Unfortunately, natural disasters are part of life, and we’re currently in the middle of hurricane season. June is the start of hurricane season, and it goes through the fall, ending November 30. According to the Office for Coastal Management, Hurricane Harvey damage led to costs of $125 billion, and the total cost of the 16 weather events in the U.S. in 2017 was more than $306 billion. The most expensive hurricanes on record in the U.S. were Katrina, Harvey, Maria, Sandy and Irma, in that order.
How Do Hurricanes Affect Real Estate?
As with any natural disaster, hurricanes can affect real estate in several ways. For example, a storm can delay the ability to buy or sell a property, and it can put a halt to closings as well. The short-term effects of a hurricane on the housing market actually occur both before and after the storm. Even the threat of a hurricane can bring the market to a screeching halt. Most people aren’t thinking about buying a new home just before or after a storm and for a few months afterward if there is damage.
In the long-term real estate is affected differently by a hurricane. For example, if homes are damaged or destroyed during a hurricane, then it shrinks inventory. That can mean it becomes more of a seller’s market if there is limited inventory. Additionally, much of the construction industry will be working on repairs, limiting new construction.
According to the Federal Reserve Bank of Dallas, after a hurricane strikes, it can raise housing prices for several years, with a maximum effect of anywhere from 3 to 4% for three years following a storm.
There’s something else that can happen in the real estate market of places impacted by hurricanes—damaged homes can create new opportunities for real estate investors to purchase homes at low prices and rehab them. That means in the long-term, the real estate market can pick up quite a bit of steam following a hurricane, but it takes some time for that to happen.
Homeowners who have cash reserves tend to be most protected from the effects of hurricane season. Cash reserves may help them make repairs faster or be able to hold out until they receive insurance money.
As a homeowner, you should always make sure you have the right insurance before you ever close on a new home. That insurance needs to go into effect as soon as you close because otherwise, it’s likely going to be too late.
You need to purchase a separate hurricane insurance policy apart from your homeowner’s insurance in most cases. Read the fine print of hurricane insurance because it usually covers wind damage, but some policies will only cover you if storms are of a certain strength.
Hurricane policies won’t usually cover flooding, so you may need additional coverage for something like a storm surge or a river overflow that floods your home.
How to Mitigate the Impact of Hurricane Season
If a storm is actually heading your way, there are certain steps you can take to minimize the damage. For example, bring in everything from outdoors or secure it, secure your windows, and do a cleanup of outside areas for things like branches or dirty gutters that could cause problems if you’re hit by a storm.
If you’re in a position to invest in real estate, you might consider waiting until after hurricane season to see how it impacts the area you’re in or would like to invest.
If you’re looking for a great realtor who can help you in your journey and answer any questions you have, connect with a top-selling professional at EffectiveAgents®.