The impact of the BP DeepWater Horizon oil spill on home values in the coastal counties along the Gulf Coast is expected to range from $648 million over one year to as much as $3 billion over five years, CoreLogic says.
In the coastal counties of Harrison, Mobile and Escambia, there are more than 71,000 homes at risk of losing an estimated average loss in beach amenities valued between $40,000 and $56,000, the company says. The total estimated loss of beach amenities is valued at $3 billion.
CoreLogic's analysis used established methods for estimating environmental amenity values, in general, that take into account the annualized economic value of beach access in these coastal communities at risk of being damaged by oil coming ashore and beaches being closed to human recreational use for a period of five years.
Specifically, CoreLogic used its public record and parcel data collected in the 15 at-risk counties and combined this with its proprietary geospatial coastline data that identifies the geographic location of the shore. 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.
Of the immediately impacted communities, the largest overall loss in amenity value would be in Pensacola, Fla. ($1.6 billion), followed by Gulfport, Miss., ($1.2 billion). In terms of average loss in amenity value per home, Gulfport is the largest ($56,000), followed by Mobile, Ala., ($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. The four coastal communities along the coast – Panama City, Tampa Bay, Cape Coral and Naples – could experience a total loss in amenity value of $11 billion, impacting 238,000 homes.
‘Using well-established economic techniques for the measurement of the economic value of environmental amenities, an estimate of the loss in beach amenity value is substantial,’ says Mark Fleming, chief economist with CoreLogic. ‘While it is, by no means, a certainty that the major coastal communities along both coasts of Florida will be impacted at all by the oil spill, the lost amenity value in these markets could be particularly high.’
If the unlikely worst-case scenario occurs and the spill reaches around the Florida Keys and up the Atlantic coast of Florida, impacting beach amenities, the additional losses could reach up to $28 billion over five years, CoreLogic says.