After the disaster that was Hurricane Katrina last year, many who lived in the affected areas in Louisiana, Alabama and Mississippi packed up and left. It is only now, over a full year after the flooding subsided that a comprehensive look at the future of gulf real estate can be made. There is a recovery going on, but it’s slow.
According to sources in the affected areas, the biggest problem facing reconstruction is labour. A catch-22 has the New Orleans construction market treading water. More hands are needed to build more homes, but the bodies attached to those hands have no place to live in New Orleans, so they don’t come.
The housing market isn’t doing much better. Predictably, the price of undamaged homes shot up during the immediate aftermath of Hurricane Katrina, and are still anywhere between 10-40 percent higher than pre-storm levels throughout most of the gulf coast area.
The amount of inventory is most of the storm-ravaged area is still very small, and the areas that did manage to escape damage tended to absorb a large amount of homeless from areas that were harder hit. This influx of demand has kept supply very, very low.
Areas such as Pearl River County in Mississippi found themselves with a doubled population almost overnight as people from flooded areas flocked there. The area had been reporting just over 400 properties for sale at any given time before the storm, but the influx in population has shrunk housing availability down to 275. As for prices, they are up significantly, from around $90,000 to $150,000.
A much larger area that took in hundreds of thousands of people was Houston, Texas. Unlike many of its counterparts, Houston has taken the influx of people quite well. New home construction is way up, and the inventory is only down from 45,000 to 40,000.
Middle-of-the-road areas like Baton Rouge essentially doubled in population, much like Pearl River. Today, the population is still 50% higher than it was before Katrina hit. There is almost no inventory here, as soon as a house goes up on the market, it is inundated with offers and sells very quickly.
Hurricane Katrina was a legendary storm that changed the lives of millions of people. The real estate market will recover there, especially in a magical city like New Orleans, but it is going to take years. The surrounding areas may not be as lucky.