Housing Market Post Harvey
What will happen to home prices post Harvey?
Houston is the 4th largest city in America, accounting for 25% of the housing market in Texas. After devastating Harvey floods, what will happen to this huge city and surrounding areas? It is being said that it will take months for all affected to enter recovery phase and a few years before the impacted communities fully recover. I think the major question pondering minds is “what will happen to the housing market?”
Facts about the Flood
Before Harvey hit, Houston was a rare fast-growing area in the U.S. The homes were strikingly affordable even though the prices had risen in recent years, but stayed the same during the 2014 oil crash. The average median home price for July was $230,000 for selling price and off the market was around $190,000. Now that Harvey floods have put a damper on the city and surrounding areas, will that change?
There are an estimated 242,000 homes in or near the known flooded areas that were flooded out completely by Harvey, these homes are together worth $61 billion. This number is based off the pre-storm appraisals, the true numbers will only be known by time. There were thousands of people with no flood insurance. Due to living in an area where it never floods, why would you get flood insurance? This issue is putting owners and their lenders in default. Most lenders are giving the owners a 3-month forbearance and then all missed payments will due, as well as starting back to regular payment schedule.
What will this do to the housing market? Unfortunately, we can only assume it will go up for at least a few years, if you judge it by previous devastations to the area. Looking back when Tropical Storm Allison hit in 2001, the rent increased by 6.1%. Hurricane Ike made the market increase by 5.7% in 2008. What will Harvey increase the market to? House prices have already increased just a month after the impact, one home priced at $82,000 pre-storm and post-storm was a 20% increase. This home stayed dry through the flood, this increase is mainly because the demand is so high right now. FEMA estimated over 760,000 reports put in for their homes to be evaluated, saying they had damage of some sort.
Fixing and Selling your flooded home
With the prices going up and the demand so high, some owners have decided to repair their home. Just note, prices on supplies are also increasing. The situation of finding contractors to help with the repairs is also scarce. Subcontractors are being beckoned for from other cities and states, so that leaves a problem for the owners deciding to stay as well.
The luck for the owners that have decided to walk away from their home has just turned to positive, after a huge devastation. The Federal Housing Administration is now offering homeowners a loan that is made to help them release the burden of a sudden and unplanned home purchase. “A lot of the people who flooded are going to be doing two transactions, selling one and buying another. FHA loan called the 203H, allows the consumer to be able to buy a home at a hundred percent, with no down payment, and they don’t use your other mortgage to qualify you,” says Shad Bogany Real Estate Associate Broker.