, MS (Sent Apr 7, 2006 11:03:24 AM)
I was originally in St. Bernard Parish, Louisiana, where the storm caused levee breaches that flooded our home with over 10 ft of water. We have been fortunate to return to our old jobs in the area, but now we need to find permanent housing within a reasonable commute distance. Houses that once sold for $180,000 are selling (and quickly) for $370,000. The demand and greed are crippling the area. We say we will rent for a while and wait for the market to calm down, but there are hundreds of thousands of people just like us. We don't see an end in sight. This is the reality that the New Orleans area is facing, and people will be critical and blame those who return to flooded areas, saying that they are just asking for it again. But right now, it's a lot easier to pay $25,000 for a gutted house and rebuild it than it is to swallow the thought of paying $200,000 over what a house is actually worth.
Andrea, New Orleans (Sent Apr 7, 2006 11:40:09 AM)
as an employer..i would be embarrased to offer a 6 to 8$ a hour job to someone with a masters degree..MB, i hate to say this but maybe you should go where you can make the money you derserve...and come back when things settle down...blessings!
andy,ms (Sent Apr 8, 2006 11:00:35 AM)
Our house was one of those 13 that was sold. We bought it for 97000 and sold it for 47000. I was sad to know that we no longer had our little house, but grateful for the sale.
Jennifer, in Houston formerly Waveland (Sent Apr 8, 2006 12:40:23 PM)
I spent 25 days last April in the town of Bay St Louis I fell in love with your town and wanted to come back to visit again in the winter. Now I sit and wonder what happen to the people that I met. The lady with the quilt shop downtown Bay St Louis. I wonder what happened to the little house I fell in love with that we rented. I will be back
Sue Christensen Superior, WI (Sent Apr 8, 2006 1:15:24 PM)
Diamondhead Mississippi was left in "relatively good condition" ?? Come visit and take a closer look. Houses still sit ruined,abandoned as homeowners wait on insurance.
lb (Sent Apr 8, 2006 9:48:22 PM)
Glad to hear some things are getting better for you. It will take time. God Bless......
Chris--------------St. Pete., Florida (Sent Apr 8, 2006 10:12:42 PM)
I am glad to see folks are getting high dollar but I have to agree with MB. People can only afford so much. Several homes in my Gautier, MS neighborhood have been for sale for several months with the hopes of getting some post Katrina profit. Storm surge did not reach us. Unfortunately, what I can see no one is looking. I worked in my garden all day this past Saturday and did not see one broker bring a prospective buyer.
AFC, Gautier, MS (Sent Apr 10, 2006 5:06:18 PM)
carl smith,
Keep your heads hi things are going to get better for everyone. we are praying for all you people in the gulf coast.....
carl smith, renovo, pa (Sent Apr 11, 2006 4:03:34 AM)
HEY MB, my son has a degree in business administration....guess where he works?....selling air conditioners....he don't want to leave our area to make more money....it's HOME...so i shouldn't give you advise....be strong...our prayers are with all of ya'll
andy,booneville ms. (Sent Apr 11, 2006 2:11:09 PM)
I spent 4 months in an around new orleans as a FEMA inspector. The devastation appears to be overwelming, but the level of human resilence is strong. The volunteer organizations are to be applauded for their efforts at helping to restore areas hardest hit by Katrina. Volunteering to work with one of these organizations will be a rewarding experience for anyone willing to give a few weeks of their time.
robert patterson wauwatosa, wi (Sent Apr 12, 2006 10:38:18 PM)
am a katrina survivor. I was in the convention center for 5 days. On my third day of being there i was injured(2 broken heel bones)try'n to escape a possible sexual assault, so i jumped 2stories. i had no medical attention until reaching Kelly AFB in san antonio,texas. THANK GOD FOR ALL MIRACLES IN YOUR LIFE.... HERE I AM 7 MONTHS LATER....not knowing if i would ever walk again, 2mths in a wheelchair, a month using the walker, and boucou days of trying to get my balance after about 12 wks in 2 casts. Not to mention these 4 scars, 5 pins and screws in each ankle. I worked 2 jobs before the storm and i raised a productive citizen. ALL BY THE GRACE OF GOD...AND THIS TOO SHALL PASS.......GOD BLESS EACH &EVERYONE OF YOU THAT READS THIS MESSAGE.....
REGINA HAMILTON, HOUSTON , TX (Sent Apr 13, 2006 12:41:08 AM)
Hey, Andy, I feel the same way, I do not want to leave, but things are only getting worse. The cost of livin continues to go up with the price of homes, but salaries remain extremely low. If the Coast is going to come back strong, some old habits need to change.
MB, Bay St. Louis, MS (Sent Apr 13, 2006 11:15:13 AM)
May God bless you too Regina Hamilton!...you are a survivor....get well soon!
andy,ms (Sent Apr 17, 2006 10:40:35 AM)
There are still some of us who went to live with relatives. And it seems that we were over looked. I have been here since the storm and I cannot find a job paying more that $6.an hr with no medical ins. My relatives are tired and so am I. Yes I escaped with my life,(what life)? Please pray for us. We all need it. And to think some people just brush it off. But it could happen to any one of us at any time. What would you do?
BTRA. Gulfport, Ms (Sent Apr 18, 2006 9:33:24 PM)
SAD PART IS THAT THERE WILL ALWAYS BE PEOPLE TRYING TO MAKE A BUCK ON SOMEONE ELSES MISFORTUNE. I'M SURE THE INSURANCE COMPANY'S ARE HOLDING OFF HELPING PEOPLE GET BACK ON THEIR FEET, CAUGHT UP IN RED TAPE!
GOD BLESS EVERYONE WHO IS TRYING TO HELP AND MAKE A DIFFERENCE TO BE AS GOD SAID LOVE THY NEIGHBOR AS THYSELF.
Kris , Waukesha, WI (Sent Apr 18, 2006 11:21:48 PM)
God bless you Regina Hamilton!...and know that your hurt is all human hurt. Because until all of us are ok...none of us are ok.
Marie, Kenner, LA (Sent Apr 19, 2006 4:14:44 PM)
My wife and I are leaving a nice 3 bedroom in Lafayette to come and live in a tiny 2 bedroom fema trailer in Bay st. Louis because its home. We want to be near home to try to find property. Why would fema think 4 people (my wife and I a 17 y.o. daughter and 6 y.o. son) could live in a 2 bedroom fema trailer. But there is no place like home. That is if the killer gnats dont fly my son away...god bless
Jason and Shaina Lafayette coming back home to the Bay (Sent Apr 19, 2006 11:39:19 PM)
Jason, fill that boys pockets with lead and da gnats can't pick him up!....good luck and god bless
andy,ms (Sent Apr 21, 2006 10:11:13 AM)
Just came back from volunteering for a week in Waveland with a group of technical center students. The work to be done is staggering in its scope. Met some wonderful people who were inspiring in their resolve to rise from ruin. Hope to return!
Bob, Barre, Vt (Sent Apr 22, 2006 3:34:48 AM)
Our little town of Brookhaven, another 90 minutes north had quite a lot of damage to homes and trees, but nothing like y'all went through further south. There have been a lot of home sales to those pushed north by the storm and we have kept a number of families in our community, apparently to stay! It was a horrific event in our lives even this far away, God bless you every one.
Cheri,Brookhaven, MS (Sent Apr 22, 2006 7:00:09 AM)
To Btra, Gulfport, MS. Just try in another job. Like in construction, helper of an electricitian, those are the jobs that are demanding right now, after an Hurricane so keep it up. Don't your spirit go down.There are lots of ilegal inmigrant doing those jobs. Come on wake up of that bad nightmare.
maria rivera, caguas, puerto rico (Sent Apr 22, 2006 12:13:34 PM)
I just returned from a week in Bay Saint Louis helping an old high school friend rebuild his house on Deer Drive. He was one of the luckier people who still had a house, however damaged, after Katrina.
I toured the area with my friend and took countless pictures of the utter devastation...homes obliterated by the storm, boats washed ashore, cars mangled and destroyed by the storm.
What gave me hope was the fact that people in that area, overlooked by the media in search of news in New Orleans, were making every effort to rebuild their community.
My friend is unemployed now, is not on public assistance, and is actively seeking employment so that he can finish rebuilding his home. There are many others in his community in the same boat. Where are the stories about the "little people" who were hit by the "eye" of this catastrohpic hurricane?
Ken Hauck (Sent Apr 22, 2006 9:46:49 PM)
I was part of a Georgia law enforcement agency that assisted in the Gulf of Mississippi after Katrina. I am glad to see that someone is finally focusing on the devistation that occurred in Mississippi and not just New Orleans. The people down there were wonderful to us. God bless you all.
MB Atlanta, GA (Sent Apr 23, 2006 9:13:33 PM)
hi all I think you are all so very brave over there and GOD BLESS you all .
barbgeraghty alice springes AUSTRALIA (Sent Apr 24, 2006 7:44:47 AM)
Here we sit on top of another hurricane season which promises to be just as bad as the last one. There is nothing down there left to destroy. The housing market is rediculious. How many people do you know that are going to purchase a $200,000 home, making $6 an hour? Not many. Everything goes up in price, but yet wages and benefits do not follow. This country has shot itself in the foot by outsourcing jobs to other countries, because it all boils down to the bottom line; more profits for the companies that rape the American worker. I see a time when China is the most industrialized nation on the planet, while we are reduced to driving oxcarts.
Mary Patton, Snellville, GA. (Sent Apr 25, 2006 9:22:06 AM)
Mary Patton is very right "the times they are a changin'".....and it seems America is on da SH** list...sadly....we seem to empower others before ourselves
andy,booneville ms. (Sent Apr 25, 2006 10:29:25 AM)
I hope that the people on the Coast will be in houses, or at least not in tents, when hurricane season starts June 1st. I pray that they will be treated fairly and will stay strong. I just feel for them so much. They are hardworking people and the salt of the earth. But I guess the average working person doesn't really matter very much now in the U.S. What jobs we don't outsource, we give to illegal aliens. But the big CEOs make sure their paychecks outpace inflation by a zillion percent. The average worker's paycheck didn't even keep up with inflation last year. I can't even remember when that last happened. I hope and pray that the people who hire illegal aliens are found guilty of rackateering in the Supreme Court. They probably won't though. All three branches of our government are Republican controlled. I thought after the congressional elections of '94, it would be heaven on earth here in the U.S., but it doesn't seem to be that way, does it? More like shot to hell.
Jane, Southern Mississippi (Sent Apr 26, 2006 11:33:40 PM)
I have been in Florida since the storm destroyed our home and business in St. Bernard Parish. We drove an hour and a half to the Mississippi coast every month with our family. We loved it. We were under insured and there is no money to rebuild. FEMA wont touch us because we were insured. It seems as though they are willing to let those who did what they were supposed to and care for themselves drown in debt. They wont give us a grant and SBA wont loan money to people who don't have a job. Because we got insurance money we dont qualify for public assistance either. We travel home every week,5 hours, to take care of things which need to be done. Kids go to school in Florida so we have to drive back, 5 hours, for Mondays. No idea how we will manage the next few months, insurance money ran out a long time ago. If we could get closer to home our lives may get a little more normal. Who wants to hire people with post tramatic stress disorder who cant concentrate or work on weekends?
When would we be able to handle the issues at home? We really need help. Please don't forget about us.
Pray for us, please.
D.B Panama City Beach Florida (Sent Apr 27, 2006 3:59:37 AM)
Hello Every Body Out There: Iam a Katrina Survivor All We Just Have to do Is Pray To God Our Lord And Saveior Jesus Christ Read John:3-16 As For Ms. Regina Hamilton What Ever It Is You Are Going Though Only God Can Work It Out. MayGod Bless All.
L. Watson Dallas Tx (New Orleans) (Sent Apr 27, 2006 7:35:44 PM)
What resilience you all have.I'm from Canada and know how devastated we were for you.Our hearts go out to you,you are all very amazing people.I would gladly have opened my home to a small family (have a 2 bdrm. townhouse)but didn't know how to go about it.However with a new hurricane season approaching we will be praying for you wonderful people once again,hping its not a season like last yr.
Debbie Griffin Cambridge,Ontario- Canada (Sent Apr 27, 2006 9:31:27 PM)
My home will be up for sale very, very soon. I'm outta
here in a short while. Good luck to all and God
bless. I don't think I can take another storm. And
if I could, I'm not sure I can take -
1) Another cabbie in another earthquake infested
city give me a hard time about me taking money from
his pocket;
2) Some joker in a hotel up North asking me why
anyone would want to rebuild a region as backwards
as Mississippi;
3) Some yahoo in Chicago telling me that the hurricane
is Mississippi's fault for voting for Bush (I know
that executive power is as great as it's ever been
but I would doubt that it's _that_ great.)
4) A bunch of rabble on a website telling me
essentially the same thing as 1)-3).
I don't wish this on my worst enemy, or on any of
those naysaying, "get yer hands offa my wallet"
types who've posted on various topics on this site.
If you're staying and rebuilding, I wish you the
best.
S., BSL (Sent May 12, 2006 8:43:54 PM)
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