Buyers Looking for Housing Deals in Hurricane-Damaged Florida

Less than a month after Hurricane Ian wreaked havoc on southwestern Florida, investors and other buyers are looking for bargains in a region where home prices have skyrocketed in recent years.

Source: WSJ | Published on October 18, 2022

climate change and home values

According to residential real-estate agents in Naples, Fla., and other areas near the Category 4 storm's path, demand from both locals and out-of-staters remains strong. They claim to have received numerous inquiries from people still interested in relocating to Florida or purchasing distressed properties.

"It's pretty much business as usual," Kelly Baldwin, a Coldwell Banker agent in Longboat Key, Fla., said. "I haven't had anyone contact me who wants to put an end to their home search."

The costs of fortifying a home against wind and flooding, as well as rising premiums for homeowner and flood insurance, are enough to drive some long-term Floridians away.

However, some wealthy investors have expressed interest. Friley Saucier, a global real-estate adviser at Premier Sotheby's International Realty in Naples, is working with a wealthy individual who plans to spend up to $50 million on distressed real estate in areas impacted by Ian.

"He called after the storm," she explained. "I've spent a week calling agents and others to find off-market properties because these homes are still being dried out and remediated and aren't yet listed."

ick Lema, whose primary residence is in Narragansett, R.I., owns a home in a storm-damaged mobile-home park in Englewood, Fla., about halfway between Sarasota and Fort Myers. He began driving around local neighborhoods looking for distressed waterfront homes and commercial properties the day after the storm, before repairing his own home.

Mr. Lema had previously looked for investments but felt that "prices were through-the-roof ridiculous." He now believes that owners of damaged properties will seize the opportunity to sell their holdings. "If they were asking $1 million before the storm," he said, "I'll offer $750,000."

Certainly, some prospective buyers are reconsidering after the storm's damage, which is expected to range between $40 billion and $64 billion for flood and wind losses to Florida residential and commercial properties, according to data firm CoreLogic. Furthermore, according to a recent Redfin report, 62% of U.S. residents who plan to buy or sell a home in the next year are hesitant to relocate to a climate-risk area.

Some people who had planned to settle in the area are now reconsidering. Kurt Kuemmerle, 60, a carpenter from Marmora, New Jersey, owns property in Port Charlotte, about 30 miles northwest of Fort Myers. He stated that he had always planned to build a retirement home there with his significant other, Robin Konschak. But now he intends to sell the property.

"We realized southwest Florida is far too dangerous to live in permanently," said Ms. Konschak.

Many others, however, are undeterred. Connie Langenbahn, 62, a retired school bus driver, and her husband, Gregg Langenbahn, 61, plan to relocate to southwest Florida in November from Cincinnati. The couple said they would live with their daughter in Sarasota, Fla., while looking for a home, which they started two years ago.

"The hurricane scared my husband, but living in Florida has been my dream my entire life, and I'm not giving up," Mrs. Langenbahn said.

The couple wants to spend no more than $450,000 on a three-bedroom, two-bathroom house. "I'm hoping prices don't rise any further now because people need homes," she said.

Some real estate analysts believe they will, at least in the short term. "We will almost certainly see an increase in prices almost immediately," said Ken H. Johnson, a housing economist at Florida Atlantic University's College of Business.

"While pricing may be erratic for the first few months," Dr. Johnson explained, "the demand for living along a coastline with warm weather and a business-friendly economy appears to have led to quick economic recoveries after recent past hurricane strikes."

Few areas in the United States have seen prices rise by this much already. According to the Naples Area Board of Realtors, the median sales price for a single-family home increased by 24.9% between August 2021 and August 2022, the latest month for which statistics are available, to $725,000. During the same time period, condominium prices increased by 34%.

According to a study released on October 11 by Dr. Johnson and Eli Beracha, Ph.D., of Florida International University, the Cape Coral-Fort Myers metropolitan area was the nation's most overpriced housing market in August—pricing was 70% higher than the area's long-term pricing trend—with buyers paying an average of 70% more than the area's long-term pricing trend.

"There won't be a lot of homes to sell for a while due to the devastation," said Kristen Conti, broker-owner of Peacock Premier Properties in Englewood, Fla. Home prices will rise for the next 12 to 18 months due to a lack of supply and strong demand from both end-users and investors, she predicts.