Prices For Existing Homes Still High, But Settling - WLOX.com - The News for South Mississippi

Prices For Existing Homes Still High, But Settling

The post-Katrina real estate market is hard to figure out. Analysts who expected a much weaker market in the wake of the hurricane, found just the opposite instead. Prices for existing homes soared after the storm. And in many cases, they've not yet come down.

Many of us have had this conversation with a spouse or co-worker: "They're asking how much for that house? There's no way." Right after the storm, many sellers were asking for the moon, and often getting it. The market has leveled off some, but not much.

"Everybody that lost their homes, on the beach or on the water, they wanted to get their kids settled or get their parents settled in something. They just went out, and they didn't care how much the price was," Gulfport realtor Sherry Owen said.

Homes that sold for $120,000 pre-Katrina suddenly jumped to $180,000 or more. But prices have settled down, somewhat.

"The market is definitely settling out. We're seeing a slowdown in exponential growth of price increases. The longer a property sits, too, sellers tend to get a little more realistic about the pricing structure," Biloxi realtor Cynthia Joachim said. 

It's not simply supply and demand driving this market. Soaring insurance rates are having a significant impact on potential buyers.

"I'll give you an example. For one home I had, 2400 square feet, the insurance was about $1400. Now, it's $4,000. And you know that makes a difference in people's payments," Owen said.

"By the time you factor in the increase in insurance, on top of the debt service, on top of the increase in value, many people who were in the housing market even in the summer time, are having to reevaluate what they're going to spend on housing now," Joachim said.

While existing home sales are affected by measurable factors like insurance rate and mortgage costs, assessing the overall market is far more subjective. For example, one realtor told WLOX News the current market is the most "unstable" they've ever seen. Another described that same market as "stable".

Most all might agree with Sherry Owen's assessment.

"We're in a very strange market right now."

The shortage of existing homes for sale is helping keep prices inflated. Drive through any established subdivision away from the beach, and count the number of "for sale" signs. There aren't many.    

by Steve Phillips

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