Real estate is just one of the many economy-driven industries that felt the devastating impact of hurricanes this season. In Puerto Rico and the U.S. Virgin Islands, residents are still in the middle of recovery efforts following Hurricane Maria. It may be some time before those real estate markets can be evaluated, as many of the islands were catastrophically damaged. The Senate is moving forward with a $36.5 billion hurricane relief package that Puerto Rico will greatly benefit from, and St. John residents are expecting the restoration of power soon.
September sales statistics provide a closer look at the challenged markets just a few weeks after Hurricanes Irma and Harvey dealt destruction to areas of Florida and Texas. Houston is coming back strong much earlier than anticipated, while Florida is still reeling from a statewide drop in real estate activity.
The hurricanes also affected the real estate industry on a national level. While total existing-home sales rose 0.7 percent and new-home sales sprang 18.9 percent in September, pending home sales declined for the first time in over a year in August, trailing 1.5 percent below last year’s sales.
“Sales activity likely would have been somewhat stronger if not for the fact that parts of Texas and South Florida—hit by Hurricanes Harvey and Irma—saw temporary, but notable declines,” says Lawrence Yun, National Association of REALTORS® chief economist.
Market Data Shows Fast Recovery in Houston
The Houston Association of REALTORS® (HAR) reports single-family homes sales rose by 4.2 percent from last September after a steep 24 percent drop in August. The market is seeing gains in all property valued above $150,000, with homes in the $500,000 to $750,000 range seeing the most sales volume.
While inventory is low in response to property flooding and consumer demand, it is steadily increasing. The current 4.1-months supply has not yet reached the inventory spike that Houston experienced right before Harvey hit, which was 4.4-months supply.
Out of an overwhelming natural disaster comes a revived rental market in Houston, as well—reportedly the strongest it has ever seen. The displaced population caused a spike in demand for rental properties. Demand for single-family rental homes rose by 83.6 percent, while townhome and condominium leases soared 92.2 percent. The average rent for townhomes and condominiums was up 5.4 percent to $1,601 and single-family rents increased by 7.9 percent to $1,886, according to HAR.
“I don’t think anyone expected to see home sales in positive territory this soon after a natural disaster of Harvey’s magnitude, but the September report speaks volumes about the incredible resiliency of the Houston real estate market,” says HAR Chair Cindy Hamann. “We are still mindful of the terrible property losses suffered across the region and continue to urge anyone who may have housing available for those in need (for up to 12 weeks of occupancy) to please post it on our Harvey Temporary Housing page at www.har.com/temporaryhousing.”
Relief efforts are still going strong, both in the community and through government funding. The U.S. Department of Housing and Urban Development (HUD) is allocating an additional $57.8 million towards Hurricane Harvey financial assistance in Texas.
“Clearly, the long-term needs in Texas far exceed this allocation, so I anticipate this down payment will be targeted to address damaged housing to help Texans move forward with their own recovery,” said HUD Secretary Ben Carson in a statement. “As we work to allocate additional funding in a fair and effective manner, states and communities can count on HUD to be a strong partner in efforts to recover from the hurricanes and other major disasters our nation experienced this year.”
Florida Markets Require More Recovery Time
According to September housing data by Florida Realtors®, Irma clearly affected Florida’s housing market. Single-family home sales statewide are down 20.4 percent compared to last September. The townhouse/condo market is down 15.9 percent statewide compared to last year. Short sales for townhomes and condos are down 57 percent, and foreclosure sales dropped 62.3 percent year-over-year. Irma also impacted the single-family short sale and foreclosure markets: Sales dropped 60.8 percent and 60 percent year-over-year, respectively.
“The impact from Hurricane Irma was wide-ranging across Florida, though the devastation and damage was certainly greater in some areas, such as the Keys and in Naples,” says Maria Wells, 2017 Florida Realtors® president and broker/owner of Lifestyle Realty Group in Stuart, Fla. “It’s not surprising that Hurricane Irma had a negative impact on existing-home and condominium sales across most local markets in September—but that’s a normal occurrence after a hurricane.”
Less borrowers are making on-time payments in the wake of Hurricane Irma. Florida one-month mortgage delinquencies climbed by almost half a percentage point in September because of the damage throughout the hurricane-impacted states. According to Black Knight Financial Services, single-family loans that were either delinquent at least 30 days or in foreclosure totaled 2.603 million as of Sept. 30. (In response to all three hurricanes, the Federal Housing Administration has extended its foreclosure relief period another three months. For homeowners impacted by Harvey, mortgage lenders and servicers of FHA-backed loans have been asked to suspend foreclosures until Feb. 21, 2018; for those impacted by Irma, until March 9, 2018; and for those impacted by Maria, until March 19, 2018.)
Economists are optimistic that the Florida markets will rebound in the near future. They suggest that current sales statistics only reflect the short-term effects of a community that is still recovering from Hurricane Irma.
“Perhaps the most important thing to understand about this month’s sales numbers is that these declines in real estate activity are not in any way indicative of a decline in the demand for housing going forward, or any other structural change in Florida’s housing market dynamics, for that matter,” says Florida REALTORS® Chief Economist Dr. Brad O’Connor.
Stay tuned to RISMedia for more developments.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com.
Suzanne De Vita contributed to this report.
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