The phone call was short and to the point: A buyer who had agreed to spend $500,000 (U.S.) on a beachfront home with a stunning view of the Gulf of Mexico was backing out.
The cancelled sale was a blow to real estate agent Linda Henderson, but it wasn’t a surprise. Globs of thick, pungent oil are washing up on the shores of Alabama’s Dauphin Island, and the smell on some days is enough to drive the island’s predominantly senior population back into their homes.
It’s also enough to drive real estate agents to despair. “I can tell you that things have pretty much dropped to dead,” she says. “We were on track for our best year since Katrina. This is devastating – you can say that the spill killed the real estate recovery.”
The end of the recovery is a particularly frustrating development for the Gulf Coast states of Louisiana and Mississippi, where foreclosure rates have consistently been among the lowest in the country. The region’s relatively tight mortgage rules kept a lid on home prices during the housing bubble and prevented the boom-and-bust pattern seen in many other regions of the U.S. But just as prices were stabilizing and sales were increasing, the spill has brought activity to an abrupt halt.
“What the housing recession and Great Recession couldn’t do to property values along the Gulf, this could easily accomplish,” said real estate analyst Jack McCabe of McCabe Research and Consulting in Deerfield Beach, Fla. “It’s a knockout punch, plain and simple.”
