BusinessReport.com

Though Hurricane Gustav caused more damage to Baton Rouge than Hurricane Katrina three years ago, the recent storm isn’t expected to provide the same sort of boost to the local real estate market.

“I haven’t seen a major increase or decrease in activity,” says Mike Carroll, the owner of the Web sites For Sale By Owner Baton Rouge and For Rent Baton Rouge. That contrasts with what happened after Katrina, when Carroll says more than 70 houses were sold through his sites in one week.

The one big change that Carroll has seen: About 10 people had called to say they wanted to suspend their ad for a couple of weeks. “In the past six months, no one has called to suspend an ad,” he says. “I’m guessing they’re taking some time to get repairs done.”

Carroll says he doesn’t expect the same amount of activity will hit the market after Gustav because the hurricane didn’t cause tens of thousands of people to relocate to Baton Rouge, a thought echoed by others in the real estate industry. But some predict the storm will provide a slight boost to the market.

“You’re going to see a lot of people focused on rehabilitation and renovation,” says Michael McDuff, executive director of the Baton Rouge Growth Coalition. “There are so many damaged properties, both residences and offices.”

The exact number of homes destroyed or damaged by Gustav might not be known for months. But here’s one indicator: The Governor’s Office of Homeland Security and Emergency Preparedness says more than 206,000 people from across the state have asked FEMA for temporary housing assistance as a result of Gustav.

With so many homes sustaining damage, there has been an obvious demand for short-term rentals.

Vicki Spurlock, one of the owners of Locations Real Estate, which specializes in fully furnished properties for lease, says she’s receiving 20 to 25 calls a day from people looking to find somewhere to stay. “Before that, we were maybe getting 30 calls a month,” she says. “We have been bombarded.”

The bad thing, Spurlock says, is that before Gustav, her rental units were already 70% occupied. And the available properties were snapped up by the FEMA and Department of Defense workers who came in two or three days before the hurricane hit south Louisiana.

Spurlock thinks Gustav will help the market because people who lost their houses to wind damage or fallen trees might opt to buy a new residence instead of waiting six to nine months for repairs. “After they do the repairs, they can go ahead and sell the house and put the cash in the bank,” she says.

Malcolm Young, president of the Louisiana Realtors, says another factor could stimulate post-Gustav sales: people wanting to get out of heavily wooded neighborhoods. Young, who lives in Hundred Oaks, located north of Interstate 10, west of Perkins Road and east of Webb Park, estimates that 60% of the houses in his area were damaged by Gustav, including 35% to 40% that were hit by trees. “People are not going to live in wooded areas,” he says.

Gustav caused a lot of damage to some of Baton Rouge’s more popular and tree-lined neighborhoods, such as Hundred Oaks and Goodwood [which have been dubbed “Twenty-five Oaks” and “Nowood” by residents with dark senses of humor]. But some real estate experts don’t think it will lead to people abandoning those areas and other neighborhoods, such as Southdowns, Garden District and Spanish Town.

“I don’t think people are going to want to abandon the old parts of town,” Spurlock says. “They’ll just hope that a storm doesn’t hit again.”

McDuff says because the damage from Gustav was so widespread—low-income neighborhoods were affected just as hard as the Country Club of Louisiana, and the residents were without power for just as long—that he doubts people will be scared away from any neighborhoods. “This was across the board,” he says.

Laura Dupree, a broker with Dupree Terrell & Company, thinks some people will leave lower lying parts of south Louisiana and move to Baton Rouge. “I’m pretty positive about the whole thing,” she says. “I think in another two weeks or a month things will be back to normal.”

ADVICE COLUMN

The Capital Region Homebuilders Association has guidelines aimed at keeping homeowners from getting ripped off in the hunt for someone to fix their hurricane damage. Here are some of their suggestions

• Beware of unscrupulous or unlicensed contractors.

• Don’t rush into repairs, no matter how badly they are needed.

• Look for proof of insurance from the insurance carrier for not only liability, but for workmen’s compensation. This should be verified with the insurance company that issued the certificate.

• Get addresses, telephone numbers and drivers license numbers of all contractors handling repairs on your home.

• Make sure contractors are properly licensed. Out-of-state contractors are required to register with the Louisiana State Licensing Board for Contractors and can be verified by going to lslbc.la.gov or calling 765-2301.

• Get a signed contract for all work to be performed. If the contract is for temporary work only, this should be stated. Don’t sign anything until you fully understand the terms.

• If the contractor asks you to pull permits for him, that could mean he doesn’t want to be responsible for the work, or he isn’t licensed.

• Building material and supply dealers are not likely to issue credit to out-of-state contractors unless they are known in the state from which they originate and have perfect credit.

• If the contractor is purchasing materials, homeowners should require a copy of the invoices and/or lien waivers for labor and materials.

• A down payment might be required, but is generally not more than 10% to 25% of the total contract and should not be paid until all of the above documentation is received and verified.

• Don’t let payments get ahead of the work. Keep records of payments and don’t pay in cash. The final payment should not be made until you are satisfied with the job and any required building inspections by the parish have been made and approved.

• For more information, contact the Capital Region Builders Association at 769-7696 or the Better Business Bureau at 346-5222.