Home Prices After Ian? Probably Going Up
Property prices usually rise after a disaster, in part because many impacted residents want to stay. But there’s a potential wild card after Ian: insurance costs.
FORT MYERS, Fla. – A price spike is expected for Florida real estate spared the wrath of Hurricane Ian. Multiple studies show property values in storm-ravaged regions have historically risen past the national average following a disaster.
Veros Real Estate Solutions estimated that property prices topped the national average by 7% in five metropolitan areas over the 12 months following a hit by a major storm.
An April 2022 analysis of Florida’s housing market by University of California, San Diego economist Joshua Graff Zivin and colleagues also concluded that home prices rise temporarily after hurricanes. And the authors also said they did not observe “any major changes to the racial, ethnic or gender profiles of buyers, suggesting that socio-demographic characteristics of neighborhoods are quite stable in the face of these housing market shocks.”
Many storm victims show an unwillingness to move, which is often the biggest factor in rising prices. However, Ian might change that equation because of predicted hikes to homeowners insurance policies.
A June 2022 report from the Insurance Information Institute found the average cost of insuring a home in Florida has risen to $4,231 annually, although Veros Chief Economist Eric Fox still does not anticipate the situation changing significantly.
“People want to move from states that aren’t run as well as ours, and they have the money to do it,” says Florida real estate agent Rick Pitts. “Hurricanes are no joke – but in California you don’t get an earthquake warning.”
Source: Forbes (10/07/22) Kochkodin, Brandon
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