Study: Real Estate Hot in Hurricane Ian-Hit Areas

homes destroyed by Hurricane in Florida
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Study: Real Estate Hot in Hurricane Ian-Hit Areas

Storms rarely have a long-term effect on the local real estate market. Cape Coral-Fort Myers listings dropped for two months after Ian but rose for the six after that.

FORT MYERS, Fla. – After plunging in the wake of last fall’s Hurricane Ian, home listings in the Cape Coral-Fort Myers metropolitan area have recovered, and sales have begun to bounce back, according to a report from Redfin.

Hurricanes present unique housing market events. Their immediate impact on the local real estate market is harsh, but investors often rush in and the number of real estate transactions bounces back and often increases.

In the two months after the devastating September 2022 storm, Cape Coral-Fort Myers saw 900 fewer new listings than there would have been had the storm not hit, according to Redfin projections. But in the six months after that, the area had 1,314 more new listings than projected, a number that more than offsetting the shortfall.

Put another way, the metro area had a net gain of 415 more new listings.

New listings are likely outperforming expectations due to a backlog created by the storm. Homeowners who paused selling plans or delisted properties in the wake of Hurricane Ian are now putting their homes on the market. There are also probably other homeowners who didn’t intend to sell but are now moving because their home was damaged and/or they want to live in a safer area.

Redfin Senior Economist Sheharyar Bokhari says property insurance prices have gone up, but “homebuyers are still moving to the Sunshine State in search of warm weather and relatively affordable home prices,” though, “ultimately, lower-income residents may be pushed out of the riskiest areas due to rising insurance and rebuilding costs.”

The analysis focuses on home listings, but it’s worth noting that scores of vacant plots have also hit the market in Cape Coral after the homes atop many of those lots were destroyed. There were 6,167 land listings in Cape Coral as of June 16 – comparable with the number of home listings (6,619). Some don’t mention the impact of the storm or the potential for future natural disasters. Other listings do mention Hurricane Ian, and tout the opportunities for builders and homebuyers despite continued storm risk.

While some people who moved to Florida during the pandemic are leaving, new out-of-staters continue to move in, which is incentivizing homebuilders in Cape Coral to keep building, according to local Redfin Premier real estate agent Isabel Arias-Squires.

Florida has doled out 80,000 residential building permits so far this year–more than any other state but Texas. Arias-Squires noted that new-construction homes in Florida have the advantage of being built under the most recent building codes, providing better resistance against natural disasters

Sales bounced back but haven’t fully recovered

In the three months after Hurricane Ian, there were 723 fewer home sales in Cape Coral-Fort Myers than there would have been had the storm not hit, according to Redfin projections. But in the following five months, there were 538 more sales than projected. That means the sales shortfall had shrunk from 723 to 185 by early May 2023.

The home sale recovery suggests that many buyers continue to prioritize waterfront views, relatively affordable home prices and lower taxes more than climate concerns.

Cape Coral-Fort Myers is the seventh most popular migration destination for homebuyers, according to Redfin’s latest ranking. Four other Florida metros – Miami, Tampa, Orlando and North Port – are also in the top 10 as the Sunshine State attracts house hunters from New York, Chicago and other major metros.

Hurricane Ian and home prices

“The storm’s effect on prices was likely muted because at first, new listings fell, which pressured prices to rise due to a shortage of homes for sale.” Bokhari says. “But new listings then more than recovered, which pressured prices to fall because there was more supply than usual.”

© 2023 Florida Realtors®

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