This article was published on: 08/01/2006
Surviving to thriving
Hurricane Katrina: One Year Later
Some brave real estate practitioners are helping to rebuild the city one deal at a time. But for others whose lives were torn apart that day, leaving New Orleans was the best option.
BY MICHELLE HOFMANN
On Aug. 29 2005, Hurricane Katrina struck the Gulf Coast with unrelenting force. Roughly 80 percent of New Orleans flooded, causing $75 billion to $100 billion in damage, according to the Louisiana Recovery Authority, and earning Katrina the title for the costliest — and one of the deadliest — natural disasters in United States history.
The local real estate community was at the center of the devastation. Entire neighborhoods were flattened by flooding and wind damage, and many homes left standing were deemed uninhabitable. Uncertainty abounded: Would residents flee for good? Is the area too risky to rebuild? Would there ever again be a viable real estate market?
One year later, although some of those questions have been answered, the area is still in a state of flux. The downtown business district and French Quarter, which will serve as host to this year’s REALTORS® Conference & Expo, experienced minimal damage and bounced back quickly. But many outlying areas that were wiped out by the storm are still in the slow process of recovery.
Here, we meet a handful of the estimated 40,000 REALTORS® who were affected by the hurricane. We find out how they have coped personally and professionally in the year after the storm, and what they predict for the future of Crescent City real estate.
Liz Ashe: “I should have died 10 times that day”
Hurricane Katrina gave New Orleans native Liz Ashe, 52, a broker-associate with Demand Realty in Metairie, La., since 1985, a glaring reminder of what’s most important in life.
Ashe’s home in Lake Pontchartrain was devoured by a 30-foot wall of water in Hurricane Katrina. She jumped into the water from her second floor and held on to a tree, then watched helplessly as her husband, Tom Havrilla, 61, drifted away in the murky torrent.
Alone, wet, and fighting to hold on against debris-lined waves, Ashe says she turned to God. “I felt like the last person on the planet,” she recalls. “I prayed often to God that day and night and confessed to him on more than one occasion that I didn't mind dying. I just didn’t want to die drowning.”
Her prayers were answered seven hours later. The water subsided; she climbed down from the tree and spent the night in an abandoned house that had a dry bed.
The following dawn, Ashe headed back to the empty slab where her showcase home had stood a day earlier. Battered from the storm, but alive and well, her husband also made his way from the other side of town to find his wife. The dynamic duo reunited and evacuated to Brandon, Miss., only to return 12 days later in a new Winnebago, affectionately named “Winnie,” which served as their home and office.
Today, Winnie is still their home while they wait for renovations to be completed on a former rental property they own in Slidell, La. “It’s very difficult to lose everything the way we did,” she says. “Watching all your possessions disappear before your very eyes is truly awful. But I am so grateful, because I should have died 10 times that day, and I’m still here.”
Ashe's real estate business also is alive and well. A $5 million-a-year producer before the flood, she now has 30 homes under contract in a subdivision of Meraux, La. Unfortunately, home prices are not what they used to be: Properties that ranged from $150,000 to $325,000 before Katrina hit are now listed at $30,000 to $100,000.
Despite the depreciation, Ashe expects a brisk year for real estate. She anticipates thousands of foreclosures in 2007, and says investors from Arizona, California, Las Vegas, New York, and Virginia are anticipating strong demand by buying single-family homes and multifamily complexes.
Frank Beckendorf: “She encouraged me to get into real estate.”
As Hurricane Katrina approached on Aug. 28, real estate practitioner Frank Beckendorf, 54; his wife, Jean; and their three children left the New Orleans suburb of Chalmette and headed for safety in Dallas.
“Better to be safe than sorry,” Beckendorf recalls thinking. The storm might only loosen a few roof shingles or upend a tree, but why risk it? He planned to return in three or four days when he could safely pick up the shingles, pay somebody to remove the tree, and call the insurance company.
He soon realized the storm was becoming more serious. The eight-hour drive took 19. Back home, heavy winds and storm surges critically weakened the levees separating Lake Pontchartrain and Lake Borgne from New Orleans — located mostly below sea level — and then the levees gave way.
Beckendorf’s sister, Marion Beckendorf Stearns, 56, a housewife and mother of five, and her husband decided to ride out the storm because they didn’t want to leave their dog alone.
“If it gets that bad, go to my house, because I have two stories,” Beckendorf said he told her before he left.
But things got bad too quickly for Stearns. As Beckendorf arrived in Dallas on Aug. 29, Marion Beckendorf Stearns drowned in 21 feet of water, two-blocks from her brother’s home — despite heroic rescue attempts by her husband. “We didn’t get her remains until December,” says Beckendorf. “She was the one who encouraged me to get into real estate.”
More than 1,800 people were killed as a result of the hurricane and flooding. For Beckendorf and his family, moving away was the best option as they dealt with their loss. “There’s no going back,” says Beckendorf, formerly a sales associate with Real Estate Results in Chalmette.
In early July he sold his Louisiana home for $40,000, a fraction of its pre-Katrina value of $250,000. He bought a home in Abilene, Texas, and is now a sales associate with Abilene’s Jimmy Partin Realty.
Albert S. Pappalardo: “None of us knows where this is going”
Quick thinking helped New Orleans-based Pappalardo Consultants Inc. nearly double annual home sales to more than $3 million from September 2005 through early June 2006 from $1.7 million in the previous year.
The company’s office suffered major damage, as it’s located in the Lakefront and Lakeview area — ground zero for the 17th Street Canal breach. But the family-run business, which boasts three generations of New Orleans Metropolitan REALTOR® Association presidents, wasn’t about to go under.
After evacuating to Rayne, La., a small town about 225 miles west of New Orleans, Albert S. Pappalardo, 63, CRE, president and chairman of the company, began leasing rental property in the Rayne and Baton Rouge regions. That turned out to be a very smart business move.
Within one week of the flood, virtually all rental housing in Baton Rouge, Lafayette, and other nearby areas was full and Pappalardo had an impressive inventory of properties to work with.
In April, Pappalardo’s company became one of the first to physically reopen an office in the Lakeview and Lakefront area. Still, he acknowledges that the real estate market is far from settled and new market trends are taking shape.
For example, locals are seeking out second or “safe” homes in scenic or rural areas away from the state’s coastal regions and low-lying areas. And many people have yet to determine if they’ll permanently stay in the area.
“Decisions are being made every day by New Orleanians on whether to stay and renovate, rebuild, or sell the flooded home and relocate within or outside of the metro area,” he says. “So until things settle down, which may not be for an extended period of time, none of us knows where this is going.”
Ryan Wentworth: “A lot of people just couldn’t live without this city.”
Licensed as a real estate practitioner in 2004, Ryan Wentworth evacuated New Orleans for Lafayette before the hurricane hit. He returned in October. Since then, the 25-year-old sales associate with Tommy Crane Inc. in New Orleans has been surprised by the volume of real estate activity in town.
Tommy Crane has added two practitioners, and listings have more than doubled from about 30 before the storm to upwards of 60 in June.
He attributes the improving real estate market in part to the devoted local practitioners, who have poured their heart into helping people find a place to live. “The agents who came back came back fighting — working with residents who lost homes to help them find new ones,” he says. “People in New Orleans have a big attachment to the place. A lot of people just couldn’t live without this city.”
Wentworth is one of those people. Rather than leave the city for a “safer” real estate market, he purchased a fixer-upper in the area. He’s almost finished remodeling the single-family, Craftsman-style home in Bayou St. John.
“Before the storm, I wouldn’t have been able to buy anything, especially not in that area,” says Wentworth, who bought the home in February.
He predicts heavily damaged areas like Lakeview could take more than three years to redevelop. But he sees constant signs of a recovery; Uptown, Mid-City, and the Warehouse District have come back strong.
“Mid-City has a lot of recovery activity and businesses are opening daily,” he says. “The Warehouse District condos, which were popular before, have become an even more attractive area because of the decreased risk of flooding. And there have been proposals for multiple new developments since the storm.”
Bonnie Ferman: “I’m just not prepared to start over.”
Bonnie Ferman, 60, formerly the broker-owner for Bonnie Ferman & Associates Realty in Chalmette, also decided to relocate after the storm.
The hurricane demolished her 20-practioner real estate brokerage, investment properties, her personal home, a commercial property, three cars, and a second home she finished renovating the Friday before Katrina landed.
“Real estate was my life. It was everything to me,” she says. “But the life I knew is over. I’m not 30. I can’t just take 10 years to rebuild. I don’t have 10 years. If I want to work, I have to go back to school. And in the state of mind I’m in and the age that I am, I’m just not prepared to start over.”
It’s hard for anyone who’s not in New Orleans to fully comprehend the magnitude of the disaster, she says. “Not only do you lose all of your worldly possessions, but you lose your life. You work for years to build your perfect home, buy investment property, own a business and live the American dream. And in a few hours, it’s all gone.”
Ferman moved to Boca Raton, Fla., where she’s helping her son, a Boca Raton real estate practitioner, and his business partner, develop marketing and sales strategies. “He’s hoping this will encourage me to pursue the career again,” she adds.
Jude Smith: “Every practitioner has had an impact on the city’s recovery.”
Jude Smith, 34, left his home in Gentilly Terrace and Gardens with a gym bag on Aug. 28 for what he thought would be a weekend trip. Smith, broker-owner of SharpMLS.com, a flat-fee real estate brokerage in New Orleans, ended up spending the next month in Brookhaven, Miss.
Smith returned to the area in October, and eventually resettled last spring in a rental property he owns in the French Quarter.
His pre-Katrina house — a three-bedroom, two-bathroom California bungalow located in the metropolitan area of New Orleans, about 10 blocks from the London Avenue Canal levee breach — listed for $125,000, about 65 percent of its pre-Katrina value. He put it on the market in June, and it sold the next month for $100,000.
“I sold the house to reinvest the money into my business,” he says.
While many real estate practitioners had to put their business on hold in the aftermath of the hurricane, Smith says his business model helped him continue churning deals. “Most of my work is done online,” says Smith, who’s a broker in three states and belongs to nine MLSs. “So I was never really out of business as long as I had my laptop.”
Today, the touristy areas of New Orleans are doing well. Practitioners headed to REALTORS® Conference & Expo, scheduled from Nov. 10 to 13, will find that “everything they would come to see in New Orleans [before the hurricane] is still intact,” he says. “Where it didn’t flood – the French Quarter, Uptown, the Garden District and Magazine Street are clean, beautiful and bustling.”
But as media reports show, other parts of the New Orleans metro area are still torn apart. The amount of rebuilding that remains to be done in the hardest-hit areas can be overwhelming.
“Life seems to be normal in the French Quarter, but outside, the atmosphere is depressed,” he says. “You have to pass through all this devastation, and that’s were you’re supposed to make your living. But you realize that it’s better that you’re here to help out.”
Smith says it could take more than 20 years for a full recovery. However, he believes that with the passing of the 2006 hurricane season and renewed confidence in the strength of the levees, things will improve.
Every real estate practitioner who returned to the city after the storm has had an impact on the city’s recovery, he says. “If I had stayed away, that would be just one more person who didn’t come back to rebuild and support the people who are still here.”