Oil spill to earn damage amounts for real estate market
Five state real estate associations along the US Gulf Coast are to receive a total of $60 million from BP for damages related to the Deepwater Horizon oil spill.
The associations in Louisiana, Florida, Alabama, Mississippi and Texas have been in negotiations with Kenneth Feinberg, administrator of the new Gulf Coast Claims Facility (GCCF) handling the BP oil spill fund.
It comes after a survey found that one in four real estate agents said that the oil spill had halted sales and more than half believe that the spill is having a negative impact, according to the poll by the analytics firm Clear Capital.
They say that the man made catastrophe has resulted in a 5 to 15% drop in prices and more than 3% of respondents reported actual property damage from the spill.
In Mobile, Alabama, property sales dropped 25% in June from last year and other areas in southeastern Alabama and Florida reported decreased sales and property values because of the spill. In Panama City, Florida, professionals reported a 32.5% drop in sales volume from a year ago.
Florida Realtors will be allocated $16 million to pay claims to real estate professionals in the state. ‘This is great news for Realtors and real estate professionals in Florida, as well as those in our neighboring Gulf Coast states, who are suffering from the loss of their livelihood because of the oil spill crisis,’ said Wendell Davis, president of Florida Realtors.
‘Many real estate claims for loss of income due to the oil spill have been in limbo, leaving people with no way to pay their bills, take care of their families or keep their businesses going,’ Davis added.
The Alabama Association of Realtors said it expects expected to receive around $24 million for claims, but the final number has not yet been confirmed. Louisiana Realtors said it expects to receive $5.8 million that will be paid out to real estate brokerages for losses related to the oil spill and the Texas Association of Realtors said it expects to receive $1.3 million.
‘This historic agreement between the real estate industry and the BP Fund is a model for public/private partnerships. It will help restore economic vitality to the Gulf Coast and ensure that a unique culture and way of life continues into the future,’ said Keith Kelley, president of AAR.
To be eligible, a real estate agent must have a license during the time the damages were incurred. The only claims allowed are based on a loss of income and payouts will be limited to $12,000 per claim.
While the Mississippi Association of Realtors did not release how much it received, president Tony Jones said local licensed real estate professionals have experienced financial losses due to transactions that were terminated or never even initiated because of the oil spill. ‘The substantial decline in Mississippi tourism and interest in real property sales due to the oil spill have greatly affected the real estate business here,’ he explained.