Tough economic conditions are making life rough in Mississippi. State tax collections have been declining for more than a year amid one of the worst economic downturns in the state’s history. The state budget, already in the red, is expected to get much worse before things get better.
Still, there are bright spots in the outlook for Mississippi in 2010. Along the Gulf Coast in Biloxi new homes are starting to appear, replacing those wiped out by Hurricane Katrina nearly five years ago. The casino business along the Gulf is attracting growing numbers of gamblers. Employment is at one of the strongest levels in the country as a robust agricultural industry puts more than a quarter of the state’s population to work.
Thanks to Hurricane Katrina, Mississippi got federal money for reconstruction and grants for infrastructure re-building long before the real estate crash. Communities north of the Gulf experienced booms as a result and some of the hardest hit areas in the housing bust have seen improving home sales.
Still, nobody expects Mississippi to come bouncing back quickly. The state has historically been among the top two poorest in the country and is expected to remain that way.
In Jackson, the largest city in the state, home sales are seeing an upswing as a result of lower housing prices and low interest rates. The federal tax credit is also credited with triggering the surge, and should force more sales in the early part of the New Year. However, the credit crunch is also expected to cause further price erosion even as home sales rise. The foreclosure epidemic is hurting Jackson and is weakening the market. Jackson is forecast to see average housing prices deflate 6.6% in 2010.
A special tax incentive program, spurred by Katrina, started before the housing crash in Biloxi. The “Gulf Zone” program is starting to make an impact as more businesses move to the area. New projects are getting county and state approvals, which will pave the way for rebuilding. Home sales should be improved as a result of the program and additional tax credits for move-up home buyers. Biloxi is forecast to sustain average deflation of just 3.7% in 2010.
In Pascagoula the market is showing signs of life. Rebuilding has been slow, but the federal programs are in place to assist and will give the market a boost in home sales. But it will take a long while for Pascagoula to get on its feet, and is forecast to sustain a decline of 3.7% on home prices in 2010.
Local banks, aided by government programs, are lending more to homeowners and businesses upstate in Hattiesburg. The infrastructure still hasn’t caught up to the building boom that developed after Katrina, but federal funds are coming to the area. Housing prices rose after the hurricane as new home builders constructed dozens of developments to house many who relocated from the gulf following the storm. Hattiesburg is weathering the financial crisis much better than other parts of the state, and is forecast to see average home prices decline just 3.2% in 2010.