Real Estate Quandry

It's been almost a year and one half since Hurricane Katrina flooded 80% of the city of New Orleans and 50% of the suburbs (where I live) immediately surrounding the city. There are many things that have changed here, but one that may be of some interest to outsiders is what effect the mass floods and wind destruction has had on real estate prices. Have all housing prices fallen? Fallen drastically? Are the undamaged houses appreciating in price?
In New Orleans the answer is that the overall prices of undamaged homes has gone up 25%, while damaged homes have seen a drop in price on average of about 50%. In my own suburb, prices of unflooded homes gone up just 11% while flooded ones have dropped in price by 27%. So the market for buying and selling homes is bizarre.
If the owner's home was undamaged by the storm his market is a seller's market commanding higher prices than before the storm. If the home flooded it's a buyer's market, the owner having to take whatever he can get and accepting a loss in the transaction. This means that speculators like contractors are buying flooded residences for the land use, tearing them down and are going to rebuild rental units in place of the former residence because with a shortage of living spaces rents have exploded upward.
That also means people are vacating in droves, leaving whether they take a loss on their damaged home sale or a gain on undamaged houses they sell. So we have a two tiered marketplace for homes- flooded homes and unflooded. As mine was unflooded I surely feel better about the marketability of my house, though I am not planning on selling and leaving New Orleans.
I often wonder what would happen to the city and to my suburb if another catastrophic storm flooded us the same way as the last. I think in that scenario there would be no housing ,market except a selling one. people would flee the area at whatever cost and housing prices would plummet to pennies on the dollar. that too means the biggest investment most people have, their homes, would fall to near worthlessness, making staying here a big gamble. No storm= a smart decision. Storm= a bad one and ruination.
So why have so many remained here? It's because uprooting is not easy, particularly for those with the least amount of damage to their. Ties and responsibilities here (family obligations, school ties, child considerations, job responsibilities, financial limitations etc...) and it hard or impossible for many to go. So we hope there will be no more Hurricane Katrina's, err....gamble there will not be. That's quite stressful and coupled with the fact that the way of life we lived before the storm is now largely gone, that there is little to do in New Orleans anymore given it has been washed away.
It's no wonder living in New Orleans is one of the nation's biggest gambles.
I guess you have heard the expression "If the shoe fits, wear it". In Turkey, they say, "If the shoe doesn't fit, shoot someone in the foot". At least I think they do, based on what happened the other day in a Karabuk, Turkey shoe store. It all occurred at a big shoe sale in which the store became too crowded as the customers flocked to buy shoes for as little as $6 per pair. When customers rebelled against orders to close the store because of the overcrowding they started fist fights with one another and with the beleaguered salespersons. One of the sales clerks panicked and pulled a gun and fired into the air, the bullet bounced from the ceiling into the foot of a customer.
After arresting the clerk and taking the injured customer to a hospital for treatment the store owner is said to be kicking himself in the shins with his on sale shoes.