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Oil Spill Drives Property Values Down $56k, Sending Buyers to Mexico
“600,000 homes face $3 billion loss over 5 years” - Bloomberg Businessweek
Bloomberg reported yesterday, that in the wake of the BP oil spill (the largest in history), some Gulf Coast homes and properties have lost an average of $56,000 each, a whopping 35% since May alone. Over 600,000 waterfront properties in Mississippi, Alabama, and Florida face value losses of over $3 billion or more over the next 5 years.
The disaster is expected to completely wipe out the premiums homebuyers and investors paid for water access and ocean views, and commercial buyers and developers will see even greater losses. Buyers have stopped calling real estate agents and pending sales are down at least 50% from 3 months ago. Home buyers, developers and investors are paralyzed with uncertainty.
Some coastal properties have been spared from the worst-case-scenario of tar balls landing on their beaches and there has been reportedly less oil seen on the sea surface recently. However, the main reason values are rapidly declining has more to do with the fear generated by the catastrophe, scarring vacationers, buyers and investors away to more pristine and unpolluted beach destinations like Mexico.
One such place that ... more
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