Oil spill sinks home prices, sales

Oil Spill Distress Syndrome hits three in 10

Only four months after the onset of the Gulf oil disaster, the event is taking a toll on the housing market, as some coastal areas face home values slipping by as much as 15 percent, while others see sales sliding by more than 30 percent.

by Broderick Perkins
© 2010 DeadlineNews.Com


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Deadline Newsroom - As predicted, and only four months after the onset of the Gulf oil disaster, the event is taking a toll on the housing market, as some coastal areas face home values slipping by as much as 15 percent, while others see sales sliding by more than 30 percent.

One in four real estate professionals in Gulf Coast region reported the oil spill's negative effects on real estate markets even in areas with no physical damage, far inland from the coast, according to a survey by Clear Capital, a Truckee, CA-based real estate data firm.

While much of housing downturn is attributed to the oil disaster and related stigma, high unemployment and the expired tax credit are also exacerbating the problem.

"Many of these local markets in the Gulf have already experienced significant price declines over the last few years as well as a recent drop off in sales volume after the tax credit expiration. Additional downward pressure in the form of stigma and loss of employment will only serve to further dampen home price recovery," said Dr. Alex Villacorta, a statistician at Clear Capital.

VIllacorta added, "While social stigma appears to be the largest factor influencing the slowdown in home buying activity, it is clear the effects of the spill are being felt well inland from the coast."

Earlier studies reported some real estate properties could lose as much as 30 percent in value due to the oil disaster and it's not certain how or if the new Gulf Coast Claims Facility will honor claims based on lost property value.

The Clear Capital report found:

• More than 50 percent of those reporting a negative impact also reported a decrease in housing values by 5-15 percent.

• The number of sales has dropped dramatically year-over-year in many markets, even those that have not experienced a decrease in price or physical oil damage.

• Much of the negative impact reported was social stigma, misconceptions and ill-conceived perceptions due to a high degree of uncertainty.

Other highlights of the Clear Capital report

The report also said Real estate agents from southern coastal area of Alabama and the Florida Panhandle reported the greatest concentration of physically affected areas and estimated at least a 5-15 percent decrease in property values.

In Mobile, AL, for example, the home sales fell 25 percent in June from one year ago.

In Panama City, FL, prior to the oil spill, April sales were up nearly 11 percent, but agents reported to Clear Capital sales tanked by 32.5 percent in June this year, compared to last June.

Likewise, St. Petersburg, FL, far from any effects of the oil spill, enjoyed home sales increasing by as much as 18 percent in the spring, but by the end of June, sales were down by nearly 9 percent compared to last year.

Still recovering from Hurricane Katrina, New Orleans saw a nearly 13 percent drop in home sales in May and a dramatic 37.9 percent tumble in June.

More than 75 percent of real estate agents polled said there was no impact from the oil spill on their market, but 41.4 percent of agents in unaffected areas were unsure about the future and another 15.3 percent nevertheless anticipate a decline in housing prices.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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