Alabama Gulf Coast Market Still Reeling From Katrina
The tide of the real estate market around the U.S. Gulf Coast has rushed out as quickly as it rolled in last year, real estate agents and property owners say. But all said they expect investors - and their cash - to roll into town again eventually.
“The market was looking up for the first time ever in the Bayou. Then Katrina came along,” Mary LaForce, 57, told the Montgomery Advertiser.
In the real estate excitement before last year’s cataclysmic hurricane, she and her husband put a “for sale” sign in front of their house and one acre lot in the town’s commercial center. They were asking $350,000.
Last week, they sat in a travel trailer on the lot. Their home was heavily flood-damaged by Katrina, and an agent told them the property would be worth more without it.
They tore the house down. Now their listing price is $240,000.
“If we don’t get a reasonable offer on it in a few months, I’m just going to build another house here,” she said. “This is the last frontier on the Alabama coast that development hasn’t touched - yet,” said her husband, Allen LaForce. “It’ll come here eventually, and we can wait.”
People like the LaForces have owned property in the Bayou for decades, and hope to sit on their lots and make a bundle when and if interest in the Bayou returns. Others are more recent arrivals who hoped to turn real estate investments quickly and now suspect they’re stuck for a while.
“The market has dropped off fast. It’ll come back again in the future, but nobody knows when,” said Bill West, standing on the balcony of his two-story house on the bayou’s northern narrows.
“It’ll be a hard sell, and I know it,” West said.
The market hasn’t risen as fast as he’d expected. But no one expected Hurricane Katrina. Real estate records show that the volume of property sales rose by more than 100 percent in 2005 in the Bayou, where, for generations, most property changed hands only through transfer of ownership between family members.
Waterfront property values went up more than 50 percent in 2005, according to property sales records. Then in August came Hurricane Katrina and the following Gulf Coast-wide real estate slump. This year, property sales dropped back down to 2004 levels, and prices have dropped more than 30 percent from last year, according to local recorded deeds.
“The trends here are pretty much in line with what you’re seeing everywhere along the Gulf Coast right now,” said Marc Estes with ACP Real Estate in Bayou La Batre.
The difference in the Bayou is that the market had only just begun to draw investor interest when Katrina hit. In 2003, just six properties were sold in the Bayou, according to records. In 2004, sales rose to 18 properties.
Then, last year, 40 properties changed hands, more than 60 percent of them snapped up by investors and speculators looking to cash in on low home mortgage rates, according to Mobile County property sale records.
This year, just 16 properties were sold, according to records.
Some blame the sagging Alabama housing market on the city’s decision to call off its deal with James. In an October 2 meeting with Mayor Stan Wright and the City Council, Wright told James that the old deal was off.
The city plans to open the floor to proposals from all interested developers within a year or so, and James and his partners are welcome to submit a new offer then. Real estate agents, however, say there are much larger forces at work in the Bayou than Tim James.
“The entire Gulf Coast is facing the same problem right now,” said Lee Martin of Port City Realty. Sales on Dauphin Island are down 65 percent from last year, according to property records, and sales are also down in and around Gulf Shores, even as Alabama mortgage rates remain low.