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Speculators Circle New Orleans for Real Estate Deals
| | Thursday, September 22, 2005 @ 09:26 AM EDT
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Contributed by: Ken Lyons
Ken Lyons Properties
Read more archived articles about Buying
Real estate speculators are searching for easy profits in the Big Easy.
By Kimberly Blanton, Boston Globe
Days after Hurricane Katrina struck, investors began posting inquiries about properties for sale on the website www.craigslist.org. Under ''New Orleans," dozens of ads were posted seeking properties to buy in Louisiana, including in the city's French Quarter and nearby Garden District. Some ads offered property for sale.
A ''triplex 4 sale" in an upcoming neighborhood adjacent to the French Quarter has ''little to no hurricane flood damage," according to an ad posted by Alexis De Bram, an interpreter who said he was laid off by his employer and can't afford his mortgage, since some tenants have disappeared.
''French Quarter/Garden District properties wanted," wrote Jason Malroy, a District of Columbia-area computer engineer and real estate investor, on the same site.
Malroy is searching for bargains in the fabled city neighborhood now surrounded by a toxic soup. He owns about 20 houses in Northern Virginia, many purchased from homeowners who no longer wish to live in flood-prone areas. He said he can afford to spend up to $1 million for four properties in New Orleans's Garden District, a neighborhood of mansions developed in the 1800s. He said he is doing so out of twin desires to encourage redevelopment of one of the country's treasures and to own a vacation home.
''Now's a good time to buy property," Malroy said.
Floods, hurricanes, and other disasters often attract what realtors call property ''vultures." But interest after Hurricane Katrina also is propelled by the nation's speculative real estate frenzy. In a market fueled by record-low mortgage interest rates, prospective buyers are sweeping into New Orleans in search of risky deals that may provide big profits when, or if, the city is rebuilt.
''We really don't have any comparable experience of something like this in the US, at least not in the last 100 years," said Henry Pollakowski, director of the Housing Affordability Initiative at the Massachusetts Institute of Technology.
Tom Byrne, chief marketing officer for San Francisco-based ****This URL Not allowed**** Inc., an online forum for independent real estate investors and sellers of commercial properties, said that while investors ''have come in droves" to New Orleans, ''we have not seen any noticeable increase in listings" of properties for sale.
****This URL Not allowed**** has measured a 45 percent rise in investor inquiries for properties in Louisiana, Mississippi, and Alabama since Katrina, which drove hundreds of thousands of people from homes that now may be destroyed, be flooded, or lack utilities. Byrne said interest in residential properties is highest: Inquiries for hotels and housing rose 72 percent; multifamily properties such as apartment buildings are up 54 percent.
Investors may view rental properties as good bets. ''I bet in those three states, the occupancy rates will be close to 100 percent in every single apartment building and hotel for a long time -- if they're in a dry area," Byrne said.
Real estate specialists said speculators purchased so-called ''distressed properties" when prices plunged for apartments in downtown Manhattan after the Sept. 11 terrorist attacks or for oceanfront property slammed by Hurricane Andrew in Florida in 1992.
Ryan Dougherty, a resident of Charleston, S.C., who advertised for historic New Orleans properties on www.craigslist.org, said that after Hurricane Hugo hit in 1989, historic buildings were refurbished with insurance and government money.
''It's a running joke Hugo was the best thing that happened to South Carolina because of all the government money that helped rebuild Charleston," Dougherty said.
New Orleans investors will be ''pretty big investors who can write a check," said Dave Barry, a Boston-area investor who buys houses entering foreclosure. He predicted huge numbers of foreclosures in Louisiana, a process starting Sept. 1, when many probably missed mortgage payments. ''This is a process that's going to play out over the next few weeks."
MIT's Pollakowski was concerned about the New Orleans residents who may sell unwisely.
''You just can't help but thinking and worrying about people getting excessively afraid and selling at excessively low prices," he said.
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