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Tess Vigeland: It's been five years since Hurricane Katrina. Along the Gulf Coast, recovery efforts are still underway, compounded, of course, by the recent BP oil spill. According to the Greater New Orleans Community Data Center, several hundred families in Louisiana are still living in FEMA trailers. And nearly 60,000 blighted properties dot the city.
Marketplace's Eve Troeh reports on one creative solution to that problem.
Eve Troeh: New Orleans East is a neighborhood built on a reclaimed swamp. This is not the New Orleans that makes tourists swoon. No French doors, no wrought iron. It's mile after mile of boxy ranch homes, built in the 1960s or later.
The neighborhood is near a shipping channel. A surge of water driven by Hurricane Katrina overtopped that canal. Homes here flooded to the rooftops.
News report: Overnight, there were two breaches in the levee system that protects New Orleans, allowing the water of Lake Ponchartrain to pour in.
But five years later, kids are once again playing in front lawn sprinklers...
Sound of sprinklers running and children shouting
Because while this neighborhood looks like it could be anywhere in America, many people decided they didn't want to live anywhere else, including Mary Hardeman.
Mary Hardeman: I've been all over the world. We're a military family. To me, it was no place like home.
Her home is low-slung, brick with small windows, like most in the Castle Manor subdivision. Hardeman gutted and rebuilt it while living in a FEMA trailer. Many houses on her block of Lancelot Drive were simply demolished.
Hardeman: That green space right there, that was a house they tore down.
Other homes remained vacant, like the house next door. Hardeman's neighbors took a buyout from the state and left. These days, more than half the population of New Orleans East has returned. But business has been slower to bounce back.
Hardeman: In New Orleans East, we have no services. It's been too long for us not to have a shopping mall, not to have a hospital, not to have different things.
Bringing business back to this area is the goal of the New Orleans Redevelopment Authority. It says the neighborhood needs more home owners back first. Remove the blight, and you stabilize neighborhoods. To do this, the city created a program. It's called Lot Next Door, and it works like this: If your next door neighbors sold their property to the government after Katrina, you get first dibs on buying it.
Ommeed Sathe directs real estate strategy for the Redevelopment Authority.
Ommeed Sathe: People might, say, "The last thing I want to do is take on another project." And yet, it was exactly the opposite. People have put their savings in, have put their sweat equity in -- and the outcomes have been phenomenal.
Even with rock-bottom prices, the decision to invest more in a flooded neighborhood isn't easy. Last year, Mary Hardeman in New Orleans East got a letter saying she could purchase the lot next door, that one with the empty house on it. She planned to buy it, and transfer the title to her daughter, who was renting a luxury apartment downtown.
But her daughter, Yodonnalisa Evans, wasn't interested.
Yodonnalisa Evans: I really didn't have any desire to come back to New Orleans East. They hadn't rebuilt enough for me. And it was a really ugly house.
Her mom saw past that.
Hardeman: I had been through the storm, and my house was just as bad, so I could see that the house would be really nice with some love and care.
The property cost about $20,000. Similar homes here, already fixed up, sell for seven times that amount. After a few months of pushing, Evans signed the papers.
Troeh: What changed your mind?
Evans: I could not beat the cost of the house.
And as work started on the home, she came around to her mom's point of view. Maybe it was when she realized she could cover the brick walls with pink stucco, add a commercial kitchen for her catering business or design a new back yard.
Evans: We took up all of the cement, put sod down here. And I put a six-foot wood fence in between us, so we could get along better. She has her yard and I have my yard.
Evans: I think I have the best looking house in Castle Manor subdivision.
Her mom Mary Hardeman agrees. But she's most proud that her daughter owns the house outright, no mortgage.
Hardeman: Her own home. She made it happen.
Some city plans for rebuilding after Katrina called for bulldozing New Orleans East, to shrink the city's footprint. But what's happening instead is that families -- like Mary Hardeman and Yodonnalisa Evans -- see their footprint in the city growing bigger.
I'm Eve Troeh for Marketplace Money.
Vigeland: We've got a slideshow of Eve's travels through New Orleans.