Speculators Rushing In as the Water Recedes Would-be home buyers are betting New Orleans will be a boomtown. And many of the city's poorest residents could end up being forced out.
By David Streitfeld, Times Staff Writer
BATON ROUGE, La. — Brandy Farris is house hunting in New Orleans.
The real estate agent has $10 million in the bank, wired by an investor who has instructed her to scoop up houses — any houses. "Flooding no problem," Farris' newspaper ads advise.
Her backer is a Miami businessman who specializes in buying storm-ravaged property at a deep discount, something that has paid dividends in hurricane-prone Florida. But he may have a harder time finding bargains this time around.
In some ways, Hurricane Katrina seems to have taken a vibrant real estate market and made it hotter. Large sections of the city are underwater, but that's only increasing the demand for dry houses. And in flooded areas, speculators are trying to buy properties on the cheap, hoping that the redevelopment of New Orleans will start a boom.
This land rush has long-term implications in a city where many of the poorest residents were flooded out. It raises the question of what sort of housing — if any — will be available to those without a six-figure salary. If New Orleans ends up a high-priced enclave, without a mix of cultures, races and incomes, something vital may be lost.
"There's a public interest question here," said Ann Oliveri, a senior vice president with the Urban Land Institute, a Washington think tank. "You don't have to abdicate the city to whoever shows up."
For now, though, it's a seller's market, at least for habitable homes.
Two months ago, Steve Young bought a two-bedroom condo in New Orleans' Garden District as an investment for $145,000. Last month, he was transferred by Shell Oil to Houston. Last week, he put the condo on the market.
In a posting on Craigslist, an Internet classified advertising site, Young asked $220,000. He got a dozen serious expressions of interest — enough so he's no longer actively pursuing a buyer.
"I'm pretty positive the market's going to move up from here," he said.
So, to their surprise, are many others.
"I thought this storm was the end of the city," said Arthur Sterbcow, president of New Orleans-based Latter & Blum, one of the biggest real estate brokerages on the Gulf Coast.
"If anyone had told me two weeks ago that I'd be getting the calls and e-mails I'm getting, I would have thought he was ready for the psychiatric ward."
Messages from those wanting to buy houses — whether intact or flooded — and commercial properties are outrunning those who want to sell by a factor of 20, said Sterbcow, who has set up temporary quarters in his firm's Baton Rouge office.
"We're pressing everyone into service just to answer the phones," he said.
These eager would-be buyers may be drawing their inspiration from Lower Manhattan, which proved a bonanza for those smart enough to buy condos there immediately after the Sept. 11 attack.
Of course, in southern Louisiana, everything is hypothetical for the moment. The storm destroyed many property records and displaced buyers, sellers, agents and title firms, so no deals are actually being done. Insurance companies haven't started to settle claims yet, much less determine how, or whether, they will insure New Orleans in the future. The city hasn't even been drained.
But people are thinking ahead, influenced by a single factor: the belief that hundreds of billions of dollars in government aid is going to create a boomtown. The people administering that aid will need somewhere to live, as will those doing the rebuilding. So will employees of companies lured back to the area, and the service people that attend to them.
All this will lead to what Sterbcow delicately calls a "reorientation" of the city.
"Everyone I talked to has said, 'Let's start with a clean sheet of paper, fix it and get it right,' " he said. "Some of the homes here were only held together by the termites."
What the owners of the city's estimated 150,000 flooded houses will get out of "reorientation" is unclear, especially if the houses were in bad shape and uninsured.
Some black New Orleans residents say dourly that they know what's coming. Melvin Gilbert, a maintenance crew chief in his 60s, stood outside an elegant hotel in the French Quarter this week and recalled how the neighborhood had been gentrified.
He remembered half a century ago when the French Quarter had a substantial number of black residents.
"Then the Caucasians started offering them $10,000 for their homes," he said. "Well, they only bought the places for $2,000, so they took it and ran."
The white residents restored the homes, which rose quickly in value. Gilbert said he expected the same dynamic when the floodwaters receded in the heavily black neighborhoods east of downtown.
The question of who should own New Orleans is already sparking tension. The first posting seeking New Orleans property "in any condition or location" was placed on Craigslist on Aug. 29, while the storm still raged. With small variation, it was repeated numerous times over the next week.
Some readers were infuriated. "Do you read/watch/understand any of the news broadcasts coming from the city? Or do you just go to 'Cashing in on Desperation, Despondency, and Depression: How to Make a Zillion Dollars investing in Disaster Area Real Estate' seminars. Sheeeeeesh!" wrote one.
The process of tracking down owners of deluged houses is greatly slowed by the absence of records. It's not going to be easy to find these people, said Farris, the Baton Rouge real estate agent.
What would she pay for a ruined house?
Farris demurred, saying it was too early to tell, but probably only the value of the land, if that. Though the French Quarter may be back to life within months, outlying districts such as North Bywater and the Lower 9th Ward will take years, if they ever do. Investors might hope this is the equivalent of buying land on the outskirts of a boomtown, but it's not a guarantee.
For one thing, there are already proposals to convert certain flooded areas — including some water-logged neighborhoods — into parks. Under the Supreme Court's recent ruling broadening the definition of eminent domain, speculators could be forced to sell their properties to the government.
That would be a great outcome for many homeowners in the parishes south and east of New Orleans that bore the brunt of the storm.
Six months ago, Todd La Valla, a Re/Max real estate agent, bought a four-unit apartment building for $59,000 in the community of Buras, an unincorporated hamlet in Plaquemines Parish 55 miles southeast of New Orleans.
The tenants evacuated in the storm, or at least La Valla hopes they did. He's sure the building is gone too, like just about everything else in the area. La Valla had no insurance, which means his $10,000 investment is probably a complete loss.
Yet where there's disaster, there's opportunity.
"I've had calls from investors in Los Angeles, Las Vegas, New York looking to buy property," La Valla said. "This is going to be hard for the poor, the elderly, those that didn't have insurance. But it's going to be great for some people."
At first, Lucia Blacksher thought she was in the bad news group. In June, she and her boyfriend put their entire savings, about $35,000, into their dream house — a century-old shotgun Victorian in the New Orleans neighborhood of Mid-City. When the storm came, they fled to Blacksher's parents' house in Birmingham, Ala.
The house, which cost $225,000, is partially flooded. Her boyfriend, a Virginian who figures he's seen enough of hurricanes to last him the rest of his life, wants to move. The insurance company won't return calls.
Last week, Blacksher was worried she would lose her beloved house either to foreclosure or a forced sale. One of those bottom-feeders would get it.
She was more optimistic Wednesday. Somehow, she would get through this.
"Because the house survived the storm, it will be even more valuable," she said. "You could offer me $300,000 and I wouldn't take it. No way."
Posts: 347 | From: Kansas City, MO, USA | Registered: Jun 2003
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budman, I notice you're a fellow KC guy. So what is your take/strategy on this stock?
Posts: 451 | From: Kansas City, KS | Registered: Sep 2005
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posted
Hey Slip, yes, from Liberty area. You? I got in at .0002 and out at .0007 when the volume slowed down. I had a buy order at .0003 all day today, but didn't get it.
There is a ton of money about to go in this area. This company is one of many getting an early start on revitalizing the flooded areas. 150,000 flooded homes, billions of dollars means lots of business. The $100,000+ homes being rebuilt are going to be taking the place of the $10,000 damaged homes. That is a lot of profit. A few contracts and this stock can really take off.
I don't know about the forward split, and how, or why they are doing that. Such a high o/s, why split forward? At this point, this is only a trade, not an investment IMHO. But I think it will make a lot of people some good money. Good Luck!
Posts: 347 | From: Kansas City, MO, USA | Registered: Jun 2003
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It's tough to tell someone to stay long in this stock, when you can make 20% easy in a single day. This coming from a large-cap guy who loves to see 10% on his money.
That being said, since this is my first play in the micro world, if I double my money, I'll be happy, but leave some in to see what happens through the F/S.
I think the stock has a lot of potential, but I think it will be tough to get it swinging up to the penny range and get it to stay there...
posted
The bad thing is, they really have no past foundation to provide support or comfort, which is why they are .0004. They have a ridiculous amount of shares outstanding, which can change at any given day without our knowledge. They don't have any income, except off the sale of their stock. Not one legit stock advisor in the world would look at this stock.
The good thing is they are saying they are going into an area to do a job that can potentially make them a lot of money. They are typical of any startup company, though most don't survive. The stock is liquid enough for now to enter and exit easily. And, most of all, playing these pinkies is FUN. That is what it is all about. Never invest more than you can afford to lose in these type stocks.
I am looking for re-entry after evaluating in the morning. Good luck.
Posts: 347 | From: Kansas City, MO, USA | Registered: Jun 2003
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Just can't wait til we get additional PRs stating signed contract on this thing.. this will go absolutely insane..
Posts: 208 | Registered: Aug 2005
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just zipped off an email to Damian..ill post if i get a reply
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
I've been trying to get more at 3 for awhile now, but the order hasn't gone through
Posts: 171 | From: berkeley, il | Registered: Aug 2005
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ive had an order in (part of myorder i bumped to 4 the other day) for 2 days now at 3 and no fill, with 6 mms on 3 i dont think its gonna happen
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
JIF, WE are kinda tryin the same thing. I have had a sell in all day at 4, no luck. i will pick some more up lower if possible.
Posts: 583 | From: Atlanta | Registered: Aug 2005
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posted
i wouldnt recommend flipping this at the ask, if the mms start selling your shares then this baby is gonna go up in a hurry, bc they are reaaallly short, right now they are filling small retail buys and covering thier own shorts with 9mill, 8 mill buys etc the past couple days. IMHO if you want to flip this youll have to wait till the bid is at 5, and even then we might be running
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
good point, order canceled. I was kinda thinkin the same thing. but soo little vol, just would kinda think it might not run if i could get out a 4. i am just gonna sit tight. maybe flip next week.
Posts: 583 | From: Atlanta | Registered: Aug 2005
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real strong support 80% of vol has been at the ask id say, nite and hdsn are tied at the hip on the ask, if one moves off the other wont be far behind, 5 is prob the only possibility of a "run" today
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
realistically, an exit of .0010-.0015 might not be far off with somegood prs, most stocks with this high of o/s struggle to get into the .002's though
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
Yes, they've got nothing but a CEO how who runs around from one industry to the other with PR's. Wait until it drops down to .0002 - .0003 buy, another PR comes out people will chase and sell .0008.
Posts: 59 | From: Georgia | Registered: Aug 2005
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so uh, sounds good, i would love to end at 5, start the week off right
hey JIF, are sells first come first serve or somthing? what did u mean by 'place holder'??? thanks
Posts: 583 | From: Atlanta | Registered: Aug 2005
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posted
lets see if we get those big eod orders again today
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
good idea, i use Ameritrade too, that sounds a little faster. ill remember that.
Posts: 583 | From: Atlanta | Registered: Aug 2005
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14 mill premarket @ 4, nite off the ask, hdsn and jeff should be soon to follow
3x4 7x2
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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