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GULF SHORES, Ala. — Nick Wilmott bent down on the beach near the high-tide mark and touched one of the reddish-brown pads of oil. It had washed up overnight from the BP spill off Louisiana and had yet to be cleaned up by the machines that sweep the beaches here every night.
“Here’s your problem,” said Mr. Wilmott, president of the Baldwin County Association of Realtors. “Imagine we’re on the balcony of a condo that I’m trying to sell you, and you look out and see this.”
Sales of beachfront condominiums and homes have plummeted since late April, when oil started gushing into the Gulf of Mexico after the explosion of the Deepwater Horizon rig. Property values are dropping, and the number of apartment rentals is half what it usually is.
In a beach town like this, where sales and rentals of vacation homes are the life’s blood of the economy, drawing a tide of tourists to fill the restaurants and boutiques, the economic impact has been deep.
Everyone in the business — builders, real estate agents, bankers, lawyers, title companies — is facing disastrous declines in business. Owners of vacation homes are watching their investments and the number of rental prospects shrink.
The value of coastal property has taken a beating along a 600-mile stretch from the Louisiana bayous to Clearwater, Fla., a stretch that before the spill was worth at least $4.3 billion, just counting the land and buildings within an acre of the shore, according to Norm Miller, an economist at the University of San Diego who is also the vice president of analytics at CoStar Group Inc.
After studying recent sales of shoreline property, Mr. Miller estimated that the value of property would drop at least 10 percent, on average, over the next seven years because of the spill.
“The number of transactions has really dropped off a cliff,” he said. “My personal opinion is until the beaches are cleaned up and we are sure they will stay clean, I don’t think there will be people buying down there.”
Brokers in Gulf Shores say that not only are the telephones quiet in their offices, but that once-eager buyers are also backing out of deals.
“What’s happening is buyers are just on hold and there are great deals, but they are saying, ‘We are going to wait and see what happens with the oil,’” Mr. Wilmott said.
Rusty and Deana Swanson of Thomasville, Ala., are among them. In late May, they had done everything except close on a three-bedroom condominium on the fourth floor in the Seawind building overlooking the gulf.
The vacation spot was something of a dream home for them and their grown daughter, who uses a wheelchair and takes great pleasure in watching dolphins.
As the oil spill dragged on, Ms. Swanson said she saw similar condominiums selling for far less than the $290,000 she had agreed to pay. She became worried that she wouldn’t be able to rent the apartment to help pay the mortgage, and that it would be worth less than what she was investing. The Swansons pulled the plug on the deal.
“I’m not going to follow through with something when I am watching the prices plummet,” said Ms. Swanson, a dietitian.
Steve Warren, the Swansons’ broker, said he had lost other sales for similar reasons. Having sold real estate for about 20 years, Mr. Warren usually closes three or four transactions a month — from which he earns about $13,000 — in the summer. “The last three months, it’s been zero,” he said.
The real estate market here was already depressed, after the burst of the housing bubble in 2008 and the current recession. The market peaked in 2005, when nearly 1,300 condominiums were sold for about $400 a square foot. By 2008, the prices and sales had both been cut in half.
Yet the market had recovered well in the last two years, brokers said, with the sales of condos — many of them foreclosures or short sales — climbing 30 percent a year. Sales were brisk in the first four months of this year, with more than 348 condos changing hands.
Then came the spill. In the first three weeks of June, the value of condo and home sales was $21 million lower than in the same period the previous year.
“This has been a sucker punch to what momentum we had,” said Kevin Corcoran, a Re/Max broker.
The ripple effect can be seen everywhere. The white beaches, which are groomed every night by crews with mechanical sand sifters, are usually thronged this time of year, but now look like postcards for a remote island.
“We are dying, literally,” said Brian Ottosen, 42, the owner of the Happy Shak, a ’60s-themed boutique a mile from the beach, where two shoppers were dawdling over some knickknacks one recent afternoon. “Right now, on my sales floor, you shouldn’t be able to move.”
Mr. Ottosen has laid off several workers and cut the hours of the remaining skeleton staff in half, but his sales since the spill have been barely 50 percent of last year’s.
Uncertainty about the coast’s economic future has frozen some real estate construction deals and scotched others. Scott Shamburger, a contractor who also owns several rental properties, said he had clients cancel five construction projects worth $2 million in the weeks after the spill began, including two commercial properties.
Shaul Zislin, who owns a beachside restaurant and two souvenir stores, sat in his mostly empty establishment recently and noted that the biggest problem was the perception that the beaches were covered with oil.
The oil has washed up sporadically, city officials said, and BP had been quick in the tourist towns on Alabama’s coast to send in droves of workers to clean it up.
So far, crews have removed about 1,500 tons of oil from Gulf Shore’s beaches alone, city officials said, and they have been forced to close the city’s beaches for a day about once every four days since the spill began.
With money from BP, the state has done what it can to counter the impression that the beaches are covered with goo. For instance, the oil company underwrote a concert that brought in tens of thousands of people to see Jimmy Buffett, whose sister owns a restaurant in town.
Still, the television images of oil on beaches have scared off the tourists and potential investors, Mr. Zislin said. Receipts at his souvenir businesses are down nearly 60 percent from last year, he said, and the restaurant’s sales have also dropped precipitously.
“The perception out there is that you get out of your car and the black oil plague is crawling up your leg,” he said.