Post-Katrina Recovery of the Housing Market Along the Mississippi

104 Pages·2008·2.84 MB·English

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Post-Katrina Recovery of
the Housing Market Along
the Mississippi Gulf Coast
Kevin F. McCarthy, Mark Hanson
Supported by Oxfam America, the Foundation for the Mid South,
the Mississippi Association of REALTORS®, and
the National Association of REALTORS
GULF STATES POLICY INSTITUTE
A study by RAND Infrastructure, Safety, and Environment
This research was sponsored by Oxfam America, the Foundation for the Mid South, the
Mississippi Association of REALTORS®, and the National Association of REALTORS
and was conducted within the RAND Gulf States Policy Institute (RGSPI)—a partnership
involving the RAND Corporation and seven universities in the Gulf of Mexico coastal
region.
Library of Congress Cataloging-in-Publication Data
McCarthy, Kevin F., 1945-
Post-Katrina recovery of the housing market along the Mississippi Gulf Coast / Kevin F. McCarthy,
Mark Hanson.
p. cm.
Includes bibliographical references.
ISBN 978-0-8330-4293-4 (pbk. : alk. paper)
1. Housing—Mississippi—Gulf Coast. 2. Housing development—Mississippi—Gulf Coast. 3. Hurricane
Katrina, 2005—Economic aspects. I. Hanson, Mark, 1966– II. Rand Corporation. III. Title.
HD7303.M7M25 2007
333.33'8097621—dc22
2007040839
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Preface
In August 2005, Hurricane Katrina devastated the U.S. Gulf Coast, inflicting major damage
to commercial property, infrastructure, and housing within the region. The hurricane’s effects,
however, were most pronounced in a half a dozen counties that included Mississippi’s three
coastal counties: Hancock, Harrison, and Jackson. As part of the state’s recovery effort, Mis-
sissippi Governor Haley Barbour appointed the Commission on Recovery, Rebuilding, and
Renewal to determine the extent of the damage and recommend policies to aid its recovery.
The RAND Gulf States Policy Institute (RGSPI)—a partnership involving the RAND
Corporation and seven universities in the Gulf of Mexico coastal region—served as advi-
sors to the commission. Because the full extent of the damage and the specific effects on the
Gulf of Mexico coastal housing market remained unclear during the course of the commis-
sion’s work, one of RGSPI’s recommendations was for a more detailed study of the housing
market and what might be done to promote its recovery. In summer and fall 2006, a group of
sponsors—Oxfam America, the Foundation for the Mid South, a private donor, the Missis-
sippi Association of REALTORS®, and the National Association of REALTORS—sponsored
RAND to conduct that study.
This report has several objectives, including the following:
(cid:116)(cid:1) to describe the structure of the housing market in the three counties
(cid:116)(cid:1) to estimate the damage done to the housing market
(cid:116)(cid:1) to assess the status of repair and rebuilding efforts
(cid:116)(cid:1) to identify major bottlenecks facing the recovery process.
Although two years have now passed since Katrina, this is the first comprehensive, quan-
titative assessment of both the extent and nature of the damage the storm did to the housing
stock and the progress that has been made toward recovery. As such, it provides a needed stock-
taking for the public, policymakers, and others involved in the housing-recovery effort by pro-
viding an assessment of what has been done. In addition, by identifying which segments of the
market’s recovery appear to be lagging, the report suggests where additional resources might be
most needed and effective. Finally, Katrina was not the first major hurricane to devastate the
area in recent memory (Camille, a category 5 hurricane when it made landfall, struck in 1969),
nor is it likely to be the last. This report considers the lessons that the Katrina experience may
offer not just for the current recovery effort but also for mitigating the damage that might be
done in future storms.
A valuable supplement to the analysis in this report would be an exploration of why recov-
ery rates differ so substantially across the jurisdictions affected by Katrina and its aftermath.
iii
iv Post-Katrina Recovery of the Housing Market Along the Mississippi Gulf Coast
Approximately 98 percent of the housing units severely damaged by Katrina were in Louisiana
and Mississippi, and the vast majority of those units were either in the New Orleans metropoli-
tan area or in the three Mississippi counties along the coast. While beyond the scope of this
study, such a comparative analysis would provide further guidance to policymakers about how
to steer toward more successful and sustainable recovery.
This report has been revised from its prepublication online version to include changes to
some of the tables and figures, as well as an additional section in the appendix.
The RAND Gulf States Policy Institute
RGSPI is a collaboration among RAND and seven universities (Jackson State University,
Tulane University, Tuskegee University, University of New Orleans, University of South Ala-
bama, University of Southern Mississippi, and Xavier University) to develop a long-term vision
and strategy to help build a better future for Louisiana, Mississippi, and Alabama in the wake
of hurricanes Katrina and Rita. RGSPI’s mission is to support a safer, more equitable, and more
prosperous future for the Gulf of Mexico region by providing officials from the government,
nonprofit organizations, and the private sector with relevant policy analysis of the highest
caliber.
RGSPI is housed at the RAND Corporation, an international nonprofit research organi-
zation with a reputation for rigorous and objective analysis and effective solutions.
For additional information about RGPSI, contact its director:
George Penick
RAND Gulf States Policy Institute
P.O. Box 3788
Jackson, MS 39207
601-797-2499
[email protected]
For a profile of RGSPI, see http://www.rand.org/about/katrina.html. More information
about RAND is available at http://www.rand.org.
Contents
Preface ........................................................................................................... iii
Figures ...........................................................................................................vii
Tables ............................................................................................................ ix
Summary ........................................................................................................ xi
Acknowledgments .............................................................................................xv
Abbreviations ................................................................................................. xvii
CHAPTER ONE
Introduction ..................................................................................................... 1
Study Purpose .................................................................................................... 2
Data and Methods ............................................................................................... 2
Organization of This Report .................................................................................... 3
CHAPTER TWO
Profile of the Pre-Katrina Housing Market ................................................................ 5
Sociodemographic Background: How the Counties Differ from the Rest of Mississippi ............... 5
Differences Among the Counties .............................................................................. 7
Detailed Analysis of the Housing Market..................................................................... 8
Profile of Housing Stock ...................................................................................... 8
Geographic Distribution of Housing Stock................................................................. 9
Submarket Analysis .............................................................................................12
Submarket Characteristics ...................................................................................14
Household Characteristics by Submarket ..................................................................17
Affordability Prior to Katrina ..................................................................................19
Summary .........................................................................................................19
CHAPTER THREE
Damage Done to Housing Stock ............................................................................21
Introduction .....................................................................................................21
Sources and Extent of Damage: Data and Approach .......................................................21
Sources and Extent of Damage: Overall Findings ......................................................... 23
Sources and Extent of Damage: Location ................................................................... 24
Damage by Housing Submarket ............................................................................. 28
Damage to the Affordable Housing Stock .................................................................. 30
Cost of Repair ...................................................................................................31
v
vi Post-Katrina Recovery of the Housing Market Along the Mississippi Gulf Coast
CHAPTER FOUR
Progress of Recovery ..........................................................................................35
Introduction .....................................................................................................35
Data Sources and Approach ...................................................................................35
Progress of Recovery Efforts ...................................................................................37
Summary of Key Recovery Findings ........................................................................ 46
CHAPTER FIVE
Key Issues .......................................................................................................47
Introduction .....................................................................................................47
General Considerations ........................................................................................ 48
Short-Term Recovery Issues ....................................................................................51
Construction Capacity .......................................................................................51
Financing ......................................................................................................52
Insurance .........................................................................................................52
Grants ........................................................................................................... 54
Loans .............................................................................................................55
Other .............................................................................................................57
Financing Summary ..........................................................................................58
The Supply of Available Housing ...........................................................................58
Long-Term Considerations .................................................................................. 60
APPENDIX
Methodology ...................................................................................................65
References .......................................................................................................79
Figures
2.1. Distribution of Housing Units Across the Three-County Area ..............................10
2.2. Distribution of Housing Units, by Coastal Adjacency and Jurisdiction ....................11
2.3. Distribution of Owner- and Renter-Occupied Units, by County and Geographic
Area ..................................................................................................12
2.4. Distribution of Renter- and Owner-Occupied Housing Units for the 10 Coastal
Cities ................................................................................................14
2.5. Race of Household Head, by Tenure ............................................................17
2.6. Homeowner and Renter Incomes ................................................................18
2.7. Owner and Renter Spending on Housing ......................................................18
3.1. Extent by Source of Damage .................................................................... 23
3.2. Storm Surge and Flooding, by Location and Jurisdiction ....................................25
3.3. Severity of Damage ............................................................................... 26
4.1. Relative Rates of Damage and Permit-to-Damage Ratios for the 10 Coastal Cities ...... 40
vii