- Zika virus has infiltrated Miami and caused at least one business to temporarily close.
- Six out of eight federally declared disasters in Texas have been floods, including Houston's flood in April.
- There are currently four wildfires blazing through California engrossing more than 100,000 acres.
Mother nature doesn’t care about real estate. It never has. Mother nature doesn’t care if you have an open house. Mother nature doesn’t care about your longterm investment. Mother nature does what it does, and you, with your ineradicable entrepreneurial real estate drive, are at the mercy of it.
“There’s really a series of events that happen in a natural disaster,” said Ed Wolff, Houston Realtor and Governmental Affairs committee advisor for the Houston Association of Realtors. “There’s the event — the natural disaster — then there’s the realization of the gravity of it.”
Between the recent floods in Louisiana that left more than 40,000 homes in need to repair and the Zika-carrying mosquitos descending upon Miami, mother nature isn’t taking your real estate investments into consideration.
This year has seen a lot of ups and downs in real estate. There have been a lot of ups (57 percent of Americans can now afford the national median home price of $240,700), but there have been a few downs. Here’s a rundown of some recent natural disasters that have left or very well could leave a longterm effect on their respective real estate markets.
Zika virus makes its way to Miami
The Wynwood gallery district and downtown shopping areas have recently been impacted by Zika’s infiltration of the city. The Florida Department of Health announced in late July that local mosquitos were likely the culprits of the spread of Zika.
The Real Deal reported on August 3 that the Wynwood Yard, an outdoor restaurant and bar located in the Wynwood Arts District, closed for a few weeks but has recently reopened, with its owner confirming to the Real Deal that one employee tested positive for Zika.
There haven’t been any reports of rent decreases or cancelled leases as of now, but the virus is still in its infancy. Miami-Dade county mayor Carlos Gimenez announced the city will likely spend upwards of $8 million to fight the mosquitos.
“Buyers in Palm Beach and St. Lucie Counties have not vocalized concerns about the Zika virus. We will continue to monitor the situation,” said Judy Ramella, President of the Realtors Association of the Palm Beaches.
The Center for Disease Control issued a travel warning to pregnant women, as Zika can be transferred from mother to fetus and can cause microcephaly — a birth defect that leads to an underdeveloped brain.
Rising waters in Houston
Houston experienced some serious rainfall throughout the month of April. So serious, in fact, that damage costs have amounted to roughly $500,000 per square mile in the city, according to an analysis of federal data by the Associated Press, with more than $5 billion in damages wreaking havoc on Houston.
“The second part is asking yourself, ‘How am I going to deal with the longterm effect?'” Wolff said.
The increase in pavement and roads due to compounding expansion has created a difficult system to manage flood waters, engineers say. But Houston is no stranger to floods – six of the eight federally declared disasters since 2013 in Texas were floods.
“The process for fixing a house after damage is a much longer-term process because of the insurance — if you’re lucky enough to have insurance,” Wolff said.
“If you never need [insurance], be blessed you never needed it.” Wolff said. “But that doesn’t mean you shouldn’t pay for it.”
5.1 magnitude earthquake shakes San Francisco
If you live in California, you have to get used to the vibrating ground.
A 5.1 magnitude earthquake shook Lake County on August 9. Lake County is roughly 130 miles north of San Francisco, which also felt aftershocks from the earthquake.
How do earthquakes affect real estate? If they are big enough, like the Loma Prieta earthquake of 1989, they have a disastrous effect on rental properties. Commercial and residential locations can be deemed unlivable, forcing renters to seek new housing. Businesses can be forced to close if this happens, as well, due to lack of commerce.
The 5.1 earthquake that happened earlier this month didn’t cause nearly the damage of the 6.9 magnitude from Loma Prieta, but it’s always on the mind when the earth begins to shift.
The biggest earthquake in recent history in San Francisco was in 1906. It claimed the lives of over 3,000 residents and displaced more than 225,000 people. There are still earthquake shakes in San Francisco that stand as a reminder of what could potentially happen.
The mid-atlantic gets a big freeze
New York and other major cities in the mid-atlantic region experienced record snowfall in January of this year.
Central Park recorded 26.8 inches of snowfall in one day. Baltimore watched as 29.2 inches of show fell on the city. Washington D.C. sat by as more than 24 inches of snow covered the city. It was reported that 48 people died as a result of the blizzard, with many attributed to heart attacks brought on from shoveling snow.
But what effect does snow have real estate? In February 2016, Lawrence Yun, chief economist at the National Association of Realtors, said “Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest. The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings.”
Blizzards keep people indoors and out of open houses, leaving less people shopping for homes because they can’t get out of the one they are in.
Wildfires blanket California
For all the sunshine and relaxation that seem to be associated with the California lifestyle, there sure are a lot of disasters.
There are currently four wildfires blazing through California engrossing more than 100,000 acres.
“The one thing we learned last year is that during the fire, there were so many rumors going around — we didn’t know what was lost until the smoke cleared,” said Rick White, a Realtor with Konocti Realty in Lake County and the former president of the board at the Lake County Association of Realtors.
“The thing I saw that happened instantly was that we had some folks who had good insurance policies, [and they] acted fairly quickly and were able to buy a replacement home,” he recalled. “So we saw a lot of demand for homes last year.”
Another way White and other local agents acted after the disaster was calling on clients who had vacation and summer rental properties in the Lake County area to see if they would be willing to open them up for the longterm to help with displaced victims.
“It was amazing to see how many people were willing to do that,” he said. “I’ve got one property that has two homes on it, and we were able to put fire victims into those, easily. That’s one way realtors have impacted the area.”
Flooding in Louisiana damages 40,000 homes
“This disaster is the worst to hit the United States since Superstorm Sandy, and we anticipate it will cost at least $30 million, a number which may grow as we learn more about the scope and magnitude of the devastation.” Brad Kieserman, vice president for disaster services operations and logistics for the Red Cross, said in a press release.
According to the Red Cross, the flood waters totaled somewhere around 6.9 trillion gallons of water, or enough water to fill 10.4 million Olympic pools.
Disaster relief from the Red Cross has helped to provide over 100,000 meals to flood victims, and the organization is still housing roughly 7,000 people in emergency shelters.
More than 40,000 homes have been damaged as a result of the flooding.