Speculators Rushing In as the Water Recedes

The real estate agent has $10 million in the bank, wired by an investor who has instructed her to scoop up houses -- any houses. "Flooding no problem," Farris' newspaper ads advise.

Her backer is a Miami businessman who specializes in buying storm-ravaged property at a deep discount, something that has paid dividends in hurricane-prone Florida. But he may have a harder time finding bargains this time around.

In some ways, Hurricane Katrina seems to have taken a vibrant real estate market and made it hotter. Large sections of the city are underwater, but that's only increasing the demand for dry houses. And in flooded areas, speculators are trying to buy properties on the cheap, hoping that the redevelopment of New Orleans will start a boom.

This land rush has long-term implications in a city where many of the poorest residents were flooded out. It raises the question of what sort of housing -- if any -- will be available to those without a six-figure salary. If New Orleans ends up a high-priced enclave, without a mix of cultures, races and incomes, something vital may be lost.

"There's a public interest question here," said Ann Oliveri, a senior vice president with the Urban Land Institute, a Washington think tank. "You don't have to abdicate the city to whoever shows up."

For now, though, it's a seller's market, at least for habitable homes.

Two months ago, Steve Young bought a two-bedroom condo in New Orleans' Garden District as an investment for $145,000. Last month, he was transferred by Shell Oil to Houston. Last week, he put the condo on the market.

In a posting on Craigslist, an Internet classified advertising site, Young asked $220,000. He got a dozen serious expressions of interest -- enough so he's no longer actively pursuing a buyer.

"I'm pretty positive the market's going to move up from here," he said.

So, to their surprise, are many others.

"I thought this storm was the end of the city," said Arthur Sterbcow, president of New Orleans-based Latter & Blum, one of the biggest real estate brokerages on the Gulf Coast.

"If anyone had told me two weeks ago that I'd be getting the calls and e-mails I'm getting, I would have thought he was ready for the psychiatric ward."