The US real estate market all but fell off a cliff two years ago. Though there has been a very minor recovery, or rather, stabilization, in home prices, we recently pointed out that it makes sense to be gloomy.
For those living anywhere near the gulf coast there has been no recovery, or really, any stabilization, as depicted by the follow chart from city-data.com:
In addition to the pre-oil leak trend of job losses, wage decreases and mortgage rate resets, we now have a natural man-made catastrophe on our hands.
With a complete loss in the Gulf coast tourism industry we can reasonably expect rental properties to get absolutely hammered. And, if the oil leak is as bad as we hope it’s not then we may very well have hundreds, if not thousands, of miles of destroyed beach front and surrounding properties. The environmental ramifications in terms of dangerous gases and oil covered beaches will lead to even higher delinquency and default rates across the southern United States.
In the event of mass, longer-term evacuations, we could potentially be looking at real estate prices going to Detroit price levels in some areas, which have literally reached $1 on some homes.
For those who think that a real estate collapse on the coast resulting from evacuations and general migration will lead to price increases elsewhere in the country, consider that many of those who will be leaving the coast will be leaving with essentially nothing – no money, no job, no assets. The likely outcome will not be increased purchases of real estate in other parts of the country. Many of those who will eventually leave the coast may have to turn to the government for help with housing, or they will likely end up living with friends or family.
There are millions of people near the Gulf coast right now that stand to lose everything as a result of the negligence of BP and the US government regulatory agencies.
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A friend of mine purchased a condo on the gulf last year. He bought it because he figured the property values couldn’t drop any lower and that it was a good investment. He didn’t pay much for it but ……………..
The chart should be in two parts 1 for Commercial and 1 for Residential . The commercial is going to take a nose dive first then Residential a close second . In my opinion .
It’s going to get worse once the structural integrity of the casing in the BP wellbore is finally compromised and the 450 ton BOP tumbles over onto the ocean floor. The casing is what is holding up the BOP. Once the BOP is gone you will have a wide open wellbore all the way to a depth of 12000′.  Unless the relief wells intend to set off a downhole nuclear explosion to collapse the wellbore laterally (pinch the casing closed) there will be no way to stop the flow until the reservoir emptied to a point that the pressure in the well is equal to that of the ocean depth.   Until that happens 100,000 to 120,000 bpd will exit the wellbore into the open Gulf each day. (ZH link attached)
Obama already knows this is going to happen and that’s why he’s playing his usual rounds of golf now, while he can, before the crisis escalates. Â
http://www.zerohedge.com/article/internal-bp-document-confirms-matt-simmons-worst-case-prediction-spill-rate-100000-barrels-d
I should have mentioned that the casing will be compromised by the intense velocity of formation material that is moving up the casing. At 70,000 PSI the BOP inner diameter (I.D.) is literally being sandblasted larger every minute the flow moves through it’s orifice. The same effect is happening to the casing below the BOP and reducing the wall thickness of the pipe.   The ocean currents will eventually tip the 450 ton BOP over.    I’m guessing the the casing will be ejected from the well bore (once the cement fails).
In any event we’re looking at open hole all the way to 12000′ with 100-210K of oil coming out each day.
Sad day for the folks on the northern Gulf Coast. Â Â
This is not directly in line with this article but :
Has anyone read some of the articles about the potential devastation from an underwater methane gas eruption ?
(Search,,,How the ultimate BP Gulf disaster could kill millions by Terrence Aym,,,)
There was a program on TV called Mega Disasters with a segment about methane gas eruptions causing unimaginable devastation.There are scientist that suggest the Gulf states are in grave danger.This would certainly end any chance of an economic recovery in Florida.In fact, such an event ( Mega Methane Gas Eruption ) could kill millions of people, including indigenous wildlife. Lots of links using the above search. Scary stuff.
As for this article, I agree Mac, Florida is toast. My wife and I are contemplating leaving NE Florida, but the economic downturn is so widespread we just don’t know where to go to find new jobs.Maybe we’ll just move closer to our kids and try there.(Search,,,the geography of a recession by Latoya Egwuekwe,,,)
I had a 3/3 rental property townhouse purchased for 87K back in 1994,sold it for 303K at the peak in 2006,paid off my home mortgage,cars and bought gold w/the balance.
I sleep like a baby.
Tming is everything and I owe much of it to assiduously reading every single story about the real estate market bubble and international events(including this site).
The next phase IMO will be a deeper collapse and the subsequent collapse of our currency which will usher in a global unit and that’s if “they” (our real owners who pull the banking levers) keep things under control.
If it gets out of control,you will wish that you stored food, guns & ammo.
AB – agreed. Commercial is toast – that is likely happening as we speak. Residential will be a bit behind, as those who live in their homes are less likely to bail on mortgage payments then someone who is a renter.
Anon – good call on the real estate sale. Some would say you were “lucky” or “fortunate.” I’d say you were aware, understood the risks and had the gonads to pull the trigger at the right time.
PR – ZH had some great stuff on this over the weekend. I have followed the story, as well as the many links within the comments. (comments over there are very insightful)
Wheedle – The info from Zero Hedge on this has led me on a journey across the web and I ended up spending about 2 hours listening to interviews last night on exactly what you mentioned – methane gas / volcanic eruptions. I am going to try to put a story together on this tomorrow.
I truly hope that the worst-case scenarios being discussed in alternative media are wrong and way off base. However, given the lack of information or even official government denials of the worst-case scenarios, I have to assume that there is some probability that they can occur. There are several potential scenarios here and none of them are good.
If even some of this info coming from independent scientific analysis is true then real estate prices in Florida will be the least of our problems.
As I am located on the Gulf coast (roughly 40 miles inland) my family and I are on “High SHTF Risk” level. We bumped up from “Elevated SHTF Risk” last night. Though we do not yet believe a threat is imminent, we will be going over our evac checklists and doing a ‘dry’ evac run-through this week.
It looks like the National Guard story we ran back in May is now making sense. I alluded to the mobilizations being driven by the possibility of coming Gulf coast evacuations. Consider this: If they knew a month ago and were calling up the Guard, then they already had to know back then that this problem was much bigger than they were letting on. They were still telling us 5000 bpd per day, when we were publishing estimates at around 40K to 70K. As Paul mentioned above, we are likely well over the 70K mark now, likely in the 125K range, perhaps higher if there is geologic damage with oil leaking through the sea floor.
Yikes.
Marc:
I live within a mile of the coast in Sata Rosa Beach {Destin} area and all of this scares the living shit outta me. I have been prepping for a year now and honestly…I never put a mega gazillion oil volcano into my possible senerios! Oil on the beaches is one thing but if they allow it into the bays we will be surrounded by this foul gunk and any directional wind will push it over us on land. WTF !!! I was hopping to stay in my home during the collaspe, now I’m having to make another plan. Do you think they will do manditory evacuatations using the guard and police?
Stealth,
If the toxic fume estimates from the EPA and independent scientists are accurate, it is possible that they may have to evacuate certain parts of the coast.
Then you have the distinct probability of oil hurricane(s) this season. Because we really don’t have any specific scientific information on something like this, I think there may be panic if we see one headed our/your way and the response from gov may be evacuation. As usual, it would probably be last minute, so expect chaos.
On top of that, there are two other reasons I can see for mass evac: 1) Nuke detonation scenario if it comes to that 2) volcanic eruptions that may result in Tsunamis (I know this sounds crazy, and I will post more info on this in the next couple days). If we have foreknowledge of a possible nuke detonation to seal the well, my suggestion is to NOT watch it on TV and get out of town before they do it. We don’t know what the effects may be in terms of Tsunami and you would have maybe 10 – 20 minutes before one hits if it does form as a result of the blast.
As I mentioned, we have upped our SHTF Risk level here in Houston and we are 45 miles from the coast. You’re on the shore line, so if nothing else, I would suggest you go over your evac checklists. There are a number of reasons why you may need to get out of Dodge in the next 2 – 3 months.
Also, if there are mass evacuations, depending on the reason for it, you may need to think longer-term than just a few days or a week. For all we know, they could close down certain cities and you may not be able to return for months.
Nothing can be discounted at this point because the information the general public is being given is anything but complete.
Hopefully it will not come to this, but if it does, be ready to move quickly. You want to be ahead of the pack on any mandatory, National Guard-led evacuation.
Mac
As one who has my life invested in Florida business and real estate, I’m watching my equity evaporate before my eyes.
Its funny how you can feel good about your geographical position one week and ready to move the next. Wheedle and I looked at some maps last week and we both thought we were in a good location.
My conclusion is that while we do our best, no place is a sure thing. Every survival scenario has its pros and cons. Being what I consider fortunate to still have a nice retreat location and the ability to go mobile if nesessary. It  just isn’t giving me the same warm fusy feeling it use to.Â
While I pray for the country and state to stablize, I think Florida will loose another 50% in home values before things change. This year I already predicted a 23 to 30% decline in home values and that was before the Gusher in the Gulf. It could be much worse.
Anxiety in America is on the rise. It doesn’t matter what you are invested in, you wish you were invested in something else. The gold bugs are feeling pretty good right now, but if you have to bug out what are you going to carry, Gold or Ammo?