The Real Deal New York

As Hurricane Florence pummels the Carolinas, what the damage could mean for the housing market

On Sunday morning, 14 people had died in the storm, which has broken the state record of flooding levels
By Erin Hudson | September 16, 2018 11:30AM

Hurricane Florence continues to slam the Carolinas with record-breaking rainfall and, with flooding now expected to reach Charlotte, NC, analysts are beginning to consider the after-effects of such a devastating, unusual storm.

Realtor.com’s chief economist Danielle Hale said damage from the hurricane was “likely to disrupt national home sales and construction for months to come.” She expects rainfall and subsequent flooding to cause damage even to properties outside the path of the storm leading to “a dampening of national housing trends.”

Hale elaborated that she projected there would be “a drop-off in demand… post hurricane as would-be buyers re-evaluate whether to live in these areas.”

Meanwhile, insurers are also watching Florence nervously, according to the Wall Street Journal. Analysts at Jefferies believe more homes in the hurricane’s path are insured, which means damages that exceed what modeling predicted could cause an outflow of investment in insurance markets and, in turn, a rise in prices for flood insurance. The colossal damages from 2017’s three hurricanes did not cause any such fallout as most homes affected were not insured.

In the days after Hurricane Harvey, investors poured into Houston looking to snap up flooded, damaged homes for resale, and Hale anticipates a similar occurrence when Florence finally dies out, but she believes investors will be more restrained this time.

“I expect there to be an uptick in investor activity in the Carolinas, but I do not expect it to be quite as large or as immediate as we saw in the Houston area because of the differences between vacation communities and year-round communities,” she told The Real Deal in an email.

She noted that Houston’s available housing inventory was increasing ahead of Harvey, while in the Carolinas supply was tightening before Florence hit. She also noted that seasonal markets for vacation homes, which makes up a chunk of the 38,000 homes in the two states that are both in the storm’s path and currently listed, would be less attractive for investors looking to flip homes on the cheap. “There is likely to be a greater pick-up in investor activity in more year-round areas,” she said.