As an agent, if you’ve ever had a listing or potential sale fall victim to the ravages of a natural disaster, you know just how great the impact of such events can be on the real estate industry.
According to a CNBC report, it is estimated that more than 10,000 homes and other structures have been destroyed by floods, winds and fires in the past three months. Even before the disasters, the construction sector was faced with a shortage of labor and the impact on residential real estate could be magnified, according to Nela Richardson, chief economist at real estate company Redfin
“The housing market can’t take the shock of a natural event. It can’t take any shock because we are so tightly wound with inventory. Any change is a big change, and you’ll see that play out across the South.”
Nationwide, inventories continue to be low, with numbers down 6.5 percent in August annually, according to the National Association of Realtors. As a result, home sales dropped for the past three months and entry-level buyers are stepping aside. Supply remains leanest at the lowest end of the market.
Housing starts also continue to fall. They may be higher than a year ago, but are nearly 20 percent below their 25-year average, noted Peter Boockvar, chief market analyst at The Lindsey Group.
“We need the supply, there is no question, but whether it’s the rising cost of labor, lots, raw materials (lumber prices at a 13-year high) and permitting, the builders just can’t deliver enough.”
Wildfires and hurricanes have left homes damaged. These homes will have to be rebuilt from the charred ground up. That will take every available worker in the state and beyond, Richardson noted.
“All the resources are being drained to the rebuilding effort. That is going to increase the cost of housing and renovation across the nation.”
The range of the impact these disasters will have on real estate will become clear over time and agents in these markets can rise to the challenge by focusing on clients’ needs amid the struggles.