Hurricane Evacuees buy pricey property

LAFAYETTE -- The Lafayette Louisana real estate market has set records in the past month as evacuees from Hurricane Katrina, and even Rita, buy up available properties. There is no housing shortage, said Steven Hebert of Coldwell Bank Pelican Real Estate.

The fact is so many people have put their homes up for sale since Katrina hit that there are now as many homes on the market as there were before the hurricane, Hebert said. Before the hurricane, there were, on average, 257 homes bought each month. Since Katrina, in September so far, 618 homes have been sold with dozens more pending -- about $132 million worth of activity, much higher than the $40 million a month average, Hebert said.

Meanwhile, builders everywhere are looking to build more homes -- even though at least 2,000 lots were approved for building before the hurricane hit, Hebert said. The possibility existed before the hurricanes that the Lafayette market could be oversaturated with new homes, Hebert said. This year's home market was already "heated" -- a full 15 percent ahead of last year's record market -- before the hurricanes hit, Hebert said.

But the recent purchases have seemed to delay any possible "correction" in the market for now, Hebert said. Another misconception is that home prices have skyrocketed, Hebert said. It's true that most of the new homes have sold for list price -- where the pre-hurricane average was about 96 percent or 97 percent of the listing price.

Many of the homes that have hit the market since the hurricane are listing at a 10 percent to 15 percent increase from pre-hurricane prices, but it's not likely they'll all be sold at those prices, Hebert said. Many of the people who've put homes on the market at higher prices are not "motivated" sellers and will likely only sell in the event they can get the "windfall" they're expecting.

Even so, it's likely that enough homes will be sold at higher-than-normal prices -- and then be used for comparisons in appraisals -- that the average Lafayette home could be sold for more than a 10 percent increase over last year's prices, Hebert said. And while builders may be itching to meet the demand, they will be faced with a challenge of labor shortages and higher construction costs caused by the disruption of the hurricanes, Hebert said.

Rental properties were swept up by Katrina evacuees, though a few properties are getting back on the market now, Hebert said. Hammy Davis, with the same company as Hebert, said the "tight" pre-hurricane commercial property market is even tighter now. Many developers have taken a wait-and-see attitude before developing retail properties in Lafayette, Davis said. Those decisions will depend on how many businesses and residents return to the New Orleans area, which will affect Lafayette and New Orleans traffic counts and populations -- two large factors for developers, Davis said. "If there's no economy and no activity, they'll have to go someplace where that exists, and Lafayette makes sense," Davis said.

Some developers have started refurbishing older properties to prepare them for temporary office space for companies that have set up in Lafayette for at least the short term, Davis said. The more of those businesses that make the decision to remain in Lafayette, the higher the demand for residential property, Hebert said.