
By David Streitfeld
The Los Angeles Times
Thursday 15 September 2005 Would-be home buyers are betting New
Orleans will be a boomtown. And many of the city's poorest residents could
end up being forced out.
Baton Rouge - Brandy Farris is house hunting in New Orleans.
The real estate agent has $10 million in the bank, wired by an
investor who has instructed her to scoop up houses - any houses. "Flooding
no problem," Farris' newspaper ads advise.
Her backer is a Miami businessman who specializes in buying
storm-ravaged property at a deep discount, something that has paid dividends
in hurricane-prone Florida. But he may have a harder time finding
bargains this time around.
In some ways, Hurricane Katrina seems to have taken a vibrant real
estate market and made it hotter. Large sections of the city are
underwater, but that's only increasing the demand for dry houses. And in
flooded areas, speculators are trying to buy properties on the cheap,
hoping that the redevelopment of New Orleans will start a boom.
This land rush has long-term implications in a city where many of
the poorest residents were flooded out. It raises the question of what
sort of housing - if any - will be available to those without a
six-figure salary. If New Orleans ends up a high-priced enclave, without a mix
of cultures, races and incomes, something vital may be lost.
"There's a public interest question here," said Ann Oliveri, a
senior vice president with the Urban Land Institute, a Washington think
tank. "You don't have to abdicate the city to whoever shows up."
For now, though, it's a seller's market, at least for habitable
homes.
Two months ago, Steve Young bought a two-bedroom condo in New
Orleans' Garden District as an investment for $145,000. Last month, he was
transferred by Shell Oil to Houston. Last week, he put the condo on the
market.
In a posting on Craigslist, an Internet classified advertising
site, Young asked $220,000. He got a dozen serious expressions of interest
- enough so he's no longer actively pursuing a buyer.
"I'm pretty positive the market's going to move up from here," he
said.

So, to their surprise, are many others.
"I thought this storm was the end of the city," said Arthur
Sterbcow, president of New Orleans-based Latter & Blum, one of the biggest
real estate brokerages on the Gulf Coast.
"If anyone had told me two weeks ago that I'd be getting the calls
and e-mails I'm getting, I would have thought he was ready for the
psychiatric ward."
Messages from those wanting to buy houses - whether intact or
flooded - and commercial properties are outrunning those who want to sell by
a factor of 20, said Sterbcow, who has set up temporary quarters in his
firm's Baton Rouge office.
"We're pressing everyone into service just to answer the phones,"
he said.
These eager would-be buyers may be drawing their inspiration from
Lower Manhattan, which proved a bonanza for those smart enough to buy
condos there immediately after the Sept. 11 attack.
Of course, in southern Louisiana, everything is hypothetical for
the moment. The storm destroyed many property records and displaced
buyers, sellers, agents and title firms, so no deals are actually being
done. Insurance companies haven't started to settle claims yet, much less
determine how, or whether, they will insure New Orleans in the future.
The city hasn't even been drained.
But people are thinking ahead, influenced by a single factor: the
belief that hundreds of billions of dollars in government aid is going
to create a boomtown. The people administering that aid will need
somewhere to live, as will those doing the rebuilding. So will employees of
companies lured back to the area, and the service people that attend to
them.
All this will lead to what Sterbcow delicately calls a
"reorientation" of the city.
"Everyone I talked to has said, 'Let's start with a clean sheet of
paper, fix it and get it right,' " he said. "Some of the homes here
were only held together by the termites."
What the owners of the city's estimated 150,000 flooded houses will
get out of "reorientation" is unclear, especially if the houses were in
bad shape and uninsured.
Some black New Orleans residents say dourly that they know what's
coming. Melvin Gilbert, a maintenance crew chief in his 60s, stood
outside an elegant hotel in the French Quarter this week and recalled how
the neighborhood had been gentrified.
He remembered half a century ago when the French Quarter had a
substantial number of black residents.
"Then the Caucasians started offering them $10,000 for their
homes," he said. "Well, they only bought the places for $2,000, so they took
it and ran."
The white residents restored the homes, which rose quickly in
value. Gilbert said he expected the same dynamic when the floodwaters
receded in the heavily black neighborhoods east of downtown.
The question of who should own New Orleans is already sparking
tension. The first posting seeking New Orleans property "in any condition
or location" was placed on Craigslist on Aug. 29, while the storm still
raged. With small variation, it was repeated numerous times over the
next week.
Some readers were infuriated. "Do you read/watch/understand any of
the news broadcasts coming from the city? Or do you just go to 'Cashing
in on Desperation, Despondency, and Depression: How to Make a Zillion
Dollars investing in Disaster Area Real Estate' seminars. Sheeeeeesh!"
wrote one.
The process of tracking down owners of deluged houses is greatly
slowed by the absence of records. It's not going to be easy to find these
people, said Farris, the Baton Rouge real estate agent.
What would she pay for a ruined house?
Farris demurred, saying it was too early to tell, but probably only
the value of the land, if that. Though the French Quarter may be back
to life within months, outlying districts such as North Bywater and the
Lower 9th Ward will take years, if they ever do. Investors might hope
this is the equivalent of buying land on the outskirts of a boomtown,
but it's not a guarantee.
For one thing, there are already proposals to convert certain
flooded areas - including some water-logged neighborhoods - into parks.
Under the Supreme Court's recent ruling broadening the definition of
eminent domain, speculators could be forced to sell their properties to the
government.
That would be a great outcome for many homeowners in the parishes
south and east of New Orleans that bore the brunt of the storm.
Six months ago, Todd La Valla, a Re/Max real estate agent, bought a
four-unit apartment building for $59,000 in the community of Buras, an
unincorporated hamlet in Plaquemines Parish 55 miles southeast of New
Orleans.
The tenants evacuated in the storm, or at least La Valla hopes they
did. He's sure the building is gone too, like just about everything
else in the area. La Valla had no insurance, which means his $10,000
investment is probably a complete loss.
Yet where there's disaster, there's opportunity.
"I've had calls from investors in Los Angeles, Las Vegas, New York
looking to buy property," La Valla said. "This is going to be hard for
the poor, the elderly, those that didn't have insurance. But it's going
to be great for some people."
At first, Lucia Blacksher thought she was in the bad news group. In
June, she and her boyfriend put their entire savings, about $35,000,
into their dream house - a century-old shotgun Victorian in the New
Orleans neighborhood of Mid-City. When the storm came, they fled to
Blacksher's parents' house in Birmingham, Ala.
The house, which cost $225,000, is partially flooded. Her
boyfriend, a Virginian who figures he's seen enough of hurricanes to last him
the rest of his life, wants to move. The insurance company won't return
calls.
Last week, Blacksher was worried she would lose her beloved house
either to foreclosure or a forced sale. One of those bottom-feeders
would get it.
She was more optimistic Wednesday. Somehow, she would get through
this.
"Because the house survived the storm, it will be even more
valuable," she said. "You could offer me $300,000 and I wouldn't take it. No
way."
Housing in New OrleansReal estate investors are looking for bargains in
the New Orleans metropolitan area after Hurricane Katrina, but in some
areas prices already are on the rise.Rent versus own in the city of New
OrleansRenter-occupied
Owner-occupied53.2%
46.8%Vacant versus occupied in the city of New OrleansOccupied
Vacant84.8%
15.2% Percentage of owner-occupied homes in each price range in the
city in 2004Under $50,000
$50,000-$99,999
$100,000-$149,999
$150,000-$199,999
$200,000-$299,999
$300,000-$499,999
$500,000 and over5.6%
27.0%
24.2%
18.4%
14.4%
6.5%
3.9%