Will Hurricane Ian end Florida’s Gulf Coast housing boom?

Hurricanes have always posed an unavoidable threat to Florida. But the risk has not deterred the masses of people who have flocked to the state since the pandemic began.

From Tampa to Naples, the state’s Gulf Coast has become a national real estate hotspot with its alluring beaches and relatively affordable price compared to big cities. Of the 10 fastest growing real estate markets this year, half are on Florida’s west coast, with Fort Myers taking the top spot, according to federal data.

But after seeing Hurricane Ian reduce entire neighborhoods to rubble with a devastating storm surge and 250 mph winds, will the newcomers stay? Experts told the Tampa Bay Times they are waiting to see if the storm can halt the Gulf Coast’s growth spurt.

“For a lot of people, whether they’re remote workers looking to the West Coast of Florida as an affordable move or looking for a different kind of lifestyle or climate, this just has to change that math,” said Thomas LaSalvia, a senior economist at Moody’s Analytics.

Related: Floridians must understand risk when rebuilding after Ian, US official says

He pointed to a psychological effect called recency bias, when people place more weight on major events after they have happened. This could temporarily curb immigration to the region while the storm is still fresh in people’s minds.

For people considering relocating, the storm may serve as a final tipping point.

Kira Smith, 54, has lived in Clearwater for more than 20 years and said she grew increasingly frustrated with Florida politics. Before the storm, she was thinking of leaving to be closer to her family, but now she and her husband are having more serious conversations about the move.

“I’ve seen footage and reports of what happened just south of us and I know it could have happened here just as easily,” said Smith, a remote researcher. With climate change, she said Hurricane Ian was a sign that things are going to get worse.

Aerial photo of damage in the aftermath of Hurricane Ian Thursday, Sept. 29, 2022 in Fort Myers. [ JOE CAVARETTA | South Florida Sun-Sentinel ]

While some might reconsider Florida out of fear for their safety, Peter Rex, a real estate investor who has bought and sold apartments along the Gulf Coast, said others were more focused on the financial implications of the storm. .

“Insurance costs are going to skyrocket and they were already high anyway,” he said. From an investor’s perspective, “this is going to decrease your net operating income.”

Even before Ian, the real estate market had already begun to cool. Rex said rising inflation and rising mortgage rates have made buying property less profitable for investors and less affordable for the average person.

Fort Myers and Tampa were the 3rd and 9th most overvalued housing markets, respectively, with homes selling 62% and 58% above their historical trends, according to a Florida Atlantic University study. While demand for housing could plummet immediately after the storm, FAU researchers said the destruction of Ian would delay construction and could further increase rents near landing zones over the years.

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“Long term, people will still want to live in Florida, which will dramatically increase demand,” said FAU economist Ken H. Johnson.

Despite the challenges facing the Gulf Coast, Budge Huskey, president and CEO of Premier Sotheby’s International Realty in Naples, said he was confident the region would bounce back as it did after Hurricane Charley. in 2004 and Irma in 2017.

Data from Redfin shows that in September 2017, immediately after Irma, the number of homes sold in the Naples metropolitan area fell by 33% year-over-year. But in October, the market stabilized and sales were at the same level as the previous year.

In Tampa Bay, housing prices have nearly doubled since Irma, according to data from Zillow.

“Anytime you choose to live along the Florida coast, you know you’re taking a risk,” Huskey said, adding that the most risk-averse buyers probably weren’t the ones moving here. in the first place.

Some investors might even use the storm as a chance to gain a foothold in the market, said Milton Bernal, who works for real estate firm New Western in their Fort Myers office.

“It becomes a good opportunity for both parties, where the seller can sell their distressed property at a fair value and investors can come in and help revitalise.”

The road, now known as Gulf Boulevard in Indian Rocks Beach, was partially washed away in the October 20, 1921 hurricane that struck the Tampa Bay area.  The unnamed hurricane formed in the Gulf of Mexico and made landfall in Tarpon Springs, killing six people in Florida and $3 million in damage.  Its peak winds were clocked at 100 mph.
The road, now known as Gulf Boulevard in Indian Rocks Beach, was partially washed away in the October 20, 1921 hurricane that struck the Tampa Bay area. The unnamed hurricane formed in the Gulf of Mexico and made landfall in Tarpon Springs, killing six people in Florida and $3 million in damage. Its peak winds were clocked at 100 mph. [ HANDOUT | Heritage Village Archives ]

Hurricanes have played a role in Florida’s real estate market volatility throughout history, most notably during the land boom of the 1920s when two major storms marked the rise and fall of the era.

The the last time a major hurricane made landfall in Tampa Bay It was 1921. Tampa historian Rodney Kite-Powell said Tampa business leaders were quick to say the storm was just a speed bump. Five years later, Tampa General Hospital was built on the Davis Islands. It is still the only Level 1 trauma center in the area and in a high risk flood zone. Despite an 11-foot storm surge, investment in Florida continued to pour in.

It wasn’t until a hurricane hit Miami in 1926 that people began to realize the prohibitive cost of investing in Florida. At the time, residents were already experiencing supply chain issues following a ship accident in Biscayne Bay. The storm accelerated the bust already underway, Kite-Powell said.

“There were those who were already a bit concerned about the unsustainability of the land boom,” Kite-Powell said. “Just like we see now with ups and downs. And so those opponents that already existed were starting to get a little bit right.

But with a recency bias, the effect may be temporary. People can be quick to forget the stress that accompanies big storms with the passage of time.

Although Huskey said the market may cool slightly over the next two months, “it’s really only a matter of time before things get back to normal.”

• • •

Coverage of Hurricane Ian by the Tampa Bay Times

HOW TO HELP: Where to donate or volunteer to help Hurricane Ian victims.

FEMA: Floridians injured by Ian can now seek help from FEMA. Here’s how.

THE STORM HAS PASSED: Now what? Safety tips for returning home.

QUESTIONS AFTER THE STORM: After Hurricane Ian, how to get help with fallen trees, food, damaged shelter.

WEATHER EFFECTS: Hurricane Ian was supposed to hit Tampa Bay with full force. What happened?

MORE STORM COVERAGE: Get ready and stay informed about tampabay.com/hurricane.

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