For those who have their dream homes on the formally idyllic Gulf of Mexico, the past 2 months have been a nightmare. Actually, when you add in the real estate bust, the past 4 years have been a nightmare.
Reports coming from the CoStar Group are expecting the BP Oil Spill to reduce property values of Gulf of Mexico properties in Florida, Alabama, Mississippi, and Louisiana by 10 percent, or 4.3 billion dollars.
And I hate to say it, they will be lucky with that loss.
This is a tourist dependent region. I can not see many people planning a trip anywhere on the Gulf Coast in the near future. The damage to the tourism industry, not to mention those involved in fishing and anything to do on the Gulf, is tremendous.
The impact on property values and employment are going to take a double hit.
What I would keep an eye out for is how this affects Atlantic Ocean property values in the Southeast. I could see real estate marketers, as well as tourist destinations, start marketing their properties in regions that typically would head to the Gulf for vacation or retirement.
There may be an uptick in Atlantic coastal real estate in North Carolina, South Carolina, Georgia and Florida over the next 6 months.
Losses may total $4.3 billion along the 600-mile (966- kilometer) stretch from the Louisiana bayous to Clearwater, Florida, the property-information service estimates.
“It’s just another blow to an already depressed real estate market,” Norm Miller, CoStar’s vice president of analytics, said yesterday in a telephone interview from San Diego. “The best thing you can do if you’re in real estate in this area is bide your time, don’t panic and don’t try to sell in this environment.”
Falling real-estate values are one consequence of the worst environmental disaster in U.S. history as oil keeps gushing from a BP well once pumped by the Deepwater Horizon rig. An April 20 explosion there killed 11 workers. Oil washing ashore will further harm property values in an area where Moody’s Economy.com estimates prices fell as much as 34 percent from the peak of the U.S. residential real estate market in 2006. via Bloomberg
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{ 4 comments… read them below or add one }
i used to be in real estate…. it seems to always go up & down with the downs recently being not just being big but HUGH. now especially in the gulf…. i have moved on to an MLM that has no competition and is involved in Gold & Silver…. it won’t go down in price as long as the U.S. keeps pringing money…
i appreciate your blog, but i believe you best move on. real estate isn’t going to make any one wealthy soon… if you think so, then goodeal & gooluck
HHH
"real estate isn't going to make any one wealthy soon…"
LOL…ok…
10% loss is a joke. I think it will be greater than the 30% loss I read on other sites. The property I own has decreased to $62,000 below what I owe on it. I did pay 20% down so this decrease is more than it looks like. This decrease was before the oil spill. Renters are paying less and less because owners that have purchased recently can afford lower their rental rate; that forces the rest of the owners down. It is a beachfront property and in a newer building. Now the oil is coming in.
I can either keep paying or let it go. What would you do?
This is truly a very bad news for the real estate industry and the people related to this industry as the real estate market is already in a mess and after this incident the situation would definitely will become more worse. As a realtor I always try to keep myself updated and as this current situation is really a bad one. After this the rates of the beach property will become more down.