After a Hurricane: ‘Should I Stay or Should I Go?’
Home Front by Budge Huskey
Special to the Herald-Tribune
In 1981 the heralded English punk band, The Clash, released a song which would finally give it the deserved attention stateside, “Should I Stay or Should I Go?” As an early fan first hearing them overseas, I watched them perform it in a small club that same year. A little nostalgia from this music fanatic, yet the title seems strangely relevant to Gulf Coasters on the heels of Ian.
As is typical following each hurricane in the Sunshine State, a period of assessment ensues as people considering a move to the coast push pause and existing residents contemplate the wisdom of remaining in such an exposed location. The outcome proves surprisingly consistent.
Following major hurricanes in less developed countries, a historical pattern exists of significant migration as area infrastructure and a continuing means of economic sustainability are compromised. In the U.S., where there is considerable ability to quickly respond to such events through both government action and personal initiative made possible through wealth, the outcome is fundamentally different. In fact, according to a study published in the Journal of Environment Economics and Management, following a natural disaster, the likelihood of a household moving within- and out-of-DMA (designated market area) increases by only 1.6 percentage points (PPs) and 0.7 PPs, respectively.
According to data from the Atlantic Oceanographic & Meteorological Laboratory, 32 Category 4 or 5 hurricanes have made landfall on the U.S. mainland since records began in 1851, and 44% (14 total) have hit Florida. Five have occurred since 1992, and four of those five were the strongest storms in the state’s history. Following all but one hurricane, the metro area most impacted continued growing. In fact, in most cases, these impacted areas witnessed rebuilding booms which led to even more jobs and, ultimately, residents.
In the hardest hit areas of Southwest Florida following Ian, real estate activity expectedly fell precipitously. Yet, while buyers appear hesitant for now, in their place is a burst of investor and builder interest seeking to capitalize on the newly created opportunity. Some are of the impression that properties may be seized at deep discounts, though most fully expect to pay market value based on their optimism about future demand and long-term values. The latter are correct in their assessment.
Not only has the number of residents ultimately increased in the two years following hurricanes, but so have real estate values. According to the National Association of Realtors®, the average price of homes in the year following a hurricane increased by approximately 5% and almost 10% over two years. In contiguous markets which were not directly impacted, the growth was purported to be even higher.
Those tuning into the news from afar these last weeks are led to believe coastal markets were entirely decimated, yet those of us at ground zero realize that it was the narrow band along some areas of the coast itself that experienced unprecedented storm surge damage while, only blocks in, there was scant evidence. Life returned to relative normalcy for most within days. Businesses were open. Traffic was heavy. Flights coming into the Gulf Coast were full.
As one who lives just north of Naples on a barrier island that was under eight feet of water, two diverging sets of circumstances became apparent. Those with older homes not built to hurricane code and at a low elevation felt the full brunt. Many of these owners have lived in these homes for years and are now seeing this destruction as a signal that it’s time to finally cash out and let someone else assume the risk. At the opposite end of the spectrum are those owners with elevated properties where the first floor is non-conforming with living areas above. In those communities, including my own, first floors were completely compromised yet the living areas above were mostly untouched. Within days there were swarms of construction and repair workers beginning the process of restoration. No one I know intends to leave.
Going forward, there will be some for whom the perils of weather and skyrocketing insurance rates justify an exit from the place previously viewed as paradise. For each one, however, there are two others who stand ready to take their place. This is the story of the Florida coasts, and why those such as this writer remain supremely bullish about the long-term prospects along the Gulf.
Budge Huskey is chief executive officer of Premier Sotheby’s International Realty.