How Will the Hurricane Affect Prices and Demand in Southwest Florida?
According to a study by Florida Atlantic University, Southwest Florida had the most overvalued residential real estate in the country. While many would expect real estate prices to take a severe hit shortly after Ian, the consensus among realtors and economists is that while there should be a pause in the hot real estate market in the region, the storm is unlikely to have a long-term effect on the housing market. People will always want to live near the sea. And past major hurricanes in the U.S. have not led to coast dwellers pulling up roots and moving inland in significant numbers. Rather, folks chose to do the hard work of rebuilding.
“I haven’t lost a single potential buyer because of the storm,” said Bob Ashworth, a real estate agent with RE/Max Realty Team in Cape Coral. “We still have strong demand. People still want to buy.”
According to the study, Florida counties were disproportionately represented among counties across the country well above the long-term pricing trend. At the end of August, Lee County buyers were paying 70% above the area’s long-term pricing trend. In addition to Lee, “four other Florida housing markets made the top ten list of most overvalued in the country when considering historic trends dating back to 1996 (Palm Bay, Lakeland, Deltona, and Tampa). Miami ranked 38th nationally.
So, what should happen with real estate values in Southwest Florida? Surprisingly, multiple studies show that prices actually rise after a major storm (https://www.veros.com home-prices). Veros Real Estate Solutions “estimated that property prices topped the national average by seven percent in five metropolitan areas over the twelve months following a hit be a major storm.”
In another study of Florida’s housing market in April 2022 by the University of California economist, Joshua Graf Zivin, the results were similar: Housing prices rise after hurricanes. Zivin’s study also found that there wasn’t, “any major changes to the racial, ethnic, or gender profiles of buyers.” Accordingly, neighborhoods should remain quite stable after major storms.
While storms, especially category 4 hurricanes, cause terrible damage, pain, and worse, historically speaking, the residential real estate markets in the U.S. generally bounces back quickly to equilibrium – and then begins to rise.