For those of you who are just reading this blog or reading anything from me for the first time, I'm a Realtor working and living in a suburb of New Orleans about 30 miles northeast of the city called Slidell. Our little city was devestated by Hurricane Katrina with about half the city flooding when the storm surge came on shore. All of Slidell sustained winds around 145 mph (which is Category 5 strength). Fortunately for us, the water drained out of the flooded parts of the city within hours because of the fact that we are about seven feet above sea level.
Right after the storm, real estate prices in the undamaged parts of the city and in undamaged West St. Tammany Parish skyrocketed as not only those people in Slidell who lost their homes were looking for new ones, but also former residents of New Orleans and other devestated areas such as St. Bernard Parish moved into anything unflooded and undamaged. It was not uncommon for homes to be listed in the MLS Monday morning and be sold Monday evening at prices that were sometimes more than 20% above pre-Katrina values. Homeowners who had undamaged homes began putting them on the market in order to cash out and until around late summer of this year, they could expect to receive a lot more than pre-Katrina value. At the same time, investors, mostly small and local, began buying up the flooded homes and repairing them to put back on the market. Unfortunately, the repaired homes began hitting the market right around summertime. The glut in home supply, many of which were way overpriced, along with most homeowners insurance companies pulling out of St. Tammany Parish, has led to a dramatic slowdown in the real estate market. Most experts do not know how long this slowdown will continue. Many of these investors are now offering gimmicks such as paying closing costs for the buyer and giving bonuses to selling and buying agents.
However, I believe the real estate market will begin to pick up beginning at around the first of the year. Insurance companies will begin to return to St. Tammany Parish since they realize that Katrina was a once in a generation event. Another thing that will give the insurance companies some reassurance about writing in Southeast Louisiana is that the state government has just recently come up with the hurricane protection plan and new leeves that they will fight for. Finally, what needs to happen on either the state or national level is that we need some kind of comprehensive disaster insurance fund that will kick in to protect the insurance companies once they pay out a certain amount to cover hurricane damage. In addition, what will heat up the real estate market is that Road Home program money will start being paid out. Right now, out of 70,000 applicants, only 20 people have been paid. However, since next year is an election year, I expect the number of people who have been paid to dramatically increase. Finally, as businesses start relocating to the New Orleans area to take advantage of tax incentives, their employees will start buying up the homes for sale.
Comments(8)