Florida Selling Property Forecast Due to Ian Hurricane
House and apartment prices in Florida may actually rise after the hurricane, as property prices are generally determined by the balance of supply and demand. Of course, no one goes to Florida to buy a house when a terrible hurricane is on the way and people are ordered to evacuate. At this characteristic moment, the demand for real estate is temporarily falling. Destructive winds and floods from hurricanes such as are suddenly and dramatically reducing the supply of affordable housing, damaging a huge number of homes and making them uninhabitable or for sale. And then an amazing period of growth begins.
Ian Hurricane in Florida
On Wednesday afternoon, Ian hurricane hit Florida and caused flooding in the town of Naples in the southwest of the Peninsula. Florida Governor Ron De Sanctis said that the hurricane causes extremely serious damage to infrastructure, however, according to his observations, the water level has already reached a maximum.
According to the American meteorological services, by 17:00 local time, the water level in Naples rose to 2.74 meters, which significantly exceeded forecasts. About 2 million people are now without electricity in Florida. More than 2 thousand flights were canceled. Damage to power grids is caused by strong wind, which leads to the fall of power lines. However, flooding caused by storm surge of water is even more dangerous.
Earlier it was assumed that Ian could strike at a densely populated area of the city of Tampa, where this last happened in 1921. However, in fact, the blow fell slightly to the south.
Residents bought bottles of water, boarded up windows and brought garden furniture into the houses. Schools and universities also canceled classes for a week.
Hurricane Ian closings list
The Disney World, Sea World and Busch Gardens theme parks in Tampa have closed due to an approaching storm, and NASA has again postponed a planned launch from the Kennedy Space Center. The Artemis rocket, the launch of which has already been postponed twice, was taken from the launch pad to the assembly shop.
Due to the hurricane, the launch of the SpaceX rocket, which was supposed to send Russian cosmonaut Anna Kikina to the International Space Station, was also postponed. Previously, it was planned that the launch would be carried out on October 3, but now it has been scheduled for the 4th.
Hurricane Ian adding pressure to Florida's insurance market
Risk is at the heart of any investment — in real estate, the stock market, cryptocurrencies or anything else. However, when it comes to housing market prices, the level of risk depends on both the investor's business model and the specific market area. A financial ratings agency indicates that preliminary losses from Hurricane Ian could range from $25 billion to $40 billion, putting additional pressure on Florida’s troubled property market. Fitch Ratings released the estimate a day after the Category 4 hurricane slammed into Southwest Florida and then barreled across Central Florida before exiting over the Atlantic Ocean.
A senior industry analyst for AM Best Christopher Graham announed in his Tuesday statement that Florida’s property insurance market is already unstable and this devastating hurricane looks to make conditions only more demanding. According to Fitch many insurers providing property coverage in the state experienced severe downturns in underwriting performance and capitalization levels in recent years despite no hurricane hitting the state. This trend has forced a number of smaller insurers into liquidation, exacerbating the challenges for policyholders of finding private market homeowners insurance coverage. The hurricane is expected to worsen the reinsurance capacity crisis for insurers, potentially causing the exit of more Florida specialist companies.
Natural disaster is coming to Florida
After the hurricane comes a financial storm of powerful American capital. Tens of billions of dollars are being spent on insurance payments and state construction, which significantly stimulates the Florida economy, promotes job growth, attracting a large army of insurers, utility workers and other specialists from various US states. The reason is obvious: there is money and demand in Florida, but there are not enough own workers to cope with a large volume of cleaning and construction.
Thus, there is a curious market fluctuation. Real estate prices in Florida may fall sharply but only after the effects of the hurricane are completely eliminated and the inflow of external funds runs out until the next time.
Convoys with trucks and workers (who, by the way, are well paid) contribute to big spending in Florida. These additional expenses increase the level of earnings in Florida restaurants, bars, hotels, in the field of rental income from real estate, etc., in a word — wherever people spend their earned money.
How hurricane Ian threatens Florida’s property market
When all the funds for the elimination of the consequences of the hurricane are spent, most of the government employees return to their places of residence, because remaining in Florida, they will be unemployed. Along with them, additional employees who were hired to serve visiting specialists are also losing their jobs.
This is a typical Florida story. The funds involved in the field of construction and workers' wages are leaving Florida at about the same time when recently replaced or renovated houses are ready to move in. Situational demand for rent is falling, new homeowners suddenly run out of rental income, and with it the money to pay their own mortgage.
Investing in real estate in Florida, buying houses or condos in the property, it is extremely important to make sure that the objects are well protected from hurricane winds and the effects of flooding. In the case of a successful purchase, if your objects resist thenatural disaster, each arrival of a hurricane will paradoxically lead to an increase in the price of your assets and the demand for your real estate.