The BP oil disaster in the Gulf of Mexico could reduce home values in the immediate region by as much as $3 billion over the next five years, according to a new report from CoreLogic.
But the analytics firm is warning that if the spill reaches the Florida Keys and goes up the Atlantic coast, the damage could total an additional $28 billion.
CoreLogic says at a minimum, Gulf communities will suffer a home equity loss of $648 million during the first year.
In the coastal counties of Harrison, Mobile, and Escambia, there are more than 71,000 homes that will potentially be impacted. In addition, there are 15 major counties stretching from the Gulf coast of Mississippi to the Atlantic coast of Florida with more than 600,000 residential properties within 1,000 meters of the coastline.
Based on a geospatial query of the public record data using the coastline file, more than 600,000 properties were identified as being within 1,000 meters of the coastline in 15 counties, representing major beach communities stretching from the Gulf coast of Alabama to the Atlantic coast of Florida.
The approach, used in this analysis, to the valuation of environmental amenities was developed in the late 1970's and early 1980's and is a well-accepted technique for measuring the value that consumers place on a variety of different environmental and residential amenities, CL says.
The loss in amenity value increases for properties closer to the beach. Beachfront homes could incur a loss of amenity valued as high as $80,000. Of the immediately impacted communities, the largest overall loss in amenity value would be in Pensacola ($1.6 billion), followed by Gulfport ($1.2 billion).
In terms of average loss in amenity value per home, Gulfport ($56,000) is the largest, followed by Mobile ($45,000) and Pensacola ($40,000).
If the Gulf currents take the oil to the communities along the Florida gulf coast the loss in amenity value will rise substantially, CL says. The four coastal communities along the coast (Panama City, Tampa Bay, Cape Coral, Naples) could experience a total loss in amenity value of $11 billion impacting 238,000 homes.
CoreLogic estimated the loss in amenity value for communities along the Atlantic coast of Florida as well, including Miami, Key West, Palm Bay, Daytona Beach, and Jacksonville. More than 295,000 properties within 1,000 meters of the beach could be affected with a total loss in amenity value of $13.5 billion.
While it is by no means a certainty that the major coastal communities along both coasts of Florida will be impacted by the oil spill, the lost amenity value in these markets could be particularly high, said Mark Fleming, chief economist with CoreLogic. "Our hope is that the oil spill is contained and the loss in amenity value is further moderated by a speedy cleanup and a return of beach amenities to the affected communities' homeowners," he said.
