| New Orleans real estate: a mushy
gold rush |
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"We have broken that record again twice in each
of the following months," he says.
What differentiates this buying spree from other ones
Sterbcow has seen is the motivation driving the sales.
"You are not seeing people who just got promoted
or outgrowing their homes, which is what you see in a typical market,"
he says. "Now what you see is, a lot are people under stress
and duress. People were evacuated, and now they are trying to get
back. Their jobs are here, their lives are here and they are coming
back and they need a place to live, and fast."
With so many residents fighting to get back to their
jobs, family and lives, the city is just plain out of places to
live.
No help appears to be on the way, either. With nowhere
to live, the army of construction workers needed to rebuild the
city also has nowhere to stay. This means that contractors from
around the nation, who may want to converge on the largest current
construction project in the world, now are functionally locked out
of the market.
The shortage of workers is driving up labor prices
for the laborers who are able to find a place to live. The Bayou
Chapter of the Associated Builders and Contractors, a construction
trade group in New Orleans, reported earlier this month that unskilled
laborers are earning as much as $20 or $30 per hour; they were making
a third of that before the storm.
Real estate investors are another group hampered by
the worker shortage. With a shortage of workers, no one is available
to quickly repair fixer-uppers, which makes quickly reselling properties
nearly out of the question, Sterbcow says.
"A few people are flipping houses, but not in
big numbers," he says. "The laborers and carpenters are
just not available. They are sucked in doing the commercial and
emergency work that pays big dollars. So, unless you can do the
restoration work yourself, flipping houses really isn't an option
right now."
Title trouble
Post-hurricane woes aren't limited to flooded areas, either.
While repaired and undamaged houses are selling as
quickly as they hit the market now, there were a couple of stressful
weeks for the real estate community immediately after the storm.
That is because before Katrina, the city of New Orleans
stored its property records in the basement of its courthouse. When
floodwaters spilled into that building, the records were submerged.
Some of the most recent city records had been computerized,
says Andrew Novak, Louisiana state counsel for the title insurance
company First American Corp.
But the digital backup was far from complete.
With sopping wet records, homeowners couldn't prove
clear title, and so the buyers couldn't get title insurance. Without
title insurance, buyers and lenders would be exposed to an unacceptable
level of liability, so many deals were stalled out.
That problem was sorted out by the end of September
however, when the city contracted with Swedish restoration company
Munters to restore the records.
At this point, most title problems have been worked
out, Novak says.
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