It has been a long 56 days since the offshore oil drilling platform, Deepwater Horizon, exploded in the Gulf of Mexico near Louisiana. Since that day it has been a wild and scary roller coaster ride of doom and gloom as local residents, vacationers and anyone that has a personal or financial investment in Northwest Florida waits to see what will happen next. I receive calls every days asking about the oil spill. Everyone wants to know what will happen to the Real Estate market?
I try to be the eternal optimist and rationalize that whatever happens to our beautiful beaches we will overcome the situation and bounce back stronger. This morning I was riding my bike along Scenic 30-A and Front Beach Road and saw hundreds of people outside enjoying our amazing weather, sunshine and sandy white beaches. Seeing people waiting in line at Charlie's Doughnuts in Alys Beach, families riding their bikes with their children, dozens of runners burning up miles on the multi-use trails, and couples walking side by side with a coffee in their hand made me believe it was business as usual on the Emerald Coast.
With an estimated 100 million gallons of oil that have leaked into the Gulf of Mexico I try to wrap my brain around the impact it will have on our area. I run through my usual list of items that impact our beaches every year and try to fit oil into the category. We usually get Red Tide every few years…we get June Weed in June that washes ashore…hurricanes in hurricane season…jellyfish…yellow flies. Even after all of these events, our beaches are still beautiful and they replenish through their natural cycle as they have for millions of years. Then I think about all of the man-made stuff that impacts our beaches…fireworks…beach toys…bottles…cigarettes and etc. Even with all of these our beaches are pristine and some of the cleanest Blue Wave Certified beaches in the world with the whitest sand and most beautiful emerald green water.
So what is going to happen if, or when, our beaches will be impacted with dime sized highly weathered tar balls…or an oil sheen? Is this going to be more or less of an impact than red tide or trash on the beach? How many tar balls will we get? How easy will it clean up? Will in naturally correct itself over time? What will it do to our Real Estate Market?
To say that the Deepwater Horizon oil spill has not impacted our real estate market would be a lie. As we all know buying and selling of real estate is both a financial and emotional decision. Currently, all of the impact on our real estate has been driven by emotion as we have no physical impact from the oil…yet.
Unfortunately, the oil spill makes an excellent news story especially since the oil is still leaking. Short term the oil spill will impact many individuals that rely on rental income to either cash flow or help carry the costs of their real estate as vacationers nervous about the oil spill cancel their vacations. In addition, many buyers that have been jumping into the market were doing so with the financial infusion of rental income to offset carrying costs. Speculation that our beaches will be closed due to the oil spill have cause a few rental cancellations, but not a significant amount. Overall, rentals and visitors to our beaches remain strong…very strong. Memorial day was an incredible weekend and week with many of the area developments at 100% occupancy. I had a few customers calling me trying to find a place to stay as everything was booked.
If oil does reach our shores and our beaches are closed many of the properties relying on rental income to offset carrying costs will encounter financial hardship. With financial hardship in an already struggling real estate market means more mortgage defaults. More mortgage defaults means more pre-foreclosures…which ultimately will become short sales or REOs. Although it is too soon to tell if our beaches will close. I will tell you that as of today the beaches are clean and oil free. So come on out and enjoy are area. I can assure you that if our beaches are impacted we will overcome the oil and come back stronger than ever.
by Craig Baranowski
For updates on the Deepwater Horizon oil spill, please visit http://www.southwaltonluxuryhomes.com/blog/deepwater-horizion-oil-spill-south-walton-beach/
