How May This Affect The Value of Your Real Estate

Whether your home was unscathed, partially damaged, significantly damaged or destroyed - you want and need to know what that has done to the value of your property. Since this is the first direct hit in many, many years that we have experienced in Pinellas County - I take a look at what experts say we should anticipate and what other markets have experienced in recent years.

It is important to remember that the appreciation, depreciation, and value of any property is ultimately determined by supply and demand.

Given the current situation, supply and demand will be driven by the number of homeowners choosing to renovate or rebuild their damaged homes. Some will choose not to due to lack of insurance coverage, inability to pass the FEMA 50% Rule, or other financial reasons. Still some will not have the will to take on such a project and/or have the desire to continue residing in an area subject to destructive tropical weather.

Demand will be determined by builders and investors seeking to obtain land on which to build new homes in accordance to current building codes for resale, and new residents seeking the desirable coastal lifestyle.

What happens between now and when our communities are restored?

1. Short Term Devaluation of Coastal Properties

Increased Risk Perception: Repeated storm damage, particularly in coastal and flood-prone areas, will likely lead to a short term decrease in demand for properties along the waterfront in Pinellas County. Hurricanes Helene and Milton both caused significant flooding and storm surge damage, which can heighten buyer wariness about investing in high-risk areas.

Immediate Devaluation of Damaged Homes: Owners of homes damaged to a degree that renders them currently unlivable and who choose to sell them "as-is" are likely to see an immediate reduction in value between 20% - 35% versus their value before the storms.

Flood Zone Expansion: As storm surges and flooding become more frequent, more areas may be reclassified as high-risk flood zones. Homes in these zones may face declining values due to higher insurance costs and reduced buyer interest.

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2. Increased Insurance Costs and Market Deterrence

Rising Premiums: After major hurricanes, insurance companies often raise premiums, especially in hurricane-prone areas like Pinellas County. This will affect property affordability, as homeowners and buyers face higher costs for both flood and wind damage coverage. If insurance becomes prohibitively expensive or difficult to obtain, this will negatively impact real estate values, particularly in areas with a history of storm damage.

INSURANCE CLAIM TIPS: Be aware of issues when it comes to insurance company claims adjusters and/or the insurance carriers using altered damage reports to deceive customers.

You can hire your own insurance adjuster in Florida: A licensed insurance professional called a public adjuster can represent you during the claims process. They can help you: assess the damage, determine the scope of repairs, estimate the replacement value, file insurance claims, and negotiate with the insurance company.

You can find a public adjuster by searching online or using a directory like the Florida Association of Public Insurance Adjusters (FAPIA https://www.fapia.net/). When hiring a public adjuster, you should check their credentials and consider hiring a member of a professional organization.

Public adjusters work on a contingency fee basis, which means they receive a percentage of the payout amount as payment for their services. The fee limit for public adjusters is 10% of the claim payment for one year after a state of emergency is declared, and 20% after that.

3. Shift in Demand Toward Resilient and Inland Properties

Increased Demand for Safer Areas: Homeowners displaced as a result of damaged homes may seek temporary or permanent housing inland. As buyers become more concerned about hurricane risk, they are likely to favor inland areas or properties that are perceived to be safer from storm surge and flooding. Inland or elevated neighborhoods that have historically seen less damage from hurricanes may see an immediate rise in demand, boosting real estate values in those areas over the short and long term.

Preference for Resilient Homes: Homes that have been rebuilt or upgraded with hurricane-resistant features, such as elevated structures, reinforced roofing, and impact-resistant windows, are likely to command higher prices in the future. Buyers are becoming more willing to pay a premium for homes that offer greater protection from natural disasters.

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4. Government and Policy Intervention

Stricter Building Codes and Zoning Regulations: In response to the damage caused by Hurricanes Helene and Milton, local governments may implement stricter building codes and zoning laws to prevent future damage. While these measures could increase construction costs, they may also enhance property values in the long run by ensuring that new buildings are more resilient to hurricanes.

Disaster Recovery and Resilience Investments: The speed and effectiveness of government recovery efforts, including infrastructure rebuilding and storm resilience projects, will play a crucial role in determining how quickly real estate values recover. Areas that receive significant investment in storm protection and flood prevention may see quicker property value recovery.

5. Long Term Valuation of Coastal Properties

Improvements in building codes, zoning laws and disaster preparedness will make an impact on property values.
Hurricane resistant upgrades may increase property values and the desirability of homes. These upgrades include impact windows and doors, wind reinforced roofs, and elevated structures in flood zones.
In the year after Hurricane Ian, Lee County homes saw prices remain stable and return to an 8% appreciation rate.

Conclusion:

The future real estate market in Pinellas County will likely experience diverging trends, with coastal properties facing short term devaluation due to heightened risk perception and increased insurance costs, while inland and hurricane-resilient properties may become more valuable as buyers prioritize safety and affordability.

Some long time residents will be forced to move. When the community is rebuilt, it will not look the same. We cannot continue to restore single story homes after storms because of the renovation costs and continued increases of insurance premiums. Unfortunately, a gentrification is in order that will cause housing costs to rise, affordability will become more difficult and the feel of "old Florida" to be harder to find.

On average, 1,000 people move to Florida every day. It is their desire to live in a tropical climate and live the beach life. They want what we have and they are willing to pay for it.

ADDITIONAL RESOURCES:

25 Years Later: Five Recovery Insights Gained After Hurricane Floyd

https://ncimpact.sog.unc.edu/2024/10/25-years-later-five-recovery-insights-gained-after-hurricane-floyd/

40K Pinellas County homes were damaged by Hurricanes Milton, Helene

https://www.wfla.com/news/pinellas-county/40k-pinellas-county-homes-were-damaged-by-hurricanes-milton-helene/

How will hurricane Helene reshape Tampa Bay’s housing market?

https://www.tampabay.com/hurricane/2024/10/04/how-will-hurricane-helene-reshape-tampa-bays-housing-market/#:~:text=The%20Tampa%20Bay%20Times%20analyzed,in%20places%20with%20less%20damage.

Hurricane Ian one year later: How has it affected beach, inland real estate in SWFL?

https://www.naplesnews.com/story/news/local/florida/2023/09/26/how-has-hurricane-ian-affected-real-estate-in-southwest-florida/70775379007/

Hurricane Ian — One Year Later: Real Estate
https://www.lehighacrescitizen.com/2023/10/02/hurricane-ian-one-year-later-real-estate/

The Impact of Hurricanes on Florida Real Estate

https://blog.vaster.com/florida-real-estate-after-hurricane#:~:text=Following%20a%20hurricane%2C%20affected%20areas,sellers%2C%20contributes%20to%20this%20decline.