As Hurricane Irene churned toward New England Thursday, public officials reacted by taking fast-acting measures to preserve lives and property, with ""President Barack Obama"":http://www.barackobama.com/im-in-splash-2 ""signing"":http://www.whitehouse.gov/the-press-office/2011/08/25/president-obama-signs-north-carolina-emergency-declaration a declaration of emergency to free up federal assistance for North Carolina. With states as farther north as Massachusetts and New York bracing for whiplash from the storm, _MReport_ speaks with real estate experts to forecast problems for sales, prices, and construction as a natural disaster looms.[IMAGE]
Classified as a Category 2 with winds expected to exceed 100 miles per hour, Irene packs a wallop for the entire U.S. eastern seaboard, home to approximately 65 million residents and valuable real estate, according to ""National Public Radio"":http://www.npr.org/2011/08/26/139964072/nightmare-scenario-hurricane-menaces-east-coast?ps=cprs. The news service joined other outlets by predicting billions of dollars in damage as the weather system passed through several states.
Still, the unusual northeastern storm may well fall short of a hundred-year event for real estate markets along the seaboard, at least by past standards. A ""paper"":http://www.nhc.noaa.gov/pdf/NormalizedHurricane2008.pdf published by several researchers with _Natural Hazards Review_ (NHR) documented nearly 100 years of economic devastation wrought by marauding storms across the coastal United States.
Their findings: Miami suffered the most under the catastrophic Great Miami Hurricane in 1926, netting $157 billion in damage, with New Orleans ranking second with $81 billion in damages as a result of Hurricane Katrina. With Irene set to crash into New England, it is unsure how real estate markets and mortgage industry professionals will feel the effects.
What would the devastation mean for the housing sector and economy, currently in a rut, at large?
""If you have a particularly damaging or insidious weather event, it can have a disastrous effect on the market at large,"" says Craig Grella, founder of ""CreativeREO.com"":http://www.biggerpockets.com/blogs/244/blog_posts/5780-how-weather-affects-home-sales, a real estate consultancy Web site. He cites abysmal home prices in New Orleans that remain far below record-lows around the rest of the country some six years forward.
Commenting on economic fallout for housing, he says it is difficult to see how one event, such as a hurricane, will ""precipitate market movement.""[COLUMN_BREAK]
His opinion? ""I think one event like a hurricane isn't going to do much damage to the home sales market, but sustained bad weather can obviously just wreak havoc on the market,"" he says.
""If somehow the area is seen as less desirable after something like this, then yes, prices will take a hit,"" says Cory Hopkins, managing editor of the Banker & Tradesman, a publication by the Massachusetts-based ""Warren Group"":http://www.thewarrengroup.com/portal/.
Dismissing the potential for fallout from Hurricane Irene, Hopkins recalls a flurry of recent snowstorms that threatened to bury sales and prices across New England.
""Series after series of snowstorms didn't do the industry any favors,"" he adds. ""Seasonally winter is already slow and any excuse to get out of your house is not good for the real estate industry.""
Surprisingly, home sales across the region over January 2010 and 2011 - periods that underwent the media-dubbed ""snowpocalypse"" - withstood impact from confidence-crimping events like rolling power outages and breaking pipes, which often encourage relocations to warmer areas, alongside depressed sales and prices. Artificial stimuli like the federal homebuyer tax credit, still in effect over January last year, help explain the unseasonal boost.
""What happened on the East Coast was even worse, as people struggled to dig themselves out of almost three feet of snow for over a month,"" Grella wrote in a blog post, tying the weather effect to a 1.4-percent decline in home sales over March, as reported by the ""National Association of Realtors"":http://www.realtor.org/.
For real estate markets historically susceptible to the wrath of hurricanes, the devastation remains just as real and long-lasting.
In an ""economic outlook"":http://www.freddiemac.com/news/finance/pdf/200509_outlook.pdf released 2005, ""Freddie Mac"":http://www.freddiemac.com/ sized up the costs to the economy and housing for the nation in Katrina's wake, forecasting shocks that would slash GDP to a 0.75-percent annual rate and gut growth over the latter half of the year to an annualized 3.5 percent. It also predicted payroll cuts by some 200,000 to 300,000, which it called ""directly attributable"" to Katrina. The outlook also warned of ""additional upward pressure on construction material costs,"" with materials like lumber, cement, gypsum board, and more forcing homebuilders to adjust their ledgers.
With dramatic and devastating weather patterns continuing to take hold, the NHR paper recommends a policy prescription for the nation's vulnerable coastal regions.
""Unless action is taken to address the growing concentration of people and properties in coastal areas where hurricanes strike, damage will increase, and by a great deal, as more and wealthier people increasingly inhabit these coastal locations,"" it says.