BUSINESS

Ferguson's Housing Market Offers A Glimpse Of The Economic Devastation Of Unrest

12/07/2014 04:39 EST | Updated 02/07/2015 05:59 EST
Scott Olson via Getty Images
ST LOUIS, MO - OCTOBER 09: Demonstrators block an intersection as they occupy streets protesting the October 8 killing of 18-year-old Vonderrit Myers Jr. by an off duty St. Louis police officer on October 9, 2014 in St Louis, Missouri. The St. Louis area has been struggling to heal since riots erupted in suburban Ferguson, Missouri after the shooting death of 18-year-old Michael Brown by a Ferguson police officer on August 9. An upside down flag is a universal symbol of distress. (Photo by Scott Olson/Getty Images)
The economic toll of the unrest in Ferguson, Mo., might not be apparent for some time — but some early data indicates an effect on real estate in the area.

Statistics culled from home sales in the municipality over the last six months point to a shift since mid-August, when protests and riots followed the police shooting of an unarmed teenager.

Is it a statistical blip? Or is it the proverbial coal-mine canary — an early hint of the type of long-term economic turmoil that afflicted other American communities, following race-related riots?

It's way too early to draw sweeping conclusions, said the organization that compiled the numbers.

"We may not know for years what the true influence of this (unrest) was," said Beth Braznell, president of the St. Louis Association of Realtors.

"I think it would make a great PhD dissertation someday."

Here's what the numbers do say.

The association provided The Canadian Press with spreadsheets of housing sales for the suburb of Ferguson compared to St. Louis County as a whole, for the six-month period ending Dec. 1, for both 2013 and 2014.

There's some bad news:

—A 77-per-cent increase in the number of days it took to sell a house these last three months, compared to the previous three months. That can't simply be ascribed to the changing seasons, as there was no such pattern last year.

—A drop of 34 per cent in the average price of houses sold in November, compared with the previous month. According to the preliminary data for November, the 11 houses sold averaged US$36,514 compared with $55,337 for 15 houses sold the previous month.

—A decline of up to 32 per cent in the number of home sales the last three months from the same period last year. The final figures for November are still being compiled, but so far the data show 37 sales over the three-month period this year, a notable decline from 55 sales in the same period in 2013.

And some better news:

—In terms of total number of sales, they're only marginally lower this year compared with 2013. There were 97 homes sold last year in Ferguson, in the June-through-November period. This year, there were at least 88 — and there could still be more when the final figures for November are completed in a few days.

—When dealing with small numbers like this, statistical freaks are to be expected. Last year, for example, there was one month where the average sale price was inexplicably low — at $33,874 in August 2013.

(Story continues below)

Ferguson Protests

Given the small sample size, Braznell says the statistics could be skewed by a few foreclosures or by a single investor snapping up a handful of cheap properties.

She has, however, heard the jitters.

She said some would-be sellers have held back listings; some frightened investors have delayed commercial transactions; and some people with a house on the market have suspended showings, because they don't want to let in strangers.

She also sees that ugly number from November on the average sale price — but will wait to draw any conclusions about what it means.

"There could be panic-selling going on. It could be that there are a lot of people dumping their houses and wanting to move. In one sense this does worry me, because it indicates that there might be a loss of wealth in the community," Braznell said.

"But I can't say that that's going on — because, again, it could just be that there were a number of foreclosures at the same time. It could be that someone bought four $11,000 (properties, and drove down the average)."

About two-dozen businesses were burned down or ransacked in the area late last month, after a grand jury ruled out charges against police officer Darren Wilson in the shooting of Michael Brown.

While the attention of the world's media singled out Ferguson, many of the damaged businesses were on West Florissant Avenue in the next-door suburb of Dellwood.

The initial wave of damage has given way to bigger, less destructive protests across the country following the non-indictment in the videotaped death of Eric Garner in New York City.

The damage has paled in comparison to riots of the 1960s — like those that followed the 1968 murder of Martin Luther King Jr. and left a dozen people dead, hundreds more injured, and hundreds of businesses torched in Washington, D.C., alone.

The aftereffects of those riots could be felt for decades, with charred or abandoned lots blighting the city landscape. The devastation in Detroit from a riot the previous year was even worse, and more longlasting.

In St. Louis, on the other hand, a real-estate agent who works in Ferguson says she's already getting calls again. Lisa Dickerson said it had been quiet — with the Thanksgiving break, and the cold weather, on top of everything else's that's going on.

"But this week, starting on Monday, I received three calls, from three different investors," she said a few days ago. "They're thinking that property values are going to go up once they've rebuilt the properties that have been burned down and damaged."

If that happens, says the sales agent, the neighbourhood will look newer and better.