Real Estate Market Uncertain After Storms
NEW ORLEANS - Real-estate agent Fred Burasâ cell phone has been ringing incessantly for weeks.
Residents displaced by Hurricane Katrina are on the line asking if he has any high-and-dry properties they can move into quickly. Speculators from across the country are calling, looking to buy heavily damaged homes on the cheap.
There are 100 people ahead of you, Buras told one California investor.
Despite or perhaps because of a the catastrophe, there is plenty of interest in the New Orleans housing market from people willing to pay top dollar for a relatively unscathed home and from others who want to make a quick buck. But what happens a year or two from now?
Some experts say the Big Easy's real-estate market will see a boom in home building and property values, while others worry that lawsuits and lack of coordination between community and business leaders will slow the city's housing rebirth.
Once the surrounding areas sell and all those properties are gone, that's my worry, said David Tastet, a real-estate agent who lost two of his own homes in the hurricane and has relocated temporarily 25 miles away in St. Charles Parish.
When things dry up and there's no place to buy until New Orleans comes back, that's what's going to really hurt the metropolitan realtors, he said.
Besides the availability of housing, the long-term impact of the hurricane on property values in the city also is uncertain.
If you own a home in parts of the Garden District that were left intact, your home value may go up. If you live in the Lakefront area, which suffered heavy flooding, your home value could go down. In Mississippi, real-estate agents say prices have jumped as much as 20 percent since the storm, driven by wealthy residents looking for new homes and investors seeking a payday.
What happens in New Orleans will depend in part on how quickly the city rebuilds, whether businesses return to New Orleans en masse and how much money the government pours in to restore the battered infrastructure, experts say.
Until you have electricity, a safe and functional sewer system, drinkable water, what can you do? said Michael Siegel, executive vice president of Corporate Realty, which handles real-estate transactions in New Orleans.
I've seen a lot of changes over the last month, but I think it's going to slow down in the near term because it's just so much, he said of the rebuilding effort. â€œItâ€™s an overwhelming amount of work to be done.â€
Until the hurricane, the market for commercial real estate in New Orleans was growing solidly, and demand for hotels was hot.
The prospects were highlighted by an announcement just days before Katrina struck that New York real-estate magnate Donald Trump was joining a team of Florida developers to build a tower in New Orleans housing condominiums, a hotel, a five-star restaurant and retail space. Early ideas for the building, expected to cost as much as $200 million to build, suggested it could reach 750 feet, or 70 stories.
Now, the future hinges on whether and how quickly the cityâ€™s mainstay tourism industry rebounds, said Susan Talley, a real-estate attorney.
â€œIf our civic leaders are creative and our business leaders do what they can to get back in the city, repopulate in the city and invest in the city, long-term I think our prospects are good,â€ Talley said.
A spokeswoman for Trump, Norma Foerderer, said she did not how the hurricane had affected the status of the tower project. Trump could not be reached for comment.
About 500 of the 4,000 New Orleans area members of the Louisiana Realtors Association are expected to quit the trade, said its chief executive, Malcolm Young. Some have moved and placed their children in new schools and probably wonâ€™t return.
â€œTheyâ€™re staying within the state, but relocating to different areas,â€ Young said.
In Tyrone Wilsonâ€™s case, the New Orleans real-estate agent has moved his wife and three girls to Dallas, where the children are in school. He ran a small brokerage firm in New Orleans that primarily handled residential properties. Before Katrina, Wilson said his company handled about $7 million in property sales a year, and the company had done about that so far this year.
But the business has done no business since the hurricane, and heâ€™s uncertain about returning.
â€œI just donâ€™t know how much business there is going to be left in the immediate future,â€ he said. â€œA lot of realtors, theyâ€™ve scattered all over the country. My agents are scattered all over the South.â€
Meanwhile Buras, recalling past downturns in his 22 years in real estate, is staying put, confident the market will turn upward.
â€œWhen we build bigger and better homes that are more sturdy, they will be buying,â€ Buras said as he took a tour through the city last week.
As he drove by some of the cityâ€™s destruction, past roadblocks and a toppled home with the words â€œWelcome to the Fourth Worldâ€ written on it, Buras said he isnâ€™t worried about New Orleansâ€™ real-estate market.
â€œWeâ€™ve been here for years. This is our home,â€ Buras said. â€œYou can go down the street and talk to 50 people and find that many of them have lived somewhere else, but they always have to come back.â€