The dual devastation from two hurricanes that swept across Florida in the past several weeks will not likely tear apart the fast-moving real estate market, if history is any indication.
Hurricanes Charley and Frances, which each caused billions of dollars in damages, could disrupt the local housing markets in the areas affected by the storms, but the effects from a weather event are typically short-lived, and sales numbers typically don’t take long to rebound and normalize, said Walt Molony, a spokesman for the National Association of Realtors.
“The only thing we can safely say about storm impact is it can delay transactions on a localized basis. In terms of annual state sales there is no discernible impact,” Molony said. “On a monthly basis we’ve previously been able to detect adverse weather impact in a U.S. Census region in existing-home sales (such as a major winter storm), but see a catch-up the following month.” On a quarterly basis the sales data tends to “smooth out,” he added.
Hurricane Andrew, which was one of the most costly hurricanes on record, caused about $25 billion in damages in Florida alone when it struck in August 1992. The storm amounted to the largest insured loss in the country prior to the Sept. 11, 2001, terrorist attacks.
Despite the wrath of Hurricane Andrew, existing-home sales actually picked up in Florida in 1992 and 1993, rising 6.7 percent from 1991-92 and 20.6 percent from 1992-93, according to association data. Florida housing starts also improved in 1992 and 1993, rising 7.6 percent from 1991-92 and 11.7 percent from 1992-93.
Also, the U.S. Census Bureau reported that the number of building permits issued in Florida grew in 1992-94. And building-permit activity has surged since 2002 – from a total of 185,431 privately owned housing units authorized in 2002 to 213,567 units authorized in 2003.
The destruction of past hurricanes and the threat of future hurricanes haven’t produced much of a hiccup in Florida real estate. From April 2000 to July 2003, Florida added about 485,000 housing units – the second-highest total in the nation during that period – Texas was first with about 500,000 new homes.
Ten counties in Florida were among the top 100 fastest-growing U.S. counties in that period, according to U.S. Census data, and Point St. Lucie, Fla., and Cape Coral, Fla., were among the top 10 fastest-growing cities in the nation.
Over the past five years, home prices have risen about 83.4 percent, to a statewide median sales price of $186,700. In July, existing single-family home sales jumped 15 percent above the previous year’s mark, to 23,554 homes sold. And existing-home sales were up 28 percent in the second quarter of this year compared with the second quarter of 2003, while the median sales price jumped 18 percent in that time.
This population and housing boom, though, can be costly when major natural disasters strike: Hurricane Charley caused close to $7 billion in insured property losses, according to some estimates, while Hurricane Frances may have caused about $3 billion to $6 billion in losses. And meteorologists are watching closely as a third hurricane, Hurricane Ivan, pushes through the Caribbean.
These huge loss estimates are not an indication that hurricanes are any more powerful now than they were in past years, said Chris Landsea, a research meteorologist for the National Oceanic and Atmospheric Administration.
“The large increases (in damages) we see in the last couple of decades are mainly due to hurricanes just like we had in the past, hitting coastlines that are very different today than they were 50 years ago,” Landsea said. There is a “huge relationship,” he said, between the damage caused by hurricanes and the surge in coastal population and coastal housing in Florida.
“It is not due to hurricanes being any different,” he said. The population in southeast Florida increased about 600 percent since 1950, Landsea said, and individual wealth has also been on the upswing. This sets the stage for more extensive damage during major storms.
Florida has been remarkably lucky to have escaped some of the deadly storms spawned during a period of increased hurricane activity that started around 1995, he added. “What I’ve been surprised about is not what has happened this year – I’m surprised that Florida has gotten off scot-free for the last eight years. Now the luck has changed. Florida is a prime target.”
Landsea over the past few weeks has participated in several flights aboard a research plane that travels near hurricanes to collect data that can help to predict the path of the storms.
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