Hurricanes Spark Real Estate Boom Along Gulf Coast
NEW ORLEANS (Reuters) - While Gulf Coast industries from shrimping to tourism struggle to recover from two devastating hurricanes, real estate in the region is booming as companies scramble to find housing for displaced workers and investors look to snap up property at bargain prices.
Six weeks after Hurricane Katrina ravaged New Orleans and coastal communities in Louisiana and Mississippi, New Orleans real estate company Latter & Blum Inc. has never been busier.
The firm's residential division generated $285 million in sales in September, 73 percent more than the $165 million it had projected before the storm.
"In some markets it's just hard to comprehend," said Latter & Blum President Arthur Sterbcow. "Every marketplace that did not flood and that has power has experienced a huge leap in sales."
Louisiana's capital, Baton Rouge, is the most heated housing market. In the 30 days after Katrina, residential purchase agreements tripled from the year-earlier period as the population swelled, according to the Greater Baton Rouge Association of Realtors.
Towns that have seen a surge of activity include lesser-hit New Orleans suburbs like Slidell, Mandeville, and La Place, Sterbcow said. He added that home prices have risen between 15 percent and 25 percent in those areas.
The first wave of buyers included relief organizations unable to find short-term hotels and rentals, and businesses who want to get back to work but need housing for their employees, experts said.
WORKERS NEED HOUSING
"I've been out looking at apartment buildings, condominiums, hotels, land to put trailer parks. That's a big business right now and it's something that is going to have to be solved for myriad companies," said Mike Siegel, executive vice president of Corporate Realty, a New Orleans-based commercial real estate company. "A lot of these companies' day-to-day workers ... don't have homes to go back to."
Sterbcow said he expects the housing boom will continue as more of the region's residents receive checks from their insurance companies, which will likely be used to buy new homes.
Regional bank Hibernia Corp. is helping 1,165 of its 6,500 employees find and pay for hotel rooms or apartments in places like Shreveport, Louisiana, Houston, and Dallas, according to spokesman Ian McNulty.
The bank expects the number of employees it is finding housing for to increase as they move on from temporary situations like living with relatives, McNulty added.
Interest in commercial real estate throughout the region also has soared since Katrina, but many New Orleans-based companies have sought short-term options while they wait to see if they will be able to return to the city.
"Many people have lived here for a number of generations and are very anxious to return, especially the smaller businesses, the local businesses, the regional businesses," said Susan Talley, a commercial real estate lawyer with the New Orleans firm of Stone Pigman Walther Wittman LLC.
Talley said she expects interest in New Orleans' Central Business District to pick up, particularly as some schools reopen next month.
Real estate investors and land developers have started to seek opportunities in the recovering region, but some may be disappointed at the lack of bargains, Siegel said.
"People with deep pockets, institutions with deep pockets say 'find me an opportunity,"' Siegel said, noting that a lot of interest is coming from the East and West Coasts. "It's not that easy though ... they think the entire city has been washed away and everything is going to be at fire sale prices."
"If stuff is bargain-priced, there is a reason it is," Siegel said. "I don't think that's what investors are looking at."