Are you planning a move to Florida? The Sunshine State is known for its beautiful beaches, vibrant cities, and picturesque landscapes, and is a place many people dream of calling home. However, living in Florida comes with its fair share of challenges, particularly when it comes to hurricanes and floods. These natural disasters can significantly impact the state's housing market, influencing property values in ways that homeowners and potential buyers should be aware of.
In this blog, we will delve into the effects of hurricanes and floods on Florida's housing market, exploring the aftermath of these calamities and how they shape property values. By the end of this blog, you will have a comprehensive understanding of the Florida housing market dynamics in the face of such natural disasters.
Florida Housing Market
According to RedFin data, as of April 2023, home prices in Florida experienced a modest increase of 0.4% compared to the previous year, with the median selling price reaching $401,000. However, there was a notable decline in the number of homes sold, with a decrease of 19.5% year over year. In April of this year, a total of 35,043 homes were sold in Florida, reflecting a significant decline from the 43,534 homes sold in April of the previous year. Additionally, the median days on the market increased by 21 days, reaching 44 days in total, compared to the same period last year.
Do Hurricanes Affect the Housing Market in Florida?
Yes, hurricanes do have a significant impact on the housing market in Florida. The state's susceptibility to hurricanes, due to its extensive coastline and geographical location, means that it frequently experiences the destructive forces of these storms. As a result, the housing market in Florida can be influenced in various ways.
1. Property Damage and Destruction
Hurricanes bring strong winds, heavy rains, and storm surges that can cause extensive damage to homes and infrastructure. Severe damage can lead to decreased property values after hurricanes, as homes may require significant repairs or even complete rebuilding. This can result in decreased demand and reduced market activity in affected areas.
2. Temporary Displacement and Rental Demand
In the aftermath of a hurricane, many homeowners may be displaced from their damaged properties, seeking temporary shelter elsewhere. This can increase demand for rental properties in unaffected areas, leading to rising rental prices and potentially impacting the overall housing market.
3. Insurance and Financing Considerations
Insurance plays a crucial role in the aftermath of a hurricane. Homeowners who experience damage may file insurance claims, which can result in higher premiums for future coverage. Insurance companies may also become more cautious about providing coverage in hurricane-prone areas, making it more challenging for buyers to obtain insurance and secure financing for properties in those regions.
4. Market Supply and Demand Imbalance
In areas heavily affected by hurricanes, the supply of available housing may decrease as damaged homes are taken off the market for repairs or demolished. This reduction in supply, coupled with potential population displacement, can lead to a temporary decrease in market demand. However, in the long term, the need for housing in Florida generally remains strong due to population growth, job opportunities, and the state's appeal as a desirable place to live.
5. Mitigation Efforts and Resilience
Over time, the housing market in Florida has become more resilient due to improved building codes and mitigation measures. Homeowners and developers are increasingly incorporating features to make properties more hurricane-resistant, such as impact-resistant windows, reinforced roofs, and elevated foundations. These efforts can positively impact property values and mitigate potential market downturns in the face of hurricanes.
Florida Real Estate Market After Irma
The Florida housing market experienced a significant impact when Hurricane Irma struck the Florida Keys and South Florida in September 2017. Experts observed a substantial decrease in pending closings on home sales, with some reporting a decline of up to 50%. Florida real estate trends indicate a sharp decline in housing market activity following natural disasters like hurricanes. During this period, homeowners, including buyers and sellers, primarily focus on repairing their properties, navigating insurance claims, and restoring normalcy to their lives. Considering the extent of the damage caused by Hurricane Irma, the short-term impact on Florida's housing market should come as no surprise.
Based on data from the National Oceanic and Atmospheric Administration, Hurricane Irma resulted in the following:
- The evacuation of a staggering 6.3 million individuals from Florida, marking the largest evacuation in the history of the U.S.
- Severe damage was inflicted upon 65% of houses in the Florida Keys, while 25% were destroyed.
- The storm left approximately 15 million people in Florida without power, causing significant disruptions in electrical services.
- The hurricane's reach extended over an extensive area, with approximately 70,000 square miles being affected by hurricane or tropical-storm-force winds. To put this into perspective, the entire state of Florida encompasses an area of approximately 65,000 square miles.
These statistics illustrate the magnitude of the impact caused by Hurricane Irma, highlighting the widespread evacuation, extensive property damage in the Florida Keys, significant power outages, and the broad geographic scope of the storm's forceful winds.
How do Hurricanes Cause Property Damage?
The severity of property damage caused by hurricanes can vary depending on factors such as:
- The intensity and size of the storm
- The distance from the coast
- The quality of construction
- The effectiveness of mitigation measures in place
Properties built with features to withstand hurricanes, such as reinforced roofs and impact-resistant windows, are generally better equipped to endure the damaging effects of these storms.
However, hurricanes can cause property damage through a combination of:
- Strong winds
- Heavy rain
- Storm surges
- Flying debris
Let’s take a look at each.
The strong winds associated with hurricanes can cause significant damage to structures. High-speed winds can rip off roofs, shatter windows, and damage exterior walls. Weaker structures are particularly vulnerable to wind damage, but even well-built properties can experience structural issues or loss of integrity.
Hurricanes often bring heavy rainfall, leading to flooding. Excessive water accumulation can infiltrate homes, causing water damage to walls, floors, and belongings. Floodwaters can also lead to mold growth, electrical hazards, and damage to essential systems such as plumbing, heating, and cooling.
Storm surge is a significant concern for coastal areas during hurricanes. It occurs when the powerful winds of a hurricane push water towards the shore, resulting in a rise in sea level. The surge can cause severe coastal flooding, submerging properties and causing extensive damage, especially in low-lying areas.
Hurricanes generate strong winds that can transform everyday objects into dangerous projectiles. Debris, such as tree branches, signs, roof tiles, and other loose things, can become airborne, posing a significant risk to buildings. Flying debris can puncture roofs, break windows, and cause structural damage to properties.
Hurricanes can also impact the stability of land, especially in coastal areas. The combination of high winds, storm surges, and erosion can weaken the foundation of properties, leading to structural damage and land subsidence. This can result in the collapse of buildings or render them uninhabitable.
How Much Does Flooding Devalue a House?
According to top real estate agents, repairing water damage caused by broken pipes in your home is unlikely to lead to a depreciation in property value. However, the same cannot be said for homes that have been flooded due to natural disasters.
In such cases, the extent of the damage, the property's flood history, and the associated risk factors can result in a reduction in value ranging from 20% to 30%. The magnitude of this devaluation depends on various factors, including the home's location in a flood-prone area that is susceptible to recurring water damage, as well as whether the flood event was an isolated incident. Additionally, the amount of water that entered the house and the availability and cost of flood insurance in the area are other significant considerations influencing the decrease in value.
Should You Buy a House in a Flood Zone?
The decision to buy a house in a flood zone depends on various factors, and it’s important to carefully consider the risks and benefits before making a decision. Here are some key points to consider:
Understand the level of flood risk associated with the specific flood zone. Assess historical flood data, including the frequency and severity of past flooding events in the area. Consult flood maps and information from local authorities to determine the likelihood of future flooding.
Determine the availability and cost of flood insurance. Properties in high-risk flood zones may require specialized flood insurance, which can significantly impact the cost of homeownership. Research the National Flood Insurance Program (NFIP) and private insurance options to understand the coverage available and associated premiums.
Evaluate the potential financial implications of buying a house in a flood zone. Lower property values and potentially higher insurance costs should be factored into your decision. Consider the long-term investment value and potential resale challenges associated with a property located in a flood-prone area.
Safest Places to Live in Florida From Hurricanes
Florida is the most frequently impacted state in the U.S. regarding hurricanes, with Texas and Louisiana following closely behind. According to experts, out of the 302 storms that have made landfall since 1851, Florida has experienced the effects of 120 of them, earning it the reputation as the state most frequently affected by hurricanes.
While no area in Florida is entirely immune to hurricanes, some cities have historically experienced fewer hurricane impacts compared to others. Hurricane patterns can change over time, and past data does not guarantee future outcomes. However, as of recently, here are the Florida cities least affected by hurricanes:
- Lake City
- The Villages
- Fernandina Beach
Remember, even these cities can still experience the effects of hurricanes, including heavy rainfall, high winds, and the potential for inland flooding. You must stay informed about hurricane preparedness and evacuation procedures regardless of the location within Florida.
For more help in making your decision, consult with a licensed real estate agent, insurance professionals, and experts knowledgeable about the local flood conditions. They can provide valuable insights and help you make an informed decision based on your specific circumstances.
Written and Published by: VanEd