By Mike Colpitts
A study of home sales in Louisiana, Alabama, Mississippi and Florida along the Gulf of Mexico shows that home values have fallen an average of 15% so far as a direct result of the BP oil spill. The devastating impact from the massive oil spill has also contributed to the growing foreclosure crisis in the region with tens of thousands of people losing employment as a result of the mess.
The study, conducted by Housing Predictor researchers on more than 1,000 sales also found that oil slicks lying at the bottom of the ocean in the Gulf Coast region wash ashore as far away as the Florida panhandle during major storms. The oil, once sunk by dispersants used by BP clean-up work crews is troubling local residents and contributing to growing health problems among workers and local residents, including lung problems.
On particularly windy days the smell of oil can still be detected as far away as the Florida coastline, where remnants of oil from the ocean’s floor have been evident in the last few weeks.
In the aftermath of the BP spill, hundreds of homeowners have lost their homes as a result of the spill, and have been forced to leave the area, but many more are waging a battle with BP to be compensated for damages they have suffered because of the oil spill.
The increase in foreclosures in the region has become noteworthy among many real estate agents, who are mainly just fighting to make a living along the Gulf Coast region, which was once a hot resort real estate market in the heat of the housing boom.
The decline in home values is especially critical along the immediate Gulf Coast waterfront, where thousands of homes have lost more than 65% of their value since the markets peak highs. Many of the area’s waterfront homes are large estate properties that ran into millions of dollars in value prior to the oil company’s massive spill in Louisiana.
The BP spill came at a time when the region was just beginning to pull out of its long real estate slump a year ago last April when lower home and condo prices were beginning to contribute to a mini-boom in sales with the federal government’s home buyer tax credit. That boom, however, reversed course as a result of the oil washing ashore and contaminating the Gulf Coast.
Areas further inland from the Gulf waterfront, ranging up to a mile have also seen major losses in home values as a result of the BP oil spill. Resort property values are forecast to decline at least an additional 20% as a direct result, as buyers leery about the prospects of the region’s economic future strength remain on the sidelines.