Hello, it's Billee Silva with the Southwest Florida Realty Show. It’s been a month now since Hurricane Ian devastated our beloved Gulf Coast. My phone rings daily with investors looking for bargains, but if you’re anticipating picking up a flooded home for a few hundred thousand, I think you’re in for a rude awakening. Historically, major disasters or storms such as hurricanes tend to “cause a temporary increase in home prices and if you don’t believe me, google How Hurricanes Sweep Up Housing Markets: Evidence from Florida,” which is a research paper based on data from 2000 to 2016.
Inventory of active listings was low before the storm. With thousands of residents experiencing severe damage or total destruction, there will be additional pressure on the already tight housing market in our area as we approach the start of the winter season.
Now about 23% of the properties that were active listings in Lee County prior to the storm have been either terminated or withdrawn Lee County encompasses the barrier islands of Fort Myers Beach, Pine Island, Sanibel, and Captiva, which had some of the most severe storm surge. With this additional hit on the inventory, the historic trends of home prices appreciating are more likely considering the supply and demand issue
Although our coastal homes and areas suffered extreme damage, our inland areas remain relatively unscathed which is where the bulk of our new communities are being built anyway. Some of them never even lost power.
But for waterfront diehards, I think little will change. A waterfront property will always be magical and people looking for beachfront property are aware of the risks. Again, don’t expect a bargain. Waterfront properties may actually end up priced higher than when they had a home on it because now you will not have the expense of demolishing an older home to build your dream home and sellers will be taking that into account.
A wild card is the cost of homeowners’ insurance, which may put a spin on how the market reacts. But those effects will take time to trickle out as policies come up for renewal post-Ian.
“I think flood insurance will go up substantially. If rates double, we’ll lose some people, especially as more insurance carriers pull out of the state.
But in the long run, people still will want to live in Florida, increasing demand dramatically, and folks know as we rebuild we will emerge better than ever and be one of the most attractive places to live on the Gulf Coast, realizing if they want to fulfill that dream they need to get in now before the prices continue to escalate. For every three people who decide to leave the area, 10 more will be flocking to arrive. It doesn’t matter where you live, you run the risk of a natural disaster, whether it’s a hurricane, tornado, earthquake, blizzard, fire, but with a hurricane, you have plenty of time to prepare. However, if you are seeking to relocate it’s important to understand the inherent risk of a potential hurricane as this is simply a part of Florida life, it doesn’t matter if you’re on the west coast, the east coast, the panhandle. However, if you plan properly, hurricanes are nothing to be afraid of as they are relatively infrequent events. but, with that being said it's important to consider the following points prior to making a home purchase.
Being on or near the Gulf comes with some inherent storm surge risk. If purchasing in a flood zone, pay attention to the zone you will be in, including the elevation as well as the evacuation zone. Make sure you have storm protection for your windows such as shutters and/or hurricane-resistant windows. And strongly consider purchasing a generator should the electric go out.
Overall, will we see the market slow down? Most definitely. We were already experiencing that before Ian with rising interest rates and the fear of a recession. Interest rates have an oversized impact on buyers’ ability to secure a home – and the challenge is growing. We know that the median sales price for homes has been increasing at a quick clip over the past few years. We also knew that interest rate increases were bound to happen. However, the pace of those increases has been nothing short of breathtaking.
The enhanced purchasing power of buyers has eroded. The low-interest rates that allowed people to stomach increases in sales prices has evaporated. We’re now left with high-interest rates and high sales prices. In my humble opinion, I think that is going to affect the SW Florida real estate market more than Hurricane Ian.
The devastation is tragic and my heart breaks for those who sustained damaged and lost so much, but SW Floridians are resilient and we will come back stronger than ever.
As always, thank you for tuning in today. If you ever have any real estate questions or are considering buying or selling please do not hesitate to give me a call. Meanwhile, please continue to keep SW Florida in your thoughts and prayers, stay safe and make it a great day.
Thank you for listening to the Southwest Florida Realty Show with Billee Silva. To learn more about Billee Silva go to www.sw-floridarealtor.com. That’s www.sw-floridarealtor.com. Or call 239-247-2490.