Hurricane Dorian has just passed by our shore and we are still deep in hurricane season. After any storm homeowners are considering the consequences of owning real estate on the Atlantic Ocean. Should I buy after a hurricane?
In recent years, the Virgin Islands, Florida and of course the Bahamas suffered severe damage from Hurricane Irma. Parts of the British Virgin Islands, United States Virgin Islands and the Leeward Islands and now the Bahamas have reported complete devastation. In fact, the Mexico Beach area of Florida is still recovering from the devastation seen there last year.
Why would I want to own real estate in the south where they experience many hurricanes?
Surprisingly, a hurricane has the opposite effect than what’s expected. Reports show that hurricane damages actually may cause housing prices to go up. IF you are a real estate investor, you may want to take this time to invest in properties near or around the Atlantic Ocean due to this positive impact from these natural disasters.
The Federal Reserve Bank of Dallas completed a study after investigating the hurricane impacts on housing markets in U.S. cities. They reported that the “typical hurricane strike raises house prices for a number of years, with a maximum effect of between 3 to 4% up to three years after occurrences.”
Is there no negative impact on the housing market from a hurricane?
While there is a positive long-term impact as a result of hurricanes, reports show that home sales happen less frequent and at a lower cost immediately after a storm. Experts have reported that pending home sales drop by about 50% in Florida housing markets. However, a study at Colorado State University shows that the negative impact is short-lived. In Texas, after Hurricane Harvey, 31% of residential neighborhoods saw an increase in median home prices.
A short term negative impact is to be expected. Homeowners have to make repairs, clean up the yard deal with insurance companies and so on. Psychologically, it has been shown that once a major storm hits or threatens people think, ‘oh it won’t happen here again” and feel secure.
Is renting a better option in areas that are prone to hurricanes?
The rental market can also be impacted by hurricanes as well. Many studies show rentals increasing directly after hurricanes, in some cases due to people renting while they repair their home.
It’s actually wiser to purchase a home since property values have shown a tendency to rise after natural disasters. Be sure you have the proper insurance in place to protect yourself as a homeowner. This is the only way to be certain your repairs will be covered. Be sure to check to see if you are in a flood plain and obtain the proper flood insurance.
Questions? Give me a call at Barnett Realty. 386-295-9999.