5.10.05

WHY IT'S DIFFICULT TO DEFINE PRICE GOUGING. This week, NBC Nightly News originates on the Gulf Coast. Tonight, a Mississippi woman tells viewers that she sold for $170K an intact house with a pre-storm asking price of $140K. In New Orleans, a substantial share of the housing stock, including a lot of rental shotgun shacks, will have to be demolished.

Big money is headed this way as housing prices soar in the most devastated region of America. In New Orleans, where unofficial estimates say more than 100,000 homes could be demolished as a result of Hurricane Katrina, dwindling supply is fueling huge demand and housing price hikes of 10 percent to 40 percent.

Much of the price spiral is driven by companies and government agencies involved in the city's long-term recovery and rebuilding. But when evacuees return with insurance checks, probably next year, price inflation could be even greater, real estate agents said.

Does that make the owners of intact houses literally windfall profiteers?
Some sellers who had their homes on the market before Katrina have either raised their asking prices--in some cases despite the homes' condition--or pulled them off the block temporarily in anticipation of prices going even higher.
But some verities are eternal.

[Real estate executive Arthur] Sterbcow said the rebuilding of New Orleans probably would be a decade-long effort. People who used to buy homes in New Orleans grew up playing Monopoly, he said. The new generation of buyer grew up with Sim City, the computer game built around constructing new cities.

There is no telling where prices will level off, Sterbcow said, but he is confident the market forces will determine the appropriate price."Pigs get fat and hogs get slaughtered," he said.

And the building material market is national in scope, with spot shortages of materials in DeKalb.

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