The Foreclosure Report

Post Katrina Prices Falling

The Voice of St Tammany reports from Louisiana. "Larry Haik Jr. often watches the real estate market in Slidell unfold from the doorstep of his suburban home. 'Homeowners are looking across the street and saying, 'Well if they got that much for their house, I'm going to sell mine too,' said Haik, a real estate agent in Slidell. 'But what they don't realize is that there are so many houses on the market that it's turning into a buyers’ market. Housing prices are coming down, but the average Joe doesn't know about it.'"

"The housing market in Slidell stalled in the past several months. Across the city, For Sale signs are sprouting like crab grass. Real estate agents predict the bloated market will soon force prices down, swinging the pendulum in favor of buyers for the first time since Hurricane Katrina sent tidal waves into the southeastern areas of the city more than a year ago."

"Today, nearly 900 homes are currently listed for sale throughout the city, more than double the number at any point in recent years. Haik said a lot of people were under-insured or not insured, and they can't afford to repair their homes, so they've put them up for sale. He attributes other sales to what he calls 'Storm Chasers,' investors who rushed to buy storm-damaged homes, fixed them up and now hope to make a profit. He refers to the last group of home sellers as 'people still trying to capitalize on the homeless.'"

"'It's getting scary,' he said about the real estate market in Slidell. 'There's a nationwide slump in home sales, but it's worse here.'"

"In Slidell, foreclosures on storm-ravaged homes could soon swell, dumping hundreds of additional houses on the market and further crippling single-family home sales and prices. 'We anticipate seeing a large number of foreclosures starting in December or January,' said Virginia McCoy, a corporate inventory manager with 20 years experience handling foreclosures in Slidell and the Mississippi Gulf Coast area. 'We're talking big numbers, and it's not just a Slidell thing. It's going to hit everywhere in the area.'"

"Although Slidell has only seen about a dozen homes foreclosed since the storm, McCoy expects the number will spike into the mid hundreds or even reach a thousand over the next two to three years. She predicts numbers will surpass the last time the city's housing market bloated with more than 300 foreclosures during the Savings & Loan scandal in the mid 80s."

"The only reason McCoy isn't busy now, she said, is that a lot of people filed for bankruptcy after the storm. Banks can't foreclose on a property if the owner has filed for bankruptcy. There was also a state-wide moratorium on foreclosures post Katrina. It was lifted Aug. 31."

"Senior citizens are expected to lose their homes more than any other demographic group, she said. 'The elderly just can't cope with what's happened,' she said. ''Most of them probably never had flood insurance, and they can't afford to rebuild."

"'In some areas, the prices are inflated,' said Carole Woodward, a real estate agent in Slidell and a board member of the Northshore Area Board of Louisiana Realtors. 'But other areas are becoming reasonable. It's hard to say what will happen (to housing prices) in the long term because Slidell isn't like the rest of the country.'"

"Based on current list prices for the nearly 900 homes for sale in Slidell, home prices have yet to drop. At the end of September, only 91 homes were priced between $180,000, the average sale price before the storm, and $220,000, the average price now, Woodward said."

"By comparison, approximately 100 homes are priced between $400,000 and $1.5 million, and more than half of the listed homes are priced between $221,000 and $399,000. The remaining 225 homes, many of which sustained substantial damages, are priced between $20,000 and $179,000."

"'It was pretty disgusting what happened after Katrina,' Haik said. 'A lot of people were raising prices after the storm. And it wasn't just the prices for homes that went up; contractors and subcontractors were charging more. Roofers and drywall hangers were making a lot more too. Anybody who was in a position to take advantage did. But nobody discusses this because it's politically incorrect because everybody knows somebody who's making a lot of money.'"

"Real estate prices are only one factor contributing to the slowdown of home sales throughout Slidell. Since the storm, homeowner insurance rates have increased by 40 percent across the city, said Jackie Muller, an agent in Slidell."

"'The insurance rates are taking a lot of people out of the market or they're buying less house than they're accustomed to,' Haik said. 'It's amazing how many sales have fallen through because of this. Agents are losing sales every day because the increase in insurance blew the (price) off the board.'"

"For luxury homes listed at $500,000 or more 'insurance is especially horrible right now,' Woodward said. It's so high that agents are signing more lease-to-purchase contracts than direct sales contracts for homes in the $400,000-plus price range. 'People want to get in, save some money, and see what happens with insurance before they buy,' Woodward said."

posted by Ben Jones @ 3:16 PM