Hurricane Katrina And The Impact On Real Estate Prices

In the aftermath of Hurricane Katrina’s broad way of destruction, the existent estate market will be affected perhaps in ways not fully understood or expected. If recent hurricane recovery history throws true there will be respective good things to come up out of all destruction. Let’s hope so as those who dwell in the Delta part have got suffered immensely.

In September 1989, a strong class 4 hurricane by the name of Victor Hugo made landfall in the Charleston, scandium area. Up to that clip it was the strongest hurricane to hit the U.S. mainland since Camille whacked the Gulf seashore in 1969. The damage from Victor Hugo was extended with full woods wiped out and fishing villages and seaboard vacation spots heavily damaged. Desperate anticipations of the storm’s negative consequence on the local economic system were made. I know, because I was living in the nearby town of Goose Brook when Victor Hugo roared through; I witnessed a sustained and drawn-out recovery attempt for many calendar months thereafter.

These were some of my personal observations of that hurricane’s impact on the lodging market:

1. Housing stock destroyed. Yes, the number of mobile homes, apartments, and single household homes damaged or destroyed by Victor Hugo was large. What had been a fairly unfastened pre-hurricane lodging market quickly tightened up as the vacancy rate plunged to close nothing as all available, undamaged property was suddenly snapped up. Rental rates, which had been on the low side, suddenly shot up and stayed up even as the lodging stock was replenished over the adjacent year. The nett consequence of Victor Hugo was that older, deficient lodging was replaced by more than modern lodging built with the up-to-the-minute edifice codification demands included. Rental rates rose accordingly to reflect the improvements.

2. Insurance payments. Although the property I was living in did not prolong much damage, some of the homes in our vicinity did. Within years of the storm’s aftermath insurance agents were canvassing neighborhoods, filing claims, and issuing checks on the spot. The quick move of the insurance companies allowed people to run out and do needed repairs quickly. Oftentimes, the amount of the check more than covered existent damage thereby allowing homeowners to do both structural and aesthetic improvements to their properties. These improvements were credited with refueling the subsequent surge in local home prices.

3. Government assistance. FEMA cut its dentition on Hugo. Originally, much unfavorable judgment was levied FEMA’s manner because of the agency’s slow response to the disaster. It took respective more than catastrophes after Victor Hugo before FEMA's response clip improved. Still, where private insurance companies left off, FEMA stepped in by cutting checks that allowed people to rebuild. Essentially, FEMA stepped in to assist the uninsured or under insured recover. Plenty of homes that had been deficient before Victor Hugo were replaced by homes that met current [and stricter] lodging codes. The impact on the lodging market was felt as this rise tide of support effectively lifted lodging prices.

Every peculiar storm’s impact on a local economic system is different. Unfortunately for occupants in the Delta region, Katrina blew through after a particularly unsmooth hurricane twelvemonth in 2004. No, FEMA isn’t broke but the financial emphasis on insurance suppliers cannot yet be measured. Unlike with Hugo, where the recovery attempt started immediately after the violent storm left, the Delta part is still in deliverance manner and waiting for the Waters to recede. I fully anticipate that it’ll be hebdomads before any sustained recovery attempt can be launched and even then it will be a long, drawn out procedure as insurance claims are filed, local edifice codifications are re-examined, and the most of import portion – people – decide whether they desire to reconstruct in damaged communities or move away.

South Florida recovered fairly quickly after Hurricane Saint Andrew devastated Homestead in 1992, but many cardinal and panhandle communities in Florida are still reeling one twelvemonth after a series of hurricanes tore up their homes in 2004. Again, much will depend on individual households willingness to reconstruct and that is the untold narrative lying in the aftermath of Hurricane Katrina.