Tuesday, January 29, 2008

Housing Prices and the Effects of Post-Katrina Conditions

Natalie over at Almost Interesting Musings on Life has a post up about re-signing her lease and the plans she and her partner have to save up for the purchase of a home. The German and I have been living in our apartment for five years and in another year or so, we should have enough money to afford to buy a house.

After Hurricane Katrina in 2005, housing prices shot up to unbelievable levels. With so many homes destroyed, people from the metropolitan New Orleans area scrambled to find homes to rent or buy. Apartment complexes and new houses sprung up in the surrounding cities to meet the demand, at a premium, of course. Some people had no other options besides paying these prices because their homes were destroyed or in disrepair due to flooding and/or wind damage.

Thanks to a combination of situations, the prices of new and previously-owned houses have now dropped a bit, especially in the areas around New Orleans (Laplace and Baton Rouge, in particular). Many post-Katrina homeowners affected by the storm have been cheated or stalled by their insurance companies, so they've been forced to switch to being renters because adjustors made bogus claims about what caused the damage to homes in order to avoid paying out. Some homeowners have rebuilt or repaired their homes in New Orleans and are now seeking to sell the houses they bought shortly after the storm. A lot of pre-Katrina New Orleanians have decided not to move back to the city and they're trying to sell their old homes so that they can start over in a new place.

When we buy, it probably won't be anything huge, but here in southeastern Louisiana you can buy a previously-owned three-bedroom house in a nice neighborhood for around $175,000+. I know it doesn't sound very nice but, by waiting a little while longer, we can take advantage of the housing market crisis and buy something larger than we would have been able to do for the same amount of money a few years ago. It's an example of how some people can profit from the imposed poverty of others. It makes me sad to think about how the cost of the house that we will buy is directly related to the way that the government has allowed corporations to renege on the services that lower-income and working-class people paid for in the form of homeowner's and flood insurance.

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