Gulf states brace for real estate storm

New Orleans itself has a historically low rate of homeownership - less than 50 percent, well below the national average of 69 percent, notes Yun at the NAR. Depending on how the city is rebuilt, those percentages may go up or down, which, in turn, will influence the health and wealth of the housing sector.

Along the Mississippi coast, Mr. Kotkin sees a likely boom for pricey second-home communities catering to snowbirds, empty-nesters, and retirees from the Midwest and Northeast. The combination of warm weather, comparatively cheap housing, and low state taxes makes for a compelling recruiting pitch.

That scenario haunts Stallworth, the Biloxi councilman. He says preserving racial and economic diversity along the coast is crucial to maintaining local heritage.

"It would be a crime" to cater only to affluent out-of-state buyers, he says. "We need to have a mixture. But the people who are here can't afford $250,000 homes. It pushes everyone away."

Even the specter of building casinos on land makes Stallworth uneasy. He won't oppose the move because no jobs can be sacrificed at the moment. Still, he says, the poverty and lack of white-collar jobs must be addressed as rebuilding begins.

As many observers note, opportunities for speculating and price gouging may be increased by the reputations of Mississippi and Louisiana, the states hit hardest by Katrina.

"Neither one of them has been a showcase of progressive politics," says Frank Popper, professor of land-use planning at Princeton University. For that reason, he cites Mississippi Gov. Haley Barbour's hiring of architect Duany, known for his pedestrian-friendly neo-urban neighborhoods, as a positive sign. "If that holds up, it is a remarkably progressive response."

Kotkin counters that New Urbanists tend to develop pricey neighborhoods, not a good portent for the poor who were abandoned during the storm's aftermath and later scattered across the country to makeshift shelters.

The ethical question - beyond the short-term question of whether developers and others should take advantage of the topsy-turvy commercial and residential real estate sectors - resonates in New Orleans and the Gulf Coast. These are areas long dominated by poverty, but whose character and appeal stem in large part from the image of dockworkers and lawyers, tattoo artists and doctors, waitresses and bankers living side by side in neighborhoods.

Experts, including Kotkin, envision a sanitized redevelopment of New Orleans that would preserve tourist attractions while leaving a smaller city populated by wealthy singles, gays, couples without children, and a scattering of artists and musicians. "That's great if you're a real estate agent," he says. "But being the San Francisco of the South isn't so great if you're a working-class New Orleans resident."

That scenario also bucks national expectations, experts say.

"The thing that was so bothersome about the flood and the government response was how completely people at the lower end were harmed," Mr. Popper says. "Something definitely needs to be done about that because it upset everyone watching it on TV."

Author Ernest J. Gaines, known for his novels chronicling the everyday heroism of poor blacks in south Louisiana, worries about the potential for minorities to once again be overlooked.

"I'm afraid of what could happen," he says. "I'm afraid many of the blacks who left will never come back, and New Orleans might become a mostly white city. I hope this doesn't happen but I think it could happen."

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