What’s Next For Southwest Florida Home Prices After Ian? Probably Going Up Even More
Hurricane Ian absolutely devastated large parts of Southwest Florida. So what’s next for home prices and our housing market? Expect even more increases. And this is not a new thing just for our Southwest Florida home prices. There’s a trend.
In an article post hurricane Ian written in Forbes, “A study by Veros Real Estate Solutions, a provider of residential property valuations to the real estate industry, showed that property prices jumped by an average of 7% above the national average in five metropolitan areas hit by major storms during the subsequent 12 months.” This data showed the housing markets of affected residential areas 1 year prior, and 1 year after a major hurricane. Hurricanes such as Katrina, Andrew, Harvey, Hugo, and locally – Charlie, were all part of the study. A 2010 Federal Reserve Bank of Dallas analysis also showed the correlation. “Our results show that the typical hurricane strike raise real house prices for a number of years, with a maximum effect of between 3 to 4% three years after occurrence.”
Southwest Florida home prices are based on supply and demand
People want to move here. A few weeks ago we showed that “A Record Number Of California And New York Residents Moved To Florida Last Month“. Even with the images of Ian, that trend will likely continue. People want to live in Florida. Ian may chase away some, but most of the people I’ve talked to have no intention of leaving town. So what factors may buck the trend and keep our home prices in check? There are variables.
Home insurance rates. The cost to insure a home in Florida is three times the national average. It’s one of Charlie Crist’s main talking points as he runs for Governor. The average cost of insuring a home in Florida is $4,231 per year. Will this stop anyone from moving here? Not a chance. If you make 100K a year in New York you’re subject to over $6,000 in state income tax. Florida doesn’t have a state income tax. Also, it just makes sense that we pay more for insurance here in Florida. I mean, hurricanes.
The National Economy. We’re on some shaky ground. Inflation numbers from this morning showed consumer prices rose 0.4% in September and were up 8.2% from a year ago. That’s 8.2% inflation in September with gas prices coming down. In October, the gas prices have started to come back up. The October inflation number could be even worse. It’s hard to buy a house when you’re struggling to pay for gas and groceries.
Interest Rates. See above. The Fed approach to inflation has been raising interest rates. As interest rates go up, the cost of a mortgage increases. I could never afford the house I have now if I hadn’t bought it 5 years ago.
Will that slow down our Southwest Florida Home Prices?
Even with all that, could we still see prices go up. “I don’t see any reason to suspect this time is going to be different,” said Eric Fox, the chief economist at Veros Real Estate Solutions. “Before Ian, we expected Lee County housing prices to gain 2.8% over the next twelve months. If you add that 5-6% hurricane premium, Fort Myers and Lee County could be looking at 9-10% appreciation over that time. I’d be surprised if it isn’t close to that.”
People want to be here, even with the ongoing threat of hurricanes. Southwest Florida is amazing. And the state of Florida is run much better than most others. I don’t want to live anywhere else. And I know I’m not the only one.
Please contribute to the Southwest Florida Emergency Relief Fund. 100% of the SWFL Emergency Relief Fund supports local nonprofits and areas experiencing the most immediate needs related to Hurricane Ian Recovery.
Returning To Sanibel Island
