BP’s oil spill may drive down Gulf Coast property values by 10 percent for at least three years, according to a forecast by CoStar Group Inc.
Losses may total $4.3 billion along the 600-mile stretch from the Louisiana bayous to Clearwater, Fla., the property-information service estimates.
“It’s just another blow to an already depressed real estate market,” Norm Miller, Co Star’s vice president of analytics, said in a telephone interview from San Diego. “The best thing you can do if you’re in real estate in this area is bide your time, don’t panic and don’t try to sell in this environment.”
Falling real estate prices are one consequence of the worst environmental disaster in U.S. history as oil keeps gushing from a BP well once pumped by the Deepwater Horizon rig. An April 20 explosion there killed 11 workers.
Oil washing ashore will further harm property values in an area where Moody’s estimates prices fell as much as 34 percent from the peak of the U.S. residential real estate market in 2006.
The median home price was $173,100 in April, down 25 percent from July 2006, according to the Chicago-based National Association of Realtors. Florida real estate is among the hardest-hit markets, with one in every 184 households in the foreclosure pipeline, according to RealtyTrac Inc., a data company based in Irvine, Calif. Only Nevada and Arizona have higher rates, RealtyTrac said.
BP’s well had been spewing 25,000 to 35,000 barrels of oil a day, according to estimates by U.S. government scientists released Thursday.
The spill may cost the London-based company $37 billion in cleanup and reimbursements for economic damage to the tourism and fishing industries, according to a June 2 report by Credit Suisse Group. The report didn’t include the effect on property values.
CoStar, based in Bethesda, Md., made its forecast for property prices assuming a 10 percent loss based on previous disasters, such as oil spills, hurricanes and the 1979 Three Mile Island nuclear accident in Pennsylvania, Miller said. His estimate relied on recent sales data of property within 200 feet of the gulf waterfront and spanning 600 miles from Venice, La., to Clearwater, Fla.
