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Tuesday, August 15, 2006
Katrina boosts home prices
Who says hurricanes are bad for housing markets? Indeed, Hurricane Katrina did for Louisiana and the Mississippi coast what a historic bull market couldn’t — namely, a jump in prices.
Baton Rouge, La., boasts the nation’s hottest home prices, according to numbers out today from the National Association of Realtors. Appreciation in New Orleans, Biloxi and Gulfport was way above the national average, too.
The stats compare home prices in the second quarter of 2006 to those in the second quarter of 2005. In Baton Rouge, prices rose 27 percent, to $172,300.
Oddly, the folks at NAR don’t mention the obvious reason for the spike — an exodus of the middle class from New Orleans after Hurricane Katrina. Maybe they want us to think the boom market has simply spread from Florida and California to once-sleepy Louisiana.
The New Orleans and Gulfport-Biloxi markets both saw 16.6 percent gains for the year, NAR says — well above the national average of 3.7 percent.
The spikes have little to do with mortgage rates, demographic trends or media coverage — to name three of the market movers oft cited by Realtors. Rather, this is a stark case of supply and demand.
In a shift reminiscent of Andrew’s effect on Dade and Broward homes in 1992, Katrina’s winds and flooding reduced the supply of homes, while displaced residents boosted demand for homes.
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