NAR economist offers insights on storm-hit communities
NAR's chief economist said there always is a recovery period after a hurricane or other natural disaster, but affected areas should bounce back within 2 years.
Key points:
- Lawrence Yun said disaster relief aid will ‘play a huge role’ in the recovery.
- NAR findings show that real estate prices recover after a hurricane, but it may take several months and up to two years.
When can the Florida real estate industry expect to recover fully from the devastation wrought by Hurricane Ian? The Category 4 storm leveled homes in southwest Florida, including in the coastal communities of Naples and Fort Myers. The death toll from Ian has reached 119, with FEMA and other agencies supporting survivors with assistance.
Since Hurricane Ian, pending home sales plummeted year over year in the areas impacted by the storm, according to data from Redfin. In Cape Coral, pending sales plunged 58% for the four weeks following Hurricane Ian. In Naples, the drop was 52% and North Port, 51%.
Redfin reported that other metropolitan areas in Florida not in the storm's path reported large decreases in pending sales, but they were not as severe as hurricane-ravaged communities. In Miami, pending sales fell 47%, and in West Palm Beach, the decrease was 43%.
Lawrence Yun, chief economist at the National Association of Realtors, told Real Estate News that after a hurricane there always is a recovery period in terms of business, jobs and home prices.
"Rents in nearby unaffected areas could actually be higher immediately as more people seek temporary housing," Yun said about residents displaced from the storm. "Insurance money and federal disaster relief naturally play a huge role."
Affected communities were in the southwest but extended inland to Orlando in central Florida. The greatest damage was along the coast. The storm is projected to be the most expensive in Florida history, topping $67 billion in private insurance losses alone.
While it may be hard for residents and business owners impacted by Ian to imagine their work and lives returning to normal, Yun said he expects a full recovery within two years.
Yun studied housing data from previous hurricanes in the U.S. and found that local economies and real estate prices generally rebounded within one or two years. "The only city not to recover in terms of jobs was New Orleans after Katrina," Yun said. "Its home prices have recovered."
Yun's data shows home sale prices after hurricanes in affected areas compared to the rest of the U.S. He wrote: "Generally speaking, there do not appear to be significant differences between the impacted markets compared to the rest of the country after one or two years. Other factors are at play aside from hurricanes to these markets, but a quick snapshot shows the resilience of the American spirit in putting things back to normal after a major storm."