Navigating Natural Disasters: Understand the Real Estate Impacts

No matter where you live, at some point a natural disaster may happen. Understanding the economic impact of those disasters can empower you to not only serve your community during a time of crisis but also lead through recovery. Part of your job as a fiduciary is to provide vital information and perspective and learning how the real estate market can perform following a natural disaster will enable you to do that.

What’s the Usual Timeline for Recovery?

To help answer this question, the KW Research team, led by Ruben Gonzalez, looked at home sales in regions affected by three natural disasters: Hurricane Katrina, the Baton Rouge Floods, and Hurricane Harvey.  By comparing the unit transactions in these areas to the national average, you can see the immediate impact and how long it takes to return to “normal.”

The data shows that it typically takes 3-6 months for the housing market to return to the national trend line. Now, every disaster is different and has differing levels of damage, so this timeline may vary based on the event.

The Three Phases of Real Estate in an Area Impacted by a Natural Disaster

Looking at the patterns of transactions in these regions, three distinct phases of economic activity emerge.

Phase 1: Disaster

Immediately during and after the event, the market slows or even comes to a complete stop.

Phase 2: Displacement

People who have been affected by the disaster have choices to make. Some may need somewhere to go. They may look to relocate to another area, or they may want to stay and find a new place to live. This creates market pressure for any properties that are undamaged.

Not everyone who has damaged property is in the same situation. Just as some may want or be forced to move to a new home, there are others who will want to stay and repair their homes. Depending on the severity of the damage, they may still need to temporality relocate.

The length of the displacement and return to home, or the repair to sell the home after a relocation, is shaped by whether or not they are insured.

Keeping these nuances in mind can help you set realistic expectations with any potential clients you serve following an event.

Phase 3: Stabilization  

The market stabilizes and recaptures lost market share from phase one. The prices may have changed, but the number of transactions will return to the national trend line.

What Can You Do?

Agent and Coach Mark Brenneman has unfortunately led through several natural disasters. He says that there’s three things an agent can do to help their community during these challenges:

Care Calls

It may sound trite, but it’s just important to reach out to people during difficult times and check in on them. Ask how they are doing and see what they need.

Be the Person Who Has What They Need

In the aftermath of a disaster, people need all kinds of things: generators, clean water, toilet paper – and often there is a delay for official, government aid to get to them.

Molly de Mattos, an agent in Asheville, rented a U-Haul truck to help someone move when her area was struck by the unexpected flooding following Hurricane Helene. She quickly put the truck into action, hauling supplies to the community and acting as “the boots on the ground” for people all across the country who wanted to help.

You may not be able to do everything for everyone, especially if you too have been impacted, but you can probably help someone. There are also organizations like KWCares that you can help fundraise for who will be able to provide immediate relief in the form of funding, supplies and like Molly de Mattos, boots on the ground support.

Check-in Long-term

In the immediate aftermath of a disaster, there can be a rush of aid. Over time, the trauma can still linger but the support lessens. This means that if you’re checking in on your sphere, don’t just call once. Check in once a week or once a month, and make sure to ask about more than the tragedy. Offer some hope and build relationships – be a good neighbor as well as a great agent.

Do you have any additional tips for supporting those in need? Share them on our Facebook page and don’t forget to check out our blog between newsletters for more insights and resources.