Could drywall disaster boost the housing market?

Though it may be hard to imagine now, defective drywall may end up being a good thing for the South Florida economy.

In the middle of a severe slump in the housing market, a recession, a locked-up credit market and a sea of foreclosures, the South Florida housing market is taking another hit.

Owners of newer homes are discovering corroding fixtures and suffering health problems they believe are the result of defective drywall imported from China during the housing boom.

''This is something that's only going to cause a more depressed value to the real estate that has this problem,'' Miami Realtor Alan Gabay said.

And nearby properties might become suspect, too. A home with Chinese drywall could have the same effect on the area as a foreclosure does: a drop in values and fears of the same problems.

''The timing of the manifestation is coinciding with the bust,'' said attorney Victor Diaz, who is suing on behalf of homeowners with suspect drywall. ``It's a catastrophe, particularly if it's one community built all at the same time.''

In the short term, this is probably true. But in the long run, some people think it could actually be a boon.

''It's really got us licking our chops,'' said Peter Zalewski, a principal with Condo Vultures. ``It's fantastic.''

The company is trying to research which communities -- condo buildings in particular -- are members of the Chinese drywall club.

''Ultimately, Chinese drywall means big discount. That's what buyers are looking for,'' he said. ``Think of it like a junkyard.''

Investors could end up buying condos in bulk at cut-rate prices, refurbishing them, then selling them at a profit, he said.

Despite the unknowns, Zalewski said, ``it's worth taking that risk.''

Zalewski pointed out that Biscayne Landing's high-end condos and shops in North Miami were built atop what was once declared an environmental disaster area by the Environmental Protection Agency. And units there sold -- although the condos came on line in 2007.

''I would almost make a case that if a property had this drywall, it's probably going to be safer than a property never accused of having it,'' he said. ``They're going to throw everything they have at that property just to wipe out any kind of doubt whatsoever.''

While refurbished condos may find buyers, there are concerns that many units built with the headache-inducing materials have yet to be discovered.

''There are a lot of projects that are sitting empty,'' said Gabay, an agent with Beachfront Realty. ``There might not even be a knowledge of it.''

Still, Gabay said if the matter is handled correctly, the condo industry could revert to a method of the past: selling units at preconstruction prices.

''It is going to be an opportunistic environment,'' he said.

Although the Florida Association of Realtors added a Chinese drywall disclosure to existing paperwork about known material defects in properties, it's an optional form, and the ideal is to repair properties and declare them problem-drywall free.

''I'm starting to get some inquiries from people that are thinking of doing this on their own,'' Parkland Mayor Michael Udine said. ``No one wants to do this if it's not going to be done right. We want to make sure we only do it one time.''

Once that protocol is established, the South Florida economy could get a boost from the resulting contracting needs.

Attorney Mark Blumstein, who has filed class-action lawsuits against imported drywall manufacturers, suppliers and home builders, said there's just one thing missing.

''Contractors are going to have to be put to work,'' he said. ``We're just looking for a funding mechanism.''