Environmental

Property values, prices plummet as oil spill lurks along Gulf Coast

Prospective homebuyers are not shying away from the Gulf Coast despite the looming threat of oil washing ashore from the busted oil rig. “Granted, its on the minds of everybody, because it’s just a sickening event,” Gulf Shores, Ala., broker Frank Malone told the Birmingham News. “The first week (after the spill), when there were a lot of unknowns, there was a lot of panic, and we had buyers discuss backing out of contracts.”

But it didn’t take long for buyers to see a silver lining – they could get even better deals on properties already suffering because of foreclosures and short sales. Consumers can snap up two-bedroom, beachfront properties for $300,000 – about half of what they sold for just five years ago. While good news for potential investors, it is devastating news for property owners and developers alike, who see their own investments plummeting in value.

Homeowners are not the only ones who likely will suffer due to the spill. Brokers say any property could be affected, including recreational, residential, commercial, and industrial. The spill “could have a serious impact on the use of the property and therefore the value of the property,” Mark Cumbest, a broker-owner in Jackson County, Mississippi, told the Mobile Press-Register.

The trickle-down effect of dwindling property values can also mean bad news to city governments. According to a recent Moody’s Investors Service report, any short-term gains from the spill response “will likely give way over the longer term to deteriorating revenue for coastal communities. These cities, towns, school districts and counties will likely experience a decline in property tax values, which will necessitate a reduction in services or an increase in other revenue to maintain current rating levels.”

BP, on the other hand, says it will cover any “legitimate claims” associated with the oil spill. However, the company has declined to explain what constitutes a claim as “legitimate.” BP meets with the Judiciary Committee this week to clarify that the company won’t leave taxpayers or the U.S. government footing the bill for damages it caused and what damages it considers “legitimate.”