Hurricanes and Housing Values Craig Cerreta, Managing Broker, Premier Sotheby’s International Realty
October 10, 2022
Though no two natural disasters are the same, there are real estate patterns that can be identified and anticipated following a natural disaster. It doesn't matter whether it's a hurricane, an earthquake or a massive fire. Many patterns repeat themselves year after year, disaster after disaster.
KEY FACTORS TO CONSIDER: Extent of damage
Location relative to the primary impact zone (major damage zone) Risk of increased frequency and intensity Insurance New construction Supply and demand
EXTENT OF DAMAGE The question is not whether a hurricane is a Category 3 or Category 5; it is how much damage did it cause? There is a huge difference between a storm that downed trees versus one that destroyed neighborhoods. News and social media provide images of the worst damage with little clarification as to the geographic scope.
Saffir-Simpson hurricane scale
Public perception is almost always one of maximum destruction in a much broader geographic area than actuality. This incorrect perception stimulates emotions that can cause some owners to panic sell and some buyers to delay or cancel plans to purchase.
LOCATION RELATIVE TO THE IMPACT ZONE The impact on people and housing values is far different for homes in the primary impact zone versus those in the surrounding areas. Most disasters experience a concentrated area of major destruction that may range from a few blocks to a few miles wide. People within that concentrated area are far more affected than people on the fringes, even though the people on the fringes also have damage. Within the primary impact zone, families experience significant material loss and possibly physical injury. As a result, their reaction to the disaster is more extreme than the reaction of those in nearby areas. Some of these people may experience Post Traumatic Stress Disorder (PTSD). A number of people within the primary impact zone are likely to leave the area and not return or rebuild. It is just too emotional and psychologically draining for them to remain in this area. A Realtor.com study estimates this number at 34% of the victims within the primary disaster zone. October 10, 2022
Premier Sotheby’s International Realty
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