Although Pensacola Bay has been one of the areas hit hardest by the Gulf oil spill, the government says there is virtually no remaining threat to other areas in Florida. Early computer models revealed a potential for the oil to travel around the Florida Keys and up the east coast, but it now looks like that won't happen.

Nevertheless, real estate values may already be dropping throughout coastal Florida. Potential buyers are concerned that tar balls could wash up even on beaches that are currently unaffected.

Worse, a self-fulfilling cycle of fear may be developing. As buyers hold back because they fear property values may be about to drop, the continuing lack of sales could itself cause a drop in real estate values.

According to a recent report from Fitch Ratings, real estate values in some coastal areas in Florida are already dropping. Florida is already in the midst of a storm of real estate problems, ranking the worst nationwide in foreclosures and mortgage delinquencies across all types of properties.

Damage to the fishing and tourism industries from the spill is likely to increase default rates, which could further drive home values down.

"Florida has been devastated by foreclosure. Texas and Louisiana have had Katrina devastation," says real estate consumer advocate Tara-Nicholle Nelson of Trulia in a recent article in USA TODAY.

"They've been hit time and time again. This is having an immediate, devastating impact on agents. Phones are ringing, but it's mostly people wanting to sell. I'd be amazed if some of them don't come back with claims against BP."

Will BP, Halliburton and Transocean Pay for Reductions in Real Estate Values?

According to USA TODAY, claims are already being submitted to BP for economic losses to owners of vacation rentals on beaches that were closed because of the spill. However, BP spokesman Robert Wine says that compensation claims related to reductions in property values are in a gray area.

The company hasn't yet decided whether to pay such claims, and the claims process has now been taken over by the Gulf Coast Claims Facility. The GCCF is a neutral third-party administration appointed by the Obama administration and run by attorney Kenneth Feinberg, who oversaw distribution of the 9/11 victims compensation fund. Any decision about whether to pay for property value losses will be made by that group.

One of Florida's largest real estate developers has already filed a lawsuit against Halliburton. The St. Joe Co. owns about 403,900 acres of Florida land within 15 miles of the Gulf Coast, and its stock price dropped nearly 40 percent in the days after the oil rig explosion.

Another development company is also considering legal action against the three companies responsible for the spill. New Bastion Development spent the last four years buying land in the Florida Panhandle for residential and commercial projects. All of the company's projects are now on hold, and the delay may be so costly that it will lose its entire investment.

Estimates of the total impact on home values the spill will have in communities directly affected by the spill are as high as $3 billion over five years. No hard estimates are available yet for the expected drop in the Florida Keys or east coast.

Related Resource:

"Gulf real estate sales suffer from BP oil spill aftermath" (USA TODAY, August 19, 2010)