The Gulf Coast oil spill could drive more residential foreclosures in Louisiana, based on studies by Costar and other research firms.
Louisiana officials said that the spill-driven federal moratorium on oil drilling will cause $100 to $150 million in lost wages each month, exacerbating the financial difficulties of homeowners already suffering from the effects of the housing crisis.
The number of Louisiana foreclosed homes is also expected to spike, as further reduction of property values will drive more homeowners to negative equity and ultimately to foreclosure. Analysts said property values would fall further by 10 percent due to the spill, in addition to the 34-percent drop that Gulf Coast areas have already suffered since 2006. The estimated losses in property values along the coast from Louisiana to Florida could reach $4.3 billion.
In May, a total of 1,733 residential foreclosures were filed in Louisiana, a staggering increase of 84 percent from the total in May last year, although it marked a decrease of 6.3 percent from the previous month. Of this number, 524 units were already taken back by the banks, and a big portion of these are foreclosed homes for sale in New Orleans, LA. More than 56 percent of these or 973 units were already posted for foreclosure auction.
Last April, the number of foreclosure notices in the state also increased by 28 percent over the month to 1,849, also marking a whopping 64-percent spike from the total in April 2009. Of these filings, 404 units were already in bank listings while 1,127 were posted for foreclosure sale.
The challenge for realtors and home sellers in Louisiana now is to encourage those who are planning to purchase foreclosed houses for sale to pursue their plans despite the spill.
In response to the report that BP PLC has agreed to allocate $20 billion to cover all the environmental and economic costs of the oil spill, including spikes in residential foreclosures, Louisiana officials said that the money is not enough, as the projected damages could reach $100 billion.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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