BATON ROUGE, La. — 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."
BATON ROUGE, La. — Brandy Farris is house hunting in New Orleans. 
