05 Oct Irma’s Got Nothing on Miami’s Real Estate Market
Hurricanes are a part of life in Miami that homeowners expect and are prepared for
By Ross Milroy | October 4, 2017
It takes more than some downed trees and wind gusts to scare off Miamians. The same holds true for the vast majority of investors looking to buy in Miami and those who have vacation homes here. There are natural disasters in practically every major city. California has earthquakes, tornadoes in the Midwest, and hurricanes can hit pretty much any coastal city. Hurricanes are just a part of life in Miami.
Sadly, Hurricane Irma did come with tragedy for some, but for the majority of people in Miami, Hurricane Irma was a big inconvenience and for the hundreds of thousands that evacuated it was also an expensive event. Many people and the media have asked if I think Irma’s wrath will be a detriment to Miami’s real estate market. I firmly believe that it will not be, and in some cases, it might even help invigorate it.
Those homeowners who did have home damage will ultimately repair and improve their properties to a point that was even better than it was prior to the storm. Some who are tired of the inconvenience of putting up hurricane shutters will opt to install pricey hurricane impact resistant windows. Those who sat through long power outages might look into a new generator or solar power (that is if they can escape the clutches of FPL, but that’s an issue for another day.) Florida roofs have a bit more than a 20-year lifespan, and if insurance is footing the bill, then you might have a good deal of homes with brand new roofs. These major storms increase the cost of construction and cities frequently adopt new building codes, which eventually increase property values throughout Miami. If you were shopping for a home and had a choice between one with impact windows and one without, which would you choose?
Even for those without damage, or for those who do not have the funds available for these pricey improvements are not likely to pack their bags and head for the hills. Rich, poor or otherwise, people are part of a community. Their families are here, their friends are here, business, schools and for many, the only city they know. For many it’s not even a consideration to move away from family. Those who nest, those who keep several generations under one roof, will clean up and tell themselves they will be ready for the next one to approach Miami.
When it comes to luxury condos, they remain the hassle free investment option and also proved to be a safer option for at least storms of this strength. It is possible that some of the fears and global impressions that Miami faced devastation will cause some condo owners who have their properties on the market to lower their asking price for a quick sale before another hurricane comes about. This could create a temporary boom, but people by nature are very short-sighted — it will not take much time for Irma to be one of those tales we tell of how Miami was just missed… also giving a false sense of security.
It’s this false sense of security and willingness to ‘forget’ that is one of the most unfortunate parts of what could be a true wake up call. Developers will continue to fight Mother Nature and continue to build within feet of Biscayne Bay. And by and large, the City and commissioners will allow it to happen. It’s almost universally agreed that Miami is facing detrimental coastal flooding, but it’s usually the mentality that ‘we have at least another 20 to 30 years.’ However, long before then, the developer will have sold the buildings, and the commissioners will be out of office. This is not a problem that will go away and one that must be addressed.
One industry that won’t be forgetting what these storms can do and how likely flooding can be is the insurance industry. Some say that the hit to insurance companies could be as high as $40 billion for Irma alone. Every year insurance rates go up in Miami and every year we get closer and closer to insurance companies refusing to offer coverage at any cost. No insurance and no mortgages? The streets might not be dry, but the city’s coffers certainly will be.
It’s fantastic to see how communities come together during these times of need, but it’s crucial that we don’t forget. It’s crucial that developers and city authorities don’t turn a blind eye and that they make a commitment for true strides in preparing for the future. We know what’s coming – the time is now, and our city and state governments need to incentivize and allow property owners to adapt to prepare for the inevitable.
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Copyright 2017. Ross Milroy Realty, LLC