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Hurricanes’ Surprising Impact on Houston Housing
February 15, 2021

Hurricanes’ Surprising Impact on Houston Housing

by The CE Shop Team

Hurricanes Can Bring Winds of Fortune to Houston Agents

In Houston, hurricanes hit roughly once every nine years, and a major storm strikes every 25 or so. However, when they do strike, something very interesting happens to the local real estate market.

Contrary to what you might think, real estate actually does really well following a hurricane - at least according to one study enacted by The Federal Reserve Bank of Dallas.

“Our results show that the typical hurricane strike in our sample raises real house prices for a number of years,” the study reads.

The Hurricane Price Hike

The reasoning behind the phenomenon is this: strong winds structurally compromise buildings and homes. Meanwhile, heavy rain and rising sea levels cause catastrophic flooding. When the storm finally passes, a significant portion of the housing supply is removed from the market.

In August of 2017, Hurricane Harvey damaged roughly 204,000 homes. Considering Houston is home to approximately 858,000 households, that’s over 23% percent of the city or more than one in five people who were affected.

Meanwhile, the majority of people are focused on recovering personal property, so very few houses become available. Of course, that doesn’t erase demand completely. Some will seek a new house while others in the coming year will be moving for other reasons.

Demand will recover before supply and the cost of housing jumps, about 3%-4% before maxing out after three years according to the study.

What Houston Is Doing About Hurricanes & What That Means for Insurance

While still in the planning stages, the Army Corps of Engineers has gotten the $8 billion green light to construct a coastal protection system intended to defend Sabine Pass up to Galveston Bay from future storms. Yet experts warn that until a plan is implemented, Houston is still at risk.

Many of the homes damaged in hurricane Harvey were constructed outside of high-risk flood zones. Private homeowners’ insurance policies don’t typically cover flooding as a result of a hurricane, so it’s recommended that homeowners purchase separate flood policies even if they’re not in a high-risk area.

Still, Houston remains a good long-term real estate play — even after a hurricane. Just be sure to familiarize yourself with areas that are more impervious to flooding and away from heavy petrochemical plants that might cause an environmental hazard.

As the climate changes and storms become more intense, especially in Houston, those will be the best long-term H-town holds.

Ready to Stir Things Up With the Best Houston Real Estate Courses From The CE Shop?

Enroll in our Pre-Licensing program now to get your career started and begin connecting your fellow Texans with the home of their dreams. Or keep going strong with one of our comprehensive, 100% online Continuing Education packages. Want to stay up to date on everything Houston? Join the Texas Real Estate Facebook Group!