Hurricane Ian was the sixth hurricane to cause $20+ billion in damages in Florida in the last 40 years. We have many team members and clients who live and work in Florida. We have experienced several hurricanes and know firsthand what the aftermath can bring. Here are some initial thoughts on the real estate impact of Hurricane Ian.
- Net migration to Southwest Florida will slow but not stop. Southwest Florida has ranked as one of the top destinations for net migration in the US with over 20,000 residents moving into the region in the last 4 years. While we expect some slowdown in population growth in the near term, the eastern suburbs could gain market share.
- Inland migration will accelerate. Just as Hurricane Andrew (a Cat 5 Hurricane in Miami) fueled growth in Broward County and the western suburbs of Miami, we expect to see strong demand for homes east of I75 over the next decade. Communities like Babcock Ranch, Big Cypress, Wellen Park, Lakewood Ranch and Ave Maria have land and homes available. We expect these inland communities to be beneficiaries of future population growth.
- We estimate home Repair and Remodeling (R&R) spending of $36 billion from Hurricane Ian. Our preliminary estimates suggest a figure around $36 billion for Hurricane Ian-related residential remodels and repairs over four years. The National Center for Environmental Information expects total costs related to Hurricane Ian to exceed $50 billion, and preliminary estimates from Moody’s RMS suggest that Ian will be costliest hurricane since 1980 (Figure 1).
- Labor and materials will be in short supply for some time. We expect the pace of the rebuilding effort to be constrained by existing labor and material shortages with most of this spending taking place in 2023 and 2024, and the new home industry to be negatively impacted by labor and materials transitioning toward the hurricane cleanup.
- Florida’s major population centers were less impacted. Fort Myers, Port Charlotte, select submarkets of Orlando and Daytona Beach all saw flooding and damage, but the major population centers—Tampa, South Florida, and Orlando—were relatively unscathed.
- New homes held up better. While hundreds of thousands of homes were impacted by devastating hurricane force winds, stronger building codes for new construction undoubtedly mitigated Ian’s impact in areas with Category 1 force winds. On average, homes built in the 1990s require 20% less investment to rehabilitate following a major wind event compared to those built in the 1970s and 1980s, and homes built in the 2000’s or later require 25% less investment (Figure 2).
Floridians are resilient. History shows that the people of this state can and will rebuild and the new homes will be stronger and better equipped to handle the wind and rain. Southwest Florida will be welcoming new residents again soon to enjoy their beautiful beaches, great restaurants, and natural surroundings. We expect the region to continue its rapid expansion.