The housing market in Mississippi boomed after Hurricane Katrina hit the Coast, but now the supply of homes outside the devastated Gulf Coast area have increased. Homeowners from the Gulf Coast fled inland seeking a new place to live. More than three years later the over supply of homes on the market are pressuring prices downward.

The special "Gulf Zone" tax incentive program should aid the recovery of Biloxi over the long term. But sales of homes in Biloxi and along the coast elsewhere in Mississippi have slowed. Local mortgage companies and banks are willing to lend on property, but homeowners insurance has become too expensive for most, putting a drag on the market.

Home prices are deflating nearly every month, but despite the drop locals are hopeful that the Biloxi marketplace will be helped by more than two dozen condominium projects planned for the area. Some have been postponed. Others are building new developments. Housing Predictor forecasts that Biloxi will endure a slow pace of sales in 2009 on average housing deflation of 12.4%. It will take years for the area to rebuild from the devastation of Katrina.

Down the road from Biloxi in Pascagoula the market has experienced fewer sales, partly because of higher homeowners insurance and because of fall out from the credit crunch. Home sales in Pascagoula are projected to remain sluggish until the government gets a handle on the financial crisis. Rebuilding after the storm has been slow, and housing values are forecast to deflate an average of 11.0% in 2009.

City	Forecast
Jackson	− 13.1%
Biloxi	− 12.4%
Pascagoula	− 11.0%
Hattiesburg	− 10.7%

Home values have sustained a blow in Jackson, Mississippi's largest metropolitan area in the center of the state. A housing workshop held by the Jackson Housing Authority drew hundreds of people in search of information regarding foreclosures. Some wanted to find out how to improve their credit to refinance their homes. Others sought information on how to buy a home in the recessionary economy.

The Jackson housing market boomed during the real estate frenzy only to see its prices fall as a result of the credit crunch and an increasing volume of foreclosures. The crisis will still take at least a couple of years to unwind in Jackson, which is forecast to see average home values drop 13.1% in 2009 as the second wave of foreclosures hits the market.

In Hattiesburg, which is home to the University of Southern Mississippi the market has also slowed, but not to the extent of other places. Hattiesburg population ballooned after Katrina as new home construction boomed. But when the credit crunch hit and consumer confidence sank housing sales slowed.

Local real estate agents held a meeting to get the word out on how Hattiesburg's market is doing better than the rest of the country. Interest rates are low and prices are at some of the lowest levels since before the boom, which should eventually attract more home buyers to the marketplace. Hattiesburg is projected to weather another slow year of sales, however, by Housing Predictor, which forecasts average housing deflation for the area of 10.7% in 2009. A good real estate agent's negotiating skills could make up the difference.