Florida's Post-Disaster Housing Crisis
A recent peer-reviewed study analyzing Florida housing markets post-hurricane shows – perhaps counterintuitively – that home values in impacted areas tend to rise following a storm. So, despite Florida's propensity for natural disasters and the damaging effects of climate change, its housing market has appeared to attract wealthier inhabitants and has exacerbated the challenges faced by lower- income households.
Here’s how it works: Hurricanes typically lead to a sudden decrease in housing supply due to storm damages. Decreased supply means temporary increases in home prices, which then mellow out to baseline levels after an average of three years. These three years are characterized by several critical observations in the post-storm housing market:
The average income of new buyers tends to increase proportionally to the rise in home prices. Once prices stabilize, more than a quarter of all households earn a greater income than before the storm.
Home prices in affected areas are five percent higher on average than those in unaffected areas.
It's possible that following storms, wealthier households sort of "take over" or at least establish a notable presence in the affected areas given that they are more likely to withstand the temporary price increases of homes and insurance.
In other words, wealthier households are "just better at self-insuring." Below are several case study examples in Florida dating back to 2017.
The Florida Keys Post-Hurricane Irma
In September of 2017, Hurricane Irma travelled through Big Pine Key and Cudjoe Key, both in Monroe County and known as the "heart of working-class housing,” such as mobile homes, "inexpensive and technically illegal" first-floor apartments, and other rental properties. Monroe County relies on a billion-dollar tourism industry staffed by a local labor pool many of whom, for even up to eighteen months after the storm, were still living in trailers, cars, tents, or with friends, and still waiting for federal recovery dollars.
Finding affordable housing is one thing for the Keys’ working class and low-income population – moving back into and/or rebuilding this housing post-disaster opens up another Pandora’s box. Rebuilding can come at a high cost, as any home or trailer with more than fifty percent damage must be rebuilt to new and higher standards, which means elevating it anywhere from three to sixteen feet. This can be hard to afford even with FEMA payouts and insurance money.
The Panhandle Post-Hurricane Michael
Hurricane Michael tore through the Florida Panhandle in October of 2018, just over one year after Hurricane Irma, and reaped similar recovery patterns to that of Irma.
Bay County was still in a state of emergency following Hurricane Michael when officials declared another state of emergency due to COVID seventeen months later. With some hurricane victims still living in shared housing, tents, FEMA trailers, their cars, or couch-surfing, COVID compounded their problems. And with some businesses still rebuilding following Michael, the mandatory closure/reduced operations of bars and restaurants hit hard for a community that was preparing for peak tourist season.
One thing that adds fuel to the fire of Florida’s housing crisis in response to natural disasters is an increasing number of remote workers in America that have turned to housing in areas that offer better access to nature. Recent research by Freddie Mac has revealed that migration has doubled for Americans moving to areas at higher risk for droughts, wildfires, coastal floods, and earthquakes.
Following Hurricane Maria in 2017, more than 100,000 Puerto Ricans left Puerto Rico and relocated to places like Florida in search of greater safety, economic opportunity, and the hope of rebuilding.
The displacement caused by Hurricane Ian last year has exacerbated the problem.
And by April 2027, Florida's population is expected to grow by 808 residents each day on average, even amidst predictions of rising sea levels, more frequent storms, and elevated mortality in the next twenty years.
At the same time that affordable housing demand is skyrocketing, Florida is seeing the ongoing exit of various housing market stakeholders – homebuyers, insurers, lenders, appraisers, etc. Such groups are expected to “step back” from investing in vulnerable coastal properties, whereas other kinds of investors and cash buyers are more likely to step in thanks to the grace of hard money loans or private loans with higher interest rates. For example, the month that Hurricane Ian hit, cash purchases represented nearly 30% of all closed sales in Florida that month. Institutional or retail investors with an "extra $700,000" saw the hurricane as "an investment opportunity."
Seven insurance companies, such as Bankers Insurance Group, have pulled out of Florida totally and dropped all accounts in the state since May 2022. Companies have told their policy holders (or rather, their former policy holders) that reasons include moving out of state, going bankrupt, or simply that they are being dropped until they can "get a new roof."
You might have heard before the saying that “disasters don’t have to be disasters.” Florida has always had hurricanes, floods, and wildfires, but tighter building requirements, lower insurability, higher immigration, spiraling rebuilding costs, and other factors are affecting the resilience and recovery capabilities of lower- and middle-income households in desirable, yet vulnerable, areas for the foreseeable future.
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