Affects of a CAT 5 Hurricane on the rental market

5 Replies

I live in Panama City, Florida. Last year we had a Cat 5 hurricane that basically turned everything upside down in our RE market. An interesting fact came out recently. The Panama City\Bay County area has the exact opposite owner/renter ratio than the national average. Our market is 70% rental and 30% owner occupied. The has caused a huge problem because of the number of displaced renters. There are simply no rental out there for them. Countless businesses cannot reopen or have limited hours a year later because there are no job seekers. I don't really have a question here, just sharing and soliciting discussion. The situation has made purchasing new rental properties impossible because all values are hyper-inflated for the short term.

Hi John,

  I've noticed the same effect happening, and here is my prediction:  Out of town investors are snapping up property left and right at the inflated prices, local owners are refinancing because they can and taking on more debt.  Fast forward a few years when inventory is back up, rents will fall, and there will be people scrambling to offload their inflated properties.  I'll be investing elsewhere until that happens, then I'll be back buying in my own backyard again.  Good Luck to you!

Being from New Orleans, I will tell you some of the longer term effects of a major hurricane.  Hurricane Katrina hit the MS Gulf Coast 14 years ago.  The hurricane itself wasn't too bad for NOLA and the surrounding areas.  But then some of the levees broke.  Cue massive flooding.

People moved away permanently.  Our population numbers are still down from what they were before Katrina.  However, the suburbs...which largely didn't have any flooding...have increased in population.

The first 1-2 years.  Businesses in the rental, auto, appliances, furniture, and construction industries were ROLLING in money!  But had a really hard time finding employees.  Lots of businesses closed permanently...there are still empty strip malls.  But employees were hard to come by for most companies.

However, once things settled down to the new normal, those same industries were pretty much stopped in their tracks for a few years.  Everyone had new places to live, new vehicles, new appliances, new furniture.  It was especially sad for the furniture stores.  There were a few family-owned ones that had been in business for decades, that went out of business.

Real estate-wise, we also had a lot of OOT investors snatching up distressed properties on the cheap. Some of them should have partnered with a local ;). I saw quite a few higher end looking houses being built in shady neighborhoods. I strongly suspect for some of them, spent more in construction than what the house was worth. The fast movers might have been okay because rental prices and home prices skyrocketed for a brief period of time. But then it stopped cold for quite awhile. I remember seeing signs and listings where owners were begging for a seller OR a renter. Anyone.

My first REA (also a causal friend), who had weathered many economic downturns with no problems thanks to her long list of clients and experience, said it was the first time she was hurting and hurting bad.  She'd been an REA for over 25 years.  Her whole career.  And started looking for other work.  The 2008 housing crisis hit us a little later down here, but that was a factor also.  The real estate market, especially for property sales, was stagnant here and didn't start picking up again until around 2011-2012.

My opinion. It's so much easier to buy in my backyard. Especially because there is a decent ROI here for buy and hold anyway. So I keep doing it. But I know I need to STOP IT. Too many eggs in my hurricane-prone basket. With rising temps and ocean levels, major hurricanes are becoming even more likely. Just like we saw in 2017.

Originally posted by @Jennifer T. :


My opinion. It's so much easier to buy in my backyard. Especially because there is a decent ROI here for buy and hold anyway. So I keep doing it. But I know I need to STOP IT. Too many eggs in my hurricane-prone basket. With rising temps and ocean levels, major hurricanes are becoming even more likely. Just like we saw in 2017.



 This is why I refuse to buy anything on a coast. My business partner really wants a vacation rental in Florida, but I don't want anything to do with it. It'll be, literally, under water in 50 years.

You pay the highest home insurance in the nation, head and shoulders, for a reason. The insurance companies aren't the only ones forced to gamble on the weather/climate when you deal with property in Florida. 

Originally posted by @Nicole Heasley :
Originally posted by @Jennifer T.:

My opinion. It's so much easier to buy in my backyard. Especially because there is a decent ROI here for buy and hold anyway. So I keep doing it. But I know I need to STOP IT. Too many eggs in my hurricane-prone basket. With rising temps and ocean levels, major hurricanes are becoming even more likely. Just like we saw in 2017.



 This is why I refuse to buy anything on a coast. My business partner really wants a vacation rental in Florida, but I don't want anything to do with it. It'll be, literally, under water in 50 years.


I have been so tempted to buy a vacation rental on the Gulf Coast of FL or AL, when I retire from my W-2 job!  It's one of my favorite places to vacation and is only a 4-5 hour drive away.  But then I remind myself, STOP IT!  Expand my real estate holdings to cities that are NOT part of Hurricane Alley. 

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