How Will Hurricane Ian Affect the Local Real Estate Market?
As we slowly get back to normal after Hurricane Ian, the big question in the real estate industry is whether there will be a sudden drop in prices and a panicked flood of fresh inventory from people who want to get out of the way of future storms.
Craig Ceretta, a local managing broker with Premier Sotheby's International Realty, doesn’t think so.
“People have short memories. If you look at other instances like this, you typically see a short-term impact with reduced demand, then it back to where it was before," he says. "Some people will say they don't want to live in a hurricane area, but just as many buyers and investors are watching to see if prices will dip. How many, we don't know, but it’s what happens every time.”
After Hurricane Irma in September of 2017, real estate sales in Sarasota and Manatee counties were down 16.8 percent when compared to September 2016, largely due to the closures and evacuations the storm caused. New listings also decreased. According to statistics published by the Realtor Association of Sarasota and Manatee (RASM) at the time, the number of new single-family homes on the market decreased by 31.8 percent and new condo listings decreased by 20.9 percent.
Still: "We had our strongest market ever in the two to three years after Irma," says Budge Huskey, Premier Sotheby's CEO.
Typically, there's an uptick in listings in September as buyers prepare for Sarasota's high season. However, "when Irma started its path toward Florida, sellers weren't preparing to list their homes—they were preparing to keep them safe," then-RASM president Xena Vallon said in 2017.
Still, while sales and listings decreased after Irma, median prices went up. The median price of single-family homes in Sarasota County increased by 8.4 percent, to $269,900, while Manatee County increased by 9.3 percent, to $295,000. Sarasota condos increased by 11.2, percent to $220,000. Condo prices for Manatee increased by 2 percent, to $181,500.
By the next year, Sarasota and Manatee county markets were healthy as ever, seeing an increase in sales across home types in both counties—to the point where we asked ourselves if we were in the midst of a real estate bubble.
Adam Hancock, owner and founder of The Sunshine State Company, serves homebuyers almost entirely from out of state and sees no shift in the desirability of the area linked to Ian. He points to previous variables, like spiking interest rates, as more of a factor than the storm.
"I don't see Ian stopping those who were going to move to Florida already," he says. "People were already favoring Sarasota vs. the Naples and Fort Myers area due to similar benefits and comparable affordability."
Roger Pettingell, an agent-broker with Coldwell Banker Realty who specializes in waterfront properties, says, "We’ve experienced this before—oil spills, the pandemic, hurricanes–when disasters happen, but it doesn't usually last a long time. Hurricane season is in the fall, and people are still going to want to be here during the colder months."
Ceretta points to Dolphin Tower's near-collapse in 2010 as another lesson in the local market's response to disasters.
“There was a panic to sell and people picked up condos at a discount right away," he says. "Even in that case, where it was unclear whether or not a property was going to pass inspection and get repaired, buyers rolled the dice. Now that Dolphin Tower is repaired, they sell with no issue because people have faith in the repairs."
Cerreta also points to the tragic red tide outbreak of 2018 that pushed some people on the barrier islands to sell. “But there were people ready to buy right behind them,” he says.
"The inventory for waterfront homes is still low, and I think that will protect any significant market shift. Our listings are still selling in a week," adds Pettingell.
This time around, Ceretta expects a decrease in housing inventory as homeowners pull their listings back to address damages sustained by the hurricane before putting them back on the market. The challenge in that scenario will be finding workers who haven't already headed to harder-hit areas, where guaranteed FEMA money will flow.
“For the most part, people won't panic sell,” he says. “They won't want to when buyers are expecting a bargain due to Ian.”
Within the local market, Hancock says inland neighborhoods may benefit. "Any insecurity about Lakewood Ranch and Parrish being far from the coast might be calmed," he says.
But for waterfront diehards, like Pettingell's clients, little will change.
"They were already dealing with high risks and are willing to take them," he says. "A waterfront property will always be magical."
"Risk-averse people who leave are replaced with someone who wants to be here," Husky agrees. If anything, he wonders if the local market will see an influx of people arriving from Sanibel and Naples, which were much harder hit by Hurricane Ian.
Although they don't see Ian causing a long-term market slowdown, all point to a probable increased demand for new construction, built to updated codes that can withstand hurricane-force winds.
A wild card is the cost of homeowners' insurance, which may put a spin on how the market reacts. But those effects will take time to trickle out as policies come up for renewal post-Ian.
“I think flood insurance will go up substantially. If rates double, we'll lose some people," Ceretta says. "People who buy a $5 million home on the water won't balk at the increase, but it may have a greater impact on buyers of $1 million dollar homes—especially as more insurance carriers pull out of the state."
"The ripple of insurance is big, but it won't take out an entire market," Hancock says.
"It's still off-season, too," Pettingell says. "We’ll see this play out during high season this winter when buying traditionally picks up. For now, it's still a strong market and we still have what people want."