Do Hurricanes Affect Florida Home Prices?

A lot of people have asked me “is it a good time to buy a Florida home right after a hurricane”?

No. It’s usually a bad and potentially hazardous time for most people to buy a home in Florida right after a hurricane hits the state.

Here’s what you need to know about when to buy, and when to stay away from the Florida real estate market, after a hurricane hits the state.

Why Florida real estate prices often rise right after a hurricane hits the state.

  • Home and condo prices in Florida can actually rise after a hurricane because real estate prices are determined by supply and demand. Sure, no one is traveling to Florida to buy homes when a hurricane is coming and people living in the state are ordered to evacuate, so demand temporally falls.
  • But, the devastating winds and flooding from hurricanes such as Irma drastically reduce the supply of available housing overnight by damaging a huge number of homes and making them unlivable or unsalable.
  • At the same time as this large drop in supply due to damage or flooding, tens of billions of dollars in insurance and government reconstruction money that flows into Florida after a hurricane’s destruction will boost the states economy and increase jobs by bringing in a large army of insurance adjusters, tree trimmers, utility crews, etc. from other states. Why? Because there aren’t enough workers in Florida to handle the massive clean up and reconstruction necessary.
  • Before the hurricane menaced the state, the supply of homes for sale in Florida was already low for a long time, causing home prices to rise into bubble territory. Why? Because people are reluctant to sell any asset, including their home, that is continually worth more next month than it is this month.

Why Florida real estate prices can fall dramatically after hurricane clean up and restoration money drys up.

  • All those convoys of trucks and workers (who incidentally get well paid while in Florida) spend lots of money while in Florida. This extra spending boosts employment at Florida restaurants, bars, hotels, apartments and more, where these wages are spent.
  • Many of the reconstruction workers will buy homes if they can because they may be working in Florida for a year or longer and want to bring their family to the state.
  • When all of the hurricane reconstruction funds are spent, most of the out of state workers will return to their home state because they will become unemployed if they stay in Florida. They will also take all that extra spending with them. The additional people who were hired to feed and entertain them, will also become unemployed because the businesses won’t be able to afford to pay them as sales drop.
  • Apartments will become vacant and newly unemployed new Florida homeowners likely won’t have the funds to pay their mortgages.
    All the reconstruction money and worker wages will all leave Florida right around the same time that all these newly replaced or repaired homes will be ready to be occupied. Unfortunately, many new Floridians will now know that hurricanes can cause you to be ordered from your home because your life may depend upon leaving. Or you can become homeless due to hurricane destruction or flooding. Or live for a week or month without AC in hot humid still summer weather. They’ll learn what happens when millions of people are forced to evacuate with no where to go and no gas to get there. So many of those repaired/replaced homes will go up for sale adding to the supply, as large numbers of people decide where they moved from is better overall than living in Florida.
  • Pictures of hurricane damage and flooding in the news for weeks will slow the rush of people moving to Florida. Many who moved to Florida during the record 10 years without hurricane evacuation, disruption, flooding and damage, will leave Florida all around the same time, rather than smaller numbers annually during “normal” hurricane seasons. Crashing demand at the same time of increasing supply of homes for sale or rent will cause Florida real estate prices to sink.

florida move guide book cover and discription

What else should you know about what happens to the Florida real estate market after a hurricane?

1. After the back to back disasters of hurricane Harvey in Texas and Irma in Florida, homeowners and flood insurance rates may skyrocket, making even future highly discounted Florida homes unaffordable, especially for retirees on a fixed income. Florida homeowners already pay the highest home insurance rates in the country
2. As I write this in mid September 2017, there are another 2 potential weather systems that could turn into hurricanes. They appear to be heading Florida’s way. More hurricane damage could boost Florida home prices even higher short term due to additional billions being spent in Florida. However, after a month of day after day news coverage of hurricane Harvey and Irma, more negative news will likely cause even more people to change their mind about moving to Florida.
3. If the supply of homes for sale in Florida increases greatly after Irma’s restoration money dries up, this can cause a “Florida only” recession. If this Florida event coincides with a national economic slow down (we are overdue as they happen every 7 years on average), the real estate market could end up being in worst shape than after the last recession when prices dropped 60% on average from what they were at their previous peak. And still no one bought homes in Florida for years after that meltdown.
4. The area’s that have actually experienced the most damage, and the area around it within commuting distance for reconstruction workers, will experience the highest increases and then the steepest drops.
Ron Stack

  • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.


11 thoughts on “Do Hurricanes Affect Florida Home Prices?”

  1. Hi, Ron,

    Thanks for this most thorough explanation of the impact of Irma on Florida’s real estate market! Lots of good information here, for those of us still interested in re-locating to Florida in the near future.
    You mentioned a national recession as another possible factor in reducing Florida real estate prices. If Trump gets a tax cut package, do you think that might reduce recession chances?
    Thanks again,

    • Hello Steve,
      According to the average length of time between national economic slowdons/recessions, we are overdue for a recession statistically. I don’t know if a tax cut would keep the expansion rolling, but I have read the stock market has already “priced in” a substantial corporate tax reduction. So if an acceptable tax cut doesn’t get passed for business, the market could react negatively. Any national economic downturn that coincides with the juice ending that hurricane reconstruction provides, along with less people moving to want to move to a state that just got hammered, could spell steep real estate price drops. Hurricane season doesn’t end until November 30th. It begins June 1rst but things can heat up mid August and can be active through October. First Texas, then Florida, now Puerto Rico, Hurricane damage has been at the top of the news for over a month now.

      Lots of folks moved to Florida in 2005 and 2006 paying twice what their home was worth not long afterward. It wasn’t the first time that happened in Florida and it won’t be the last. You know, you read the book. Hey, thanks for pointing out that error a week ago. Good luck Steve.
      Ron Stack

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.
      • Is there a better state to relocate to or a better retirement lifestyle for you than moving to Florida? You’ll know after reading How to Retire Happier.
  2. Ron,

    Enjoy your insights. For someone still considering a move to Florida, I’m interested in your thoughts on what areas of the state might see the greatest short term gains and corresponding decrease in value over the near future. Do you have any sense of the timing of this change in the market, months/year?


    • Tim,
      The highest short term home price gains are most likely to happen in still livable areas with the shortest commute to the most heavily damaged areas where billions of insurance proceeds and hurricane reconstruction money will go. It may take 1-2 years until most of the money is spent and all the extra workers that were needed, and the extra workers in the businesses that served them while they were in Florida, leave. When they leave, and the people who had their homes and belongings damaged and have decided to move back to were hurricanes don’t happen so they never have to go through it again, and put their homes on the market increasing supply, prices will head south as those folks head north. Good luck Tim.
      Ron Stack

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.
      • Is there a better state to relocate to or a better retirement lifestyle for you than moving to Florida? You’ll know after reading How to Retire Happier.
    • Hello Ron,
      you continue to write fantastic articles.
      I would like to know your thoughts on the Florida Keys especially the Upper Keys or the Key Largo area. Although the Key Largo area did not get hit with Irma as bad as the lower Keys, it was affected. I ask about the Florida Keys as in my opinion it is a different market than the mainland of Florida. Many people own high-end homes and only use them several weeks out of the year. I’m certain that’s true in other parts of Florida as well. The one driving factor, at least I think it is a driving factor is supposedly there is going to be a moratorium on building in the Florida Keys in the next two to three years. That moratorium alone I would think would keep prices elevated in the Florida Keys I would love to hear your opinion.

      • Hello Billy,
        I would take a look at what is happening with the Federal Flood insurance program, FEMA and private insurers before investing in an any high risk (and growing?) natural disaster area. There are other waterfront/water dominated areas that I feel have a far higher chance for long term appreciation, outside of Florida, where the risk from natural disasters is far lower with no hurricane risk at all. I’ve seen expensive homes and lots in Florida become submerged and worthless. Personally, I would be a seller in high risk natural disaster areas, not investing money into them. I can enjoy the Florida Keys as a visitor just as much as an owners can. But as a visitor, I can leave without a care before a hurricane ravages the area, owners can’t. That’s just how I see it, others such as sellers in these areas or their agents will likely say something different. Good luck Billy.
        Ron Stack

        • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.
        • Is there a better state to relocate to or a better retirement lifestyle for you than moving to Florida? You’ll know after reading How to Retire Happier.
  3. Hello Ron,

    Thank you for the great article. I would like to know your thoughts on what happens to the real estate market after a hurricane in very high end neighborhoods in South Florida. Specially around the Miami area, like Coconut grove, key Biscayne, Miami Beach, ect. Since workers will not likely buy homes in this area, how is the market affected. Also, how much do you actually think the supply of homes was actually affected in these areas after Irma. I have heard that many houses were able to survive the hurricane without much damage. Is this true?

    Thank you

    • Hello IsaBella,
      Hurricane Irma did not make landfall in the areas you mentioned. The article above applies to places in Florida where hurricanes make landfall or travel through shortly after landfall before the hurricane loses much of its destructive power. Don’t be fooled, the Miami Southeast Florida area has suffered hurricane devastation numerous times in the past and it will happen again, the only question is when. Some of the areas you mentioned are now experiencing “sunny day flooding” which they didn’t in the past. These places are some of the ones you don’t want to be in when the next major hurricane hits there. Please see the links below for more…
      Ron Stack “That Best Places Guy”

      • Want to be certain if moving to Florida is right for you or your family? You’ll know after reading the Florida Move Guide.
      • Is there a better state to relocate to or a better retirement lifestyle for you than moving to Florida? You’ll know after reading How to Retire Happier.

      Hurricane Irma Track

      Hurricane Irma Damage Images

    • Its a great time to buy? Yea, it’s always a great time to buy…for real estate agents, but buying after a hurricane mean paying too much to buy junk and risk buying a home that’s going to grow mold after you moved in. Run, don’t walk, from agents that tell you its a great time to buy when your common sense tells you otherwise.

Comments are closed.