Select Gulf Coast communities, hardest hit by hurricane-spawned housing shortages, have become booming regional anomalies, surrounded by larger markets suffering some of the slowest price gains in the nation.
In the first quarter this year, the West and East South Central real estate markets were the third and fourth slowest in the nation. Only the West and East North Central regions, among nine tracked by the Office of Federal Housing Enterprise Oversight (OFHEO), had slower rates of appreciation.
The OFHEO said first quarter 2005 to 2006 home price appreciation in the West South Central region came in at 7.69 percent. However, New Orleans, LA, clocked an average 14.32 percent rate of home price appreciation with Baton Rouge, LA, coming in at 12.07 percent during the same year-long period.
University of New Orleans (UNO) real estate market researchers said average home prices have risen 10 percent just since Hurricane Katrina made landfall as the nation's greatest natural disaster ever.
With New Orleans' population at about 220,000 -- half what it was before the storm -- many neighborhoods remain largely piles of rubble and tottering houses where homes once stood.
However, sales are brisk, UNO says. Some 3,600 houses sold in the greater metro area in the first three months of 2006, ahead of quarterly averages for 2003-2005, when more than 13,000 homes sold each year, UNO reported.
The average single-family home price rose to $215,179 in the first three months this year, up from the average $195,377 in the first eight months of 2005, according to the university.
Immediately after Katrina, Baton Rouge experienced an overwhelming surge in home sales and prices as an exodus of fleeing residents from the Big Easy and incoming volunteers, rescue workers and others crowded the capital city until it was bursting at the seams.
Now as the trickle of residents returning to New Orleans builds to a stream, some say home prices are booming more than lagging indicators reveal and are likely to continue to do so in the immediate future.
"Property values in central New Orleans have risen 49.1 percent since August 2005. This increase is due to the properties being recently reconstructed or remodeled. This is the perfect time to buy a gutted home for a great bargain in an excellent area for a huge discount," said Mandeville, LA-based broker Geri Bowen, of Wayne Waddell Realtors in her RealtyTimes.com Market Condition report.
In the next region over to the east, homes in the entire East South Central market averaged a 7.74 percent rate of inflation from the first quarter 2005 to the first quarter 2006, compared to 12.16 percent in Hattiesburg, MS; 15.88 percent in the Gulfport-Biloxi area and 14.61 percent in Mobile, AL.
Agents in the Mississippi coastal area also say price appreciation is rising faster than major reports reveal.
"(Biloxi) Home prices are up approximately 30 percent across the board since 'the storm.' Materials shortages, labor and land cost increases all contribute. There is a definite shortage of 'affordable homes.' Coastal Cities are working diligently to correct this," said Biloxi-based agent Joe McVey, Keller Williams Realty in his RealtyTimes.com report.
Further inland, in Hattiesburg, where residents also retreated, real estate agents are keeping close tabs on the market to assure appraised values are true.
"Effects of Hurricane Katrina have placed a high demand on housing in the area. Although prices are up, the need for a home to appraise at loan value has prevented unreasonable escalation," Hattiesburg, MS-based Kristy Goodwin, an agent with RE/MAX Real Estate Partners reported to RealtyTimes.com's Market Conditions.
