Gulf Coast Homes Expected to Lose $56K in Value on Average
More than 600,000 properties -- from Alabama to Florida's Atlantic Coast -- may be affected by the BP oil spill. The counties with the most severe damage -- Harrison, Miss., Mobile, Ala. and Escambia, Fla. -- have approximately 71,000 homes with greatly diminished value.
BP is reimbursing homeowners for property damage under the Oil Pollution Act of 1990. This framework for compensation includes property losses. Home value reimbursements will be made on a case-by-case basis by Kenneth Feinberg, the Washington attorney tapped by BP and the Obama administration.
The severity of the property-value destruction may rest on the potential for lingering doubts about the Gulf's ability to recover, environmentally and economically, from the oil spill. Oil damage is still evident 20 years after the disastrous Exxon Valdez spill in Alaska's Prince William Sound, reports MSNBC.
The drop in Gulf property values could wipe out the premium that some homeowners paid for oceanfront views. Equally disturbing, the spill's catastrophic damage may affect future buyers' perceptions of the area and its long-term investment potential.
Avila Beach, Calif., might offer a glimpse into the time and money necessary for the recovery of property values, though it's one small town affected by a comparatively small oil spill. Avila Beach suffered an underground oil spill 10 years ago as a result of leaking pipes, tanks, and underground oil transported by Unocal. Nearly three city blocks were razed in order to clean the contamination. Thanks to massive money and upgrades, the town is experiencing an economic regrowth. But, Avila Beach is still trying to rebuild its economy outside of the tourist season, reports the San Luis Obispo Tribune.
Attracting new residents and tourists is key to maintaining property values, particularly in beachfront communities.
New Orleans resident Paul Poupart isn't very optimistic about homeowners' recovering their losses, and may echo sentiments of those in this situation: "The people who lose out will probably have to eat it and smile because BP will pull out and disappear paying out as little as possible. They can't look to the Feds to help them out. They are inefficient and don't really care. We learned this from Katrina."
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