Texas & Florida post-Hurricane, Now What?

[Lane Kawaoka]

Due to recent hurricanes...

I got to pondering looking back when New Orleans was hit by Hurricane Katrina there were short-term disruptions to gas prices especially since Houston is a major think tank for the metro industry. I expect Federal money which might have been focused on (helicopter money) be spent on infrastructure spending or tax cuts NOW be redirected to damage recovery... Which will manifest as tax breaks, loan subsidies, or other incentives offered to entice investment capital to flow into affected markets?

Definitely an opportunity in the short term to go in there and develop to take advantage of the fiscally earmarked casually funds.

As a long-term buy hold investor what I am keying in on is what the big institutional players (like insurance companies) will do. I suspect they will actually have to pony up and pay claims in Houston and Florida which will divert funding away from their Plan A: financing new class A multi-family apartments in other markets. This results in less new developments coming online which is great for Class B and C MFH investors who have been struggling with the recent cap rate compression.

Any thoughts?

[Guy Gimenez]

1. Low / no equity homeowners will walk from their properties and focus on rebuilding their lives as renters for the next 2 years. These foreclosures will certainly impact values in numerous communities throughout Houston. 

2. Many insurance companies will re-think the coastal markets and their policy premiums for same.  This, along with the inevitable increase in flood insurance premiums will also impact buying power for future homeowners. 

3. Landlords will be in demanding higher rents as there will be a shortage of housing for the next year or while properties are rebuilt. 

4. Long-term impact can only be speculated on since this was an epic storm that caused billions in damage to homes, autos and businesses but those purchasing SFR's better buy very, very low or they could be the next distressed sellers.