Housing prices soaring in flood-ravaged New Orleans
All dressed up with no place to go, three dozen real estate agents gather in a West Bank Presbyterian church for their weekly sales meeting, hoping for words of encouragement amid sprawling residential ruin.
Sitting beneath large velvet banners that read, “Lamb of God,” “Prince of Peace” and “King of Kings,” the spoken message from the head of Latter & Blum Inc., was all about mammon at a recent meeting.
Big money is headed this way as housing prices in the most devastated region of the U.S. soar. In New Orleans, where unofficial estimates say more than 100,000 homes could be demolished as a result of Hurricane Katrina, dwindling supply is fueling huge demand and housing price hikes of 10% to 40%, on average.
Much of the price spiral is driven by companies and government agencies involved in the city’s long-term recovery and rebuilding. But when evacuees return with insurance checks, probably next year, price inflation could be even greater, real estate agents said.
“Those people coming back have a vested interest in New Orleans,” said Glennda Bach, who’s been selling real estate in the area for 30 years.
“It’s going to be an enormous housing boom,” said Arthur Sterbcow, chief executive of Latter & Blum, which saw several of its realty offices destroyed and its New Orleans headquarters shuttered because of damage and mold.
The hyperactive housing climate is marked by individuals and companies buying houses or groups of houses, sight unseen. Sterbcow said one company involved in rebuilding the city purchased 150 homes without inspecting any of them.
Some sellers who had their homes on the market before Katrina have either raised their asking price -- in some cases despite the condition of the home -- or pulled them off the block temporarily in anticipation of prices going even higher.
The price spike affects primarily low- to moderate-income housing, Sterbcow said, and that could play a major role in the demographic redefinition of New Orleans. “This could change the demographics of the city. I think we’ll lose a lot of low-income people,” Sterbcow said.
There is no set figure on the number of homes that will have to be demolished. Although portions of the city are reopening, more than 100,000 residents who evacuated have not returned, and city officials have avoided speculating on how many homes will be leveled. Many will be in the hardest hit areas such as the city’s Lower 9th Ward and nearby St. Bernard Parish.
Preservation groups have exerted pressure to save architecturally significant structures in the city. Those include an estimated 37,000 buildings, according to the Historic Preservation Trust. That will compete with efforts to return New Orleans to a semblance of normalcy as soon as possible.
Housing inflation is a common occurrence in communities struck by natural disasters. What sets Katrina damage apart from that of other hurricanes and tornadoes is the wide swath of destruction.
Last month, Baton Rouge and other area cities provided a hint of what was to come for home costs as demand from evacuees drove up prices, either for long-term leases or purchases.
Real estate agents in New Orleans, though, have been out of work for more than a month.
Mortgage lenders and title companies also have been shut down because of Katrina. Millions of property documents were destroyed or damaged. Housing inspections have given way to repairs, where the wait can be many months. Multiple listing services have not been updated. It may be early in the new year before the traditional home sale and closing process resumes in New Orleans.
Real estate brokers such as Barbara Longworth, who lives in the Algiers neighborhood, have gone without a paycheck for more than a month. Longworth, who received food stamps, spends her days feeding 28 abandoned cats, working at relief agencies and laundering uniforms for a National Guard unit working near her home. Her cellphone doesn’t ring like it used to, and she is eager for the day when her clients return to the city and she can begin selling again.
For agents, she said, the return of the housing market is “like waiting for Christmas.”
“You know there’s something good under the tree, but you just can’t open it yet,” Longworth said.
