After Irma, buyers might face higher prices for newer Florida homes
Canadians dropped a whopping US $19 billion last year buying up real estate in the U.S. And Florida was their leading destination.
Hurricane Irma is unlikely to curb that trend, according to local real estate agents. But the storm might have a lingering impact on property prices, they add.
“Very little, if anything, is going to happen,” said Brent Leathwood of Sarasota, Fla.-based Cross Border Realty, which specializes in helping Canadians buy in the state.
If there’s any dip in demand at all, it’s going to be short-lived, he predicts.
“There will be a pause, and people will regroup,” he told Global News. But “in six months the vast majority of people will have forgotten about it.”
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Danny Hertzberg, who sells luxury real estate in Miami Beach, says he’s constantly taking calls from potential buyers. The only slowdown he foresees is in sales closings, with the devastation wrought by Irma delaying a slew of real estate deals.
Still, both Leathwood and Hertzberg believe the storm will help increase the price spread between older and newer Florida homes.
After Hurricane Andrew ravaged the Sunshine State in 1992, Florida legislators adopted some of the strictest building codes in the country, noted Leathwood.
It’s part of the reason why clients who’ve been in touch with Leathwood after Irma have only reported minor damage.
The other reason why damage was relatively limited is that Irma didn’t hit Florida as badly as it could have. Had the storm traveled just 30 kilometres west of its actual path, it might have racked up $200 billion in damages instead of around $60 billion, according to one estimate. It also helped that Irma had weakened from a Category 4 hurricane when it hit the Florida Keys to a Category 2 storm when it reached the Tampa Bay area.
Still, buildings built before Andrew, especially older homes dating from the 1940s and 1950s, were much harder hit, according to Leathwood.
Even before the latest hurricane, he would seek to direct clients to newer buildings because of the concerns about potential flooding and wind damage, he told Global News.
Now he expects it will be even easier to convince buyers to see reason and forgo a bargain on an older home in favour of more modern structures.
Hertzberg said he’s already heard from prospective buyers who have specified they’re only interested in newer buildings precisely because of Irma.
Modern structures with open spaces and large windows were already all the rage before the storm, he said.
“Now, there’s even more of a demand [for that]. I’ve heard from clients – they want newer structures because of the type of building, the impact windows, the higher elevation.”
The state now requires new homes to be built at higher elevations to reduce flooding risk, he noted.
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“On top of the aesthetic element … the security aspect, asset protection have made a big difference.”
But safety comes at a price. Already before Irma, newer properties in Sarasota and Venice were easily selling at twice the price of older homes, said Leathwood.
The modern property his typical Canadian client would purchase in the area costs US $300,000. A comparable home from the older housing stock comes in at around US $150,000, he said.
With even more buyers now willing to consider only recent construction, that divide will likely widen even further.
Will the hurricane spook buyers of waterfront property, too?
Leathwood also expects he’ll have an easier time persuading clients to buy properties that aren’t directly on the waterfront.
“I always tell them, choose [the homes] that are 10 to 15 miles inland.”
The beach is still only a 15-minute drive away, but the risk of flood damage is dramatically reduced, he argues.
Indeed, the storm could deter some coastal property buyers, according to the South Florida Business Journal.
Hertzberg, though, doesn’t see it that way.
“I think people understand the risk of coastal cities, whether it’s New Orleans, Miami, Houston or even New York, which we saw from Hurricane Sandy.”
Florida Realtors, the trade group representing Realtors in the state, told Global News it is too soon to assess potential real estate market trends.
“We haven’t looked at that yet. There’s no data,” spokesperson Marla Martin said.
© 2017 Global News, a division of Corus Entertainment Inc.