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Although much media attention has deservedly focused on New Orleans’ poorest residents, the city’s African-American middle class could take an even harder hit in Katrina’s wake. Keith Butler, a financial advisor who lives part time in the Big Easy, notes that many members of the city’s once-thriving black middle class lived in neighborhoods east of downtown that were severely flooded. Federal flood insurance tops out at $250,000 per home, but many properties were worth more than that. Such a housing hit would come at a time when many service jobs at schools, city government and hospitals are no longer needed, creating more problems for them financially. “Their contribution to the city’s economy is significant,” Butler notes. “If that suddenly changes, if New Orleans becomes the San Francisco of the south, expensive and much less diverse, these people will be double-whammied. They won’t be able to afford to rebuild while their access to the upper reaches of government will be hampered by the population shift. They’re not abjectly poor so it’s harder for them to find sympathy. The hit to their net worth as a group will be a larger percentage and hurt worse than any other.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.