Gulf of Mexico oil spill could affect real estate market throughout the US, it is claimed
The BP Oil Spill is an environmental disaster and a serious blow to businesses and property owners along the Gulf Coast, particularly in Florida, it is claimed.
People planning to build family properties in Florida are beginning to reconsider as the massive oil slick spreads across the Gulf of Mexico. It is a serious blow to the state’s hard hit real estate industry which has been showing signs of recovery.
It is also hitting the holiday home sector with tourist numbers down because potential visitors are being put off.
Stalled projects generally are second or vacation homes on the water but also include primary residences, homebuilders and suppliers say. Several homebuilders reported one to three delayed projects because of the oil slick just as new construction was beginning to make a slight recovery.
New home sales had improved earlier this year but slumped since the oil rig Deepwater Horizon exploded and began gushing oil off the Louisiana coast in April. Some oil is now within 10 miles of Bay County, a popular tourist and second home location.
‘Since the oil crisis began, construction has just stopped,’ said Tom Ledman, president of the Home Builders Association of Panama City-Bay County.
Business is at a standstill because no one knows what is going to happen, according to Darrell Day, president of Dayco Construction. There is uncertainty over where the oil will land, how it will be handled and what federal regulations will follow, he added.
The oil spill is also likely to affect local property values, according Rick Harper, director of the University of West Florida’s Haas Center for Business Research and Economic Development.
Second homes are most vulnerable because the value is linked to the ability to lease the property when not in use. BP has already paid out $183,602 in claims for losses in Florida. About $11,722 has been paid for losses to total real estate sales.
But it is not just property along the Gulf coast that is affected. According to Toll Brothers, the US’s largest luxury home builder, worries about the oil spill and its effects on the economy and the environment is contributing to an overall decline in real estate sales. Its sales activity is 20% lower than a year earlier.