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Property values climb on the Coast, but cost of living a bargain

Property values skyrocketed and the demand for housing on the Mississippi Gulf Coast outpaced supply during the early 1990s with an influx of new residents looking for economic opportunity with the newly-built casino industry.

John Phillips, manager for Prudential Gardner Realtors in Biloxi, remembers how hot the housing market got throughout the Coast.

“We were in a real bind for a time in both houses and apartments,” he said.

But according to the quarterly reports from the American Chamber of Commerce Researchers Association’s (ACCRA) Cost of Living Index, housing prices on the Coast are actually going down, bringing the total cost of living to 5.6% below the national average during the third quarter of 2003, down from 4.4% below the national average during the same period last year.

The ACCRA index is based on nearly 100,000 data points collected in surveys of 400 metro and non-metropolitan areas across the United States. The Harrison County Development Commission’s (HCDC) staff gathers the quarterly statistics in various economic sectors, such as groceries, utilities, housing, health care and transportation, and submits them to ACCRA officials.

Susan Davis, who produces the statistics for the HCDC, said ACCRA compiles the housing statistics by asking researchers to get price quotes on various types of housing specified by the ACCRA questionnaire. For this year’s survey, ACCRA asked for five price quotes on existing houses from 1,600-2,100 square feet with three bedrooms and two baths sold in the past 90 days. For new construction, four builders returned information on how much they would sell a custom 2,400-square-foot, three-bedroom/two-bath home for in the current market.

The results showed that existing homes meeting the survey’s criteria sold for prices ranging from $114,000-$169,000, up from last year’s figure of $96,000-$143,000 for the same period in 2002. Newly-built housing estimates came in from $146,000-$180,000, down from last year’s estimates of $189,000-$215,000.

“Our housing is way lower than the majority (of the country) — they questioned us on it,” said Davis. Most of the increases seen in the index came from increases in transportation costs, with decreases seen in utilities, health care and grocery costs.

Charlotte Saddler, a Realtor in Pascagoula, said that a drop in housing prices would not be surprising considering the drop in demand she’s seen in the past quarter — but she hasn’t seen a drop thus far.

“I don’t think prices have decreased appreciably,” she said.
The biggest demand is for mid-range to luxury homes, with lots of new construction going up in Ocean Springs, Gautier, Gulfport and Biloxi.
Phillips said that from his vantage point, supply and demand were finally evening out in the Coast market.

“It’s not nearly so hot a housing markets for casino people as it was five years ago,” Phillips said. “However, I don’t see a lot of inventory in our subdivisions and not many vacancies in the apartment complexes.”

Prices are somewhat more stable than Phillips expected with the burgeoning economic growth nationally and locally, as well as the continued drop in housing interest rates.

“The bustling, booming economy we have here on the Coast usually means housing prices go up,” Phillips said. But the price pressures seem to be coming out in an unusual way. “There’s a surprisingly good market in what we would consider luxury homes, in the $350,000-plus range.”

A multiplicity of factors can change the value of a home in the Coast-Biloxi-Gulfport MSA, according to Davis. Proximity to the beach, subdivision amenities, the number of lots available from developers as opposed to builders and the neighborhood or city where the home is located are a few, said Davis.

Bruce Kammer of Poplarville, Mississippi Association of Realtors’ 2004 president, believes housing prices and demand in Southwest Mississippi and Southeast Louisiana dropped this summer due to the contested gubernatorial races in each state.

“With the elections, folks just had a wait-and-see attitude,” said Kammer. “Our market had been so strong for three years, and we just had a saturation of homes for sale.”

Kammer expects growth to continue, but at a lower rate than during the past three years. New construction continues in the luxury and upper mid-range housing, while most existing housing falls into the mid-range price category for the area. Average sales price is typically between $84,000-$85,000 in the Poplarville area, said Kammer.

Another interesting factor is the influence the retiree population has on the available housing stock, according to Phillips — noting that inquiries about condominiums and other retirement-friendly developments have gone up considerably in his office the past two years.

Retiree homeowners tend to have very little impact on community services — no new schools needing to be built, for instance — while often bringing a great deal of disposable income to an area, Phillips said.

And Phillips credits the casino boom with producing these kinds of favorable results. “Now that people are coming here to the casinos, they’re seeing what a great place this is to live.”

Contact MBJ contributing writer at Julie Whitehead at mbj@msbusiness.com.

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