In the greater Houston region, Hurricane Harvey has caused between $30 and $40 billion in residential property damage including 30,000 to 40,000 homes destroyed and 196,000 homes damaged.
(Source: CBRE/Community Impact Newspaper; Moody’s Analytics)
Many of the damaged homes will require significant repair, and owners may need to bring their homes back to the studs given mold issues. Also, many properties have been flooded three or more times since Tropical Storm Allison in 2001 and there are on-going discussions to have government buyouts that would return thousands of these houses back to nature.
Further exacerbating the problem, many of the damaged homes are not in a FEMA-designated “special flood hazard area” that required flood insurance to obtain federally insured mortgages. As a result, only 20% of homeowners in the Houston region with flood damage have insurance protection. (Source: Consumer Federation of America estimate).
Prior to the hurricane, Houston issued 27,000 permits for single family homes and had a severe labor shortage. Not surprisingly, contractors are now even more overwhelmed than they were prior to Hurricane Harvey which will further delay the recovery.
Based on prior hurricanes and floods, experts are predicting the following trends that could last for 12 to 18 months:
– Demand will surge for apartments and rents will increase in the short term
– Home prices of existing and repaired properties will increase (While not completely analogous, New Orleans housing prices surged 17% the year after Hurricane Katrina)
While property repairs and new residential construction will cause significant job growth, it will not make up for the loss suffered by most of the people of Houston.
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