Now that hurricane Irma has faded into oblivion, the physical damage and toll it took on property owners have been largely measured and counted in the immediate aftermath. However, many are wondering what ways it might impact real estate prices in the longer term. There are 5 particular possibilities. Keep reading to learn what they are.
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1) Home prices will rise from there being less of them:
The hurricane, along with other storms of this season, destroyed a lot of homes.Some homeowners may not bother rebuilding, even with insurance or government aid.
Even if the lots are sold and rebuilt, it means the total available housing supply will be suppressed for months or years. This decrease in supply will put upward pressure on prices, especially in Florida areas that got hit.
2) Property values could fall due to the damage:
One thing that could conversely put downward pressure on real estate prices is the fact that the damage was widespread and considerable.
If a homeowner chooses not to rebuild or their home was a loss, they might just take the insurance check and then sell the place as-is cheap. Even homes that are still standing are not whole or full, and their values might plummet.
3) Home prices will rise due to labor costs:
One thing that could have a subtle yet lingering effect on real estate across many regions and states is the fact that labor costs are bound to go up. The reconstruction efforts are going to take time, and it’s extra work for specialists and contractors in the construction industry, where many professionals are likely to flock to stricken areas for months or even years to make money. That will constrict the labor supply everywhere, driving up labor costs for construction and renovations across all homes, new or otherwise.
4) Property values might fall in distraught neighborhoods:
Not every neighborhood that got damaged was wiped off the map or flattened. Many took moderate to significant or severe damage but still have some residents. Still, with various homes on the street needing serious work, it will depress local property values until all the homes are restored with owners or tenants in them.
5) Home prices might rise outside of hurricane areas due to demand:
A minor but possible impact on real estate prices outside of Florida and other states directly hit by hurricanes is that of residents who evacuated who are not planning on returning. Millions fled the storm only to return to lots that were destroyed or damaged.
Some are deciding not to rebuild and get out of hurricane areas, driving up demand for housing in those places. Even some who returned to structurally sound homes are still looking to get out of the area.
It might be some time before the full impact of the 2017 hurricane season on real estate prices is fully known, and even then it might not be possible to pinpoint everything on Irma, as Harvey also made domestic landfall in Texas. However, the 5 ways listed here are certainly possibilities for states impacted by Irma.
Furthermore, Maria’s damage to Puerto Rico will inevitably have consequences as well. Buyers are not going to be looking at buying or moving to an island that might go months without power, and several hundred thousand citizens of the island might flee or not return. Their presence in the continental United States, particularly the state of Florida, which is closest, would further increase demand for housing that remains viable, providing another upward force on real estate prices.