As the Gulf of Mexico oil spill starts washing up to land, some shoreline property owners and real estate agents say they are concerned the disaster could literally hit home by decreasing house values.
“There’s no telling what depreciation will be, at this time, but I’m sure there will be something - just as sure as there will be a storm in the Gulf,” said Karl Thayer of Century 21 Island Realty in the summer tourist spot of Grand Isle, Louisiana. The region has a history of being regularly pummeled by hurricanes and tropical storms – and now, oil.
Jonathan P. Roberts, a real estate broker based out of Seagrove Beach, Florida, said his community is in the same boat with concerns about home values (Florida has already been hit particularly hard by the housing crisis). With the oil slick heading closer to Florida, Roberts said that some buyers are bringing up the oil spill as a way to leverage slightly lower prices, but that home prices appear to be stable at this time.
“The spill has been real slow in coming here,” Roberts said, noting that there wasn’t a tar ball in his sight on Thursday despite the spill’s migration toward Florida. Nonetheless, he said, “the worry is not only that it could make property values go down, but that it could make some areas unlivable.”
Report finds reasons to be concerned about property values
Their concerns are not unfounded. A report released in May by Moody’s Investors Service notes that property tax values are likely to decline in the communities directly impacted by the oil spill, which was triggered April 20 by an oil rig explosion. It is now being called the worst oil spill in U.S. history.
The economic impacts are detailed in Moody’s “Gulf of Mexico Oil Spill: Boost from near-term spending may give way to credit stress.” The report identified Florida as being at possible “significant economic risk” due to its vulnerability from the current housing downturn and the state’s limitations on property tax reforms, according to a version obtained online through standard registration and reported on by other media. Much of the outcome along the Gulf Coast depends on efforts to contain the oil slick, as well as where it ends up washing to shore. In the case of the 1989 Exxon Valdez oil spill, a fisherman who owned a home near the shore in Homer, Alaska, ended up selling the home at a loss when oil-containment efforts affected the home’s value, according to National Public Radio.
Thayer would like to see the BP oil company make amends for any financial impacts to home values and the local economy by building a water park on Grand Isle, Louisiana. In Florida, Roberts said community members are getting frustrated with the clean-up effort and want to see more coordination with locals who are ready to pitch in (see comments section below).
In the meantime, some property managers along the Gulf Coast are finding no lack of renters of a different kind.
“We were just approaching our summer season and people were getting ready to sit down and drink a cool one and watch the kids play on the beach…and then people started backing out because they didn’t want their kids swimming in the chemicals,” said Thayer. “As fast as those people backed out – and those places were booked for 3 to 4 days a week – these oil companies and crews started coming and booking seven days solid.”
Photo of Seagrove Beach, Florida, reprinted with permission from the Pelican Real Estate website of Jonathan P. Roberts
- Read a related post on mortgage relief for oil spill victims: “Homeowner victims of Gulf oil spill consider mortgage relief.”
Do you live near the Gulf Coast shore? Let us know what you are seeing and hearing from your front porch.
THIS IS FROM AN EMAIL SENT BY JONATHAN P. ROBERTS, WHO IS QUOTED IN THE STORY. DUE TO SPACE ISSUES, IT WASN’T INCLUDED IN THE BLOG POST BUT WE ARE REPRINTING IT HERE:
The oil slick has the potential to really hurt our area. In fact, it will probably hurt all the states and countries that border the Gulf of Mexico. I have been so frustrated with the government’s lack of control over the cleanup efforts. The people that live here, just like the residents of south Louisana, want to help. We will donate our boats, cars and time to help clean up the mess. Of course we want to paid back for damages resulting from the oil spill, but the most important thing is to clean up the mess. We keep hearing how BP will be paying for the cleanup….it might take months or years for BP to write the check. We need to be guaranteed compensation for donations of boats and time from the federal government. Then get everybody to work.
The government needs to assume the role as leader of the cleanup effort. The government needs to use the military command and control structure to enlist government resources and privately owned assets to clean the oil before it reaches the shore. The clean up “plan” thus far is to wait for the oil to get to the beaches. There are some really good plans that could get the oil while still out at sea. We need to be lots of different cleanup methods while the oil is at sea. Some cleanup methods will work better than others, but until we start a massive cleanup effort….we won’t know the best way to clean. We should be using every boat, truck and person to start cleaning up the oil. It’s sad to see such a lack of leadership from the federal government and to see how slow the Louisiana marshes are being cleaned.
Initially I was concerned that it would hurt property values where I live here in Navarre, FL. However, the last time there was a diaster causing severe damage, Hurricane Ivan (2004), inland properties sky-rocketed. The people that lived on the beach needed somewhere to live while their homes were being rebuilt. The housing market has since declined. Who would have thought that property values would rise 50-100% AFTER a diaster?!?!? If the oil is severe enough that people must evacuate their beach-front homes, this may help property values for the inland areas.
Perhaps that could be the silver lining in this situation.
Thank you for your perspective on this, Sara, as well as your insight from the 2004 hurricane.
I live in Dunedin, which is part of the coastline of the Tampa Bay area.
Just as the home values were very slowly creeping up…the oil spill! Our property values are heading down even though the spill is many miles away.
If the spill makes it here…I may need to pay someone to take my house!
Hi, Kathy. Wow – that’s frustrating. Really sorry to hear about that. Are property owners organizing in your community to seek any remedies?
Thanks for this post! However, I had a difficult time viewing this article in Safari 5. Just wanted to bring that to your attention! Thanks.
Bookmarked, great stuff
The oil spill in the gulf is undoubtedly one of the most disgraceful atrocities of our current century. While the attack of 9/11 was limited to that small area of ground zero, this oil spill has effects all the way out across the ocean, impacting innocent animals, formerly beautiful coastline and also local industry. I with all my heart hope that this atrocity is resolved as best as is possible.