Gulf Coast Real Estate Threatened by Oil Spill
"This will be 100 times worse," says Christine Weber, a real estate agent near Biloxi, Miss., who says she can already smell the fumes from her house five miles from shore. "It is not something that can be cleaned up like a hurricane, where you can replace a roof. You can't remove oil from the sand or the water."
Weber, looking back on the housing market following Hurricane Katrina, says the demand for homes had picked up, and the supply was low because of homes lost or damaged in the storm. But the impact from the Gulf of Mexico oil spill, a slick which is edging toward the Gulf Coast, could destroy wildlife, beachfront property, and healthy living conditions for the community for years.
"We won't have anything around here," she adds. "It will be desolate."
The extent of the oil spill's damage is far from being felt in Biloxi, but in some vacation havens the toll on tourism is taking immediate effect. On Dauphin Island, a barrier island in Alabama, a broker at a local beach-house rental company says that in one to two days they lost $400,000 in cancellations for reservations as far away as September. The broker, Randy Tanner of Dauphin Island Real Estate Inc., says the island is experiencing occasional tar balls on the beaches, but it's unknown whether the oil spew will hit the island head-on.
"The lifeblood of this island is the west end, the beach, where the tourists come in," he says. "We are dealing with a problem we've never had. We knew how to deal with hurricanes."
In addition to turning off tourists, it's also scaring away investors who were looking to redevelop the area. Local real estate broker Ray Gonzales told ABC affiliate WLOX-TV in Biloxi: "[The venture capitalists] will be back. They're going to make sure that this is cleaned up before they open banks for developers."
Other real estate insiders argue that despite the upsurge of casinos in Biloxi since Katrina, little progress has been made in the home market along the city's coastal area.
A real estate agent with Keller-Williams in Biloxi, Joe McVey, says that securing home insurance and mortgages to build on the beachfront is nearly impossible, post-Katrina. According to McVey, only a few wealthy homeowners, who can pay in full, have been able to build in the vicinity.
"It is very depressing," he says. "The roads along the beach are fine, but there are no homes to speak of. You have 26 miles along Mississippi that are still devastated -- basically empty lots."
"Now, comes along this oil spill. What's it going to wipe out?" he asks.
It is still not possible to know for sure just how costly this debacle will be to the regional and national economy: It is a tragedy that is still very much unfolding -- or in this case, flowing.
Initial guesstimates of economic damage from natural (or man-made) disasters often prove to be wildly overstated. But why do I have a feeling that in this tragedy the initial estimates will prove to be largely understated?
Additional reporting by Megan Mollmann.