All right, everybody, welcome back to the show, ready to dive in.
Always.
What do we got today?
Well, today we're thinking about Florida real estate.
Oh, sunshine and beaches, what could be better?
Right, but we're not exactly talking about the postcard version of Florida today.
Uh-oh, what's the catch?
We're diving deep into what happens after a hurricane hits.
Ah, I see, so after Helene and Milton.
Exactly, those two really shook things up.
Got your snorkel ready.
Uh-huh, ready to get soaked in some data, let's do it.
Okay, so I always hear this idea about hurricane discounts on properties.
Oh yeah, by low, everyone loves a deal.
Right, but is it actually a smart move?
Well, we've got a stack of articles here and honestly, it paints a pretty complex picture.
Yeah, that's what I figured.
So we're taking Tampa Bay as our case study today, right?
Right, but the trends we're seeing, you know, from MarketWatch to those academic journals,
it's all pretty consistent across hurricane prone areas.
So Helene slams into Tampa Bay, was it category four?
Yeah, category four, no joke.
And suddenly boom, for sale, signs everywhere.
Like mushrooms after a rain, right?
Exactly, so is it heartbroken families or?
Well, that's the thing, a lot of those signs, they're not from families at all.
Really, so who are they from then?
Investors mostly.
Yeah.
John Burns, Real Estate Consulting, they're predicting a massive wave of investor activity
in Tampa after Helene.
Okay, so how massive are we talking?
They're saying upwards of 60% of sales in some hard hit neighborhoods could be investors.
60%, wow, that's intense.
And usually it's what, like 20%?
Yeah, something like that in a typical year.
So yeah, big difference.
Okay, so what are these like investor sharks seeing that us regular folks are missing?
Well, first off, insurance.
MarketWatch is just full of stories about homeowners who were, well, let's just say
underinsured, especially for flooding.
Right, because even if I find some amazing beachfront condo, like super cheap.
If you can't get insurance or if those premiums are insane, then what good is the deal?
Right, exactly.
It's not a steal if you can't afford to actually live there.
And those premiums, oh, they're skyrocketing.
And it's not just the hurricane risk either.
Oh, right, because we have to factor in, what was it, that condo collapse?
Exactly, that condo collapse a few years back.
New regulations mean higher insurance costs for everyone, which of course gets passed
onto the buyer.
Right, of course.
So yeah, it's a bit of a trap, honestly.
Low sell price upfront that bam, slammed with insurance, potential future damage.
Yeah, starting to see why people might be hesitant.
And don't even get me started on repairs.
Oh, right, because even if I can afford to buy a place outright.
Those post-hurricane repairs, they add up so fast, John Burns, they estimate the average
cost to repair a flooded home in Tampa is going to be over $70,000.
$70,000, wow.
And that's on top of whatever insurance doesn't cover.
Yeah.
Ouch.
I wonder some homeowners are just throwing in the towel at that point.
It can be rough for sure.
I was reading an interview, I think it was in MarketWatch.
A mortgage broker had clients who just went through two major hurricanes back to back,
emotionally and financially drained.
Yeah, I can't even imagine.
And you know, with climate change, these storms are only going to become more frequent,
more severe.
Yeah, that's a point we definitely can't ignore.
Some people are really starting to question the long-term viability of owning property
in these areas.
You know, I can't blame them.
Totally.
So it's not just about like, oh, can I snag a good deal?
It's like, will this deal even be livable, let alone profitable in five, 10 years?
Exactly, precisely.
And that's where things get even more complicated because despite all this, despite the hurricanes,
the insurance, the repairs, there's still this huge demand for Florida real estate.
Oh, so people are still lining up to buy in Florida, even after all that?
Oh yeah, absolutely.
Especially from a particular kind of buyer.
Okay, so who are these diehard Florida fans?
Who's still buying?
Well, we've got two main groups.
First you've got those who are just like undeterred.
The risks, the storms, they don't care.
They want that Florida lifestyle.
They're like, bring on the hurricanes, I've weathered worse.
Uh-huh, exactly.
And they usually have the financial cushion to handle it, right?
Remember, was it 37% of Tampa homes are bought with cash?
Yeah, I remember that.
Crazy.
This big pool of people ready to just jump in, even if it means riding out a few storms.
Literally.
Okay, so that's one group.
Who else is in the market for hurricane battered properties?
Well, the investors, of course.
Oh, right, of course.
And I'm not just talking retirees looking for a vacation home.
This is good firms.
Wall Street money, they swoop in to capitalize on, you know, the chaos.
And their game plan is, surely they're not planning to just sit on these damaged properties.
Sit on them, no way.
They're buying low, gutting, and then rebuilding.
To more resilient standards, of course, which also means more expensive, and then flipping
for a profit.
So it's a classic real estate play, just like amplified by disaster.
Exactly.
And history tells us they're not exactly wrong to do this.
Oh, how so?
Look at Sanibel Island.
Devastated by Ian, what was that, two years ago?
Right, Hurricane Ian.
Just off.
Average home values, they plummeted right after, obviously.
Distressed sales, all that.
But guess what?
They've rebounded, like completely, even surpassed pre-Ean levels in some areas.
Yeah, that's wild.
So is it a good thing then, like for the people who actually live there?
It can't be that simple, right?
Yeah, you hit the nail on the head, it's not that simple.
Yeah.
See, if these investors are paying top dollar, even for properties that are, you know, pretty
messed up, what happens to the folks who live there before?
Right, the people who maybe can't afford to rebuild or who can't compete with these
big firms that have tons of money to throw around.
Exactly.
And that brings us to what we call the gentrification effect.
Oh, right, I've heard that term before, but never really knew what it meant.
What is it?
Well, after Ian, the Tampa Bay Times, they did a deep dive on this whole thing.
And what they found was actually really shocking.
Okay, I'm intrigued.
Lay it on me.
So logically, you'd think a hurricane would mean, like, lower property values, right?
Makes sense, less people want to live in a disaster zone.
But studies show that often, the exact opposite happens.
Really, how is that even possible?
Well, you have less housing supply because a bunch of homes were just destroyed, right?
But then you combine that with increased demand from investors and even from some residents
who are determined to stay.
That combo can actually drive prices up.
I think the Times found that in some areas after Ian, homes that had those high flood
insurance claims, they were selling for like 9% higher just a year later.
9% higher after a hurricane.
That's insane.
Yeah, it's crazy.
But, you know, this isn't just about buying either.
Slade had a piece about how some landlords, they use this situation, you know, evicting
long-term tenants so they can charge higher rent.
Oh, so they take advantage of this situation knowing that wealthier people will come in
after the hurricane and pay more for those same apartments.
Sadly, yes.
So you've got these two sides to the story.
On one hand, you've got people saying, Florida's resilient, the market always bounces back.
But on the other, you have this very real problem.
Where the people who lived there before can't afford to come back.
So their community is just gone.
Exactly.
And it's a cycle that just keeps repeating with every hurricane.
And, you know, we can't forget, this isn't just about individual properties or individual
people even really.
This is about bigger problems.
Like what?
Like housing affordability, disaster preparedness, even climate change adaptation.
Big picture stuff.
Right.
So if we zoom out even further then, what does all of this mean for Florida real estate
in general?
And are we saying that what, only super rich people are going to be able to afford a place
on the beach?
Or is that like overly dramatic?
I mean, it's a bit of both, honestly.
I was reading in fortune, they did a whole thing on pending home sales.
They're up nationally, which makes sense.
But Florida's coastal cities, they're actually seeing a pretty significant drop.
Oh, really?
So people are getting scared off.
Some are, yeah.
Especially with those insurance hikes we talked about.
Yeah.
I mean, who can blame them?
Yeah.
I think I remember reading about some folks getting hit with like a $7,000 insurance bill.
It's a small place too.
Oh yeah.
It's rough out there.
But then on the other hand, I saw this piece in Business Insider and it profiled this home
owner.
They slashed their asking price by like 40% after their house got flooded.
Oof.
40%, that's a huge loss.
Right.
But get this, they were flooded with calls from investors.
Like immediately.
So even with all the risks, people are still drawn to Florida.
I mean the sunshine, the beaches, I get it.
It's a powerful draw, for sure.
So what is it then?
Is this just a temporary thing?
Like people are scared right now because we had a couple of bad hurricane seeds, but it
will blow over.
Or is the sum going bigger?
Well that's the million dollar question, isn't it?
Is climate change finally impacting how we see these at risk areas?
Right.
Because on some level, we can't just keep rebuilding the same beachfront condos if they're just
going to get wiped out again in a few years.
Exactly.
Some experts think we're on the verge of a huge shift.
Like the financial and emotional toll of these disasters, it's finally going to outweigh the
benefits for a lot of people.
Especially if those insurance premiums keep going up.
I mean at some point, it's just not even worth it.
Exactly.
But then you've got the other side, the people who say Florida real estate is basically hurricane
proof that it's weathered storms before and it always bounces back stronger.
And let's be real, people love sunshine, they love being on the water.
That's not going to change.
And it's not just the people, right?
Didn't Slate talk about government policies that kind of prop up this whole system?
Right.
Like subsidized flood insurance, disaster relief, all of that.
It creates this weird situation where the true cost of living in these risky areas, it's
kind of hidden.
So are we saying it's a gamble either way?
Like buy now and hook for the best or stay away and risk missing out if Florida does have
another comeback?
You know, I think it's less about gambling and more about asking ourselves the right
questions.
But instead of just looking at individual properties and trying to make a quick buck,
what if we thought about rebuilding after these hurricanes differently?
Differentially how?
Like what are we talking about here?
Yeah.
Like instead of it being every homeowner for themselves after a hurricane, scrambling
to rebuild, what if the community like actually came together?
Okay.
Yeah.
I'm listening.
Paint me a picture.
What does that look like?
So imagine a hurricane hits, right?
Devastation.
They're freaking out, they get organized, they figure out what resources they have,
who needs what, and then they get creative.
Creative how?
Give me an example.
What are we talking about here?
Well, take housing, right?
Yeah.
Because that's the big one.
Instead of just rebuilding the same houses in the same spots just as vulnerable as before.
Right.
Which we know is a recipe for disaster.
Exactly.
They explore other options like community land trusts.
Community land trusts.
Okay.
Now you've got my attention.
I'm going to go through those.
So basically it's this nonprofit, right?
And they own the land.
Then they lease out the houses on that land, but at affordable rates.
Oh, interesting.
So instead of individuals bearing the burden of owning this potentially risky property.
It's shared.
Shared risk, shared responsibility.
Exactly.
And it helps keep housing affordable, especially for those long-term residents who maybe couldn't
afford to rebuild on their own.
Right.
Because they're not competing with wealthy investors or whatever.
Exactly.
And it opens up opportunities for better building practices too.
Like actually hurricane resistant homes, flood proof foundations.
Oh yeah.
That makes sense.
If the community is invested in these buildings, they'll want to make sure they're built to
last.
Right.
And those costs, they get spread out.
So it's less of a burden on any one person.
Okay.
I'm seeing how this could work.
It's like thinking bigger than just your own backyard.
Yes.
It's about the entire community.
And it's not just housing either.
But community gardens designed to withstand flooding, shared renewable energy.
It's about making the entire system more resilient.
So it's not just about rebuilding.
It's about building back better.
Yes.
And acknowledging that with climate change and everything.
We really are all in this together.
It's not about abandoning these areas entirely.
More like rethinking how we live in them.
Exactly.
Yes.
So that it's done in a way that's, you know, sustainable and equitable.
Okay.
I love that idea.
Instead of just like reacting to each disaster, what if we planned ahead?
Like what if we took all that money we spend on disaster relief and actually invest of
it in making these communities stronger beforehand?
Well, if we actually were proactive instead of reactive, that's the real opportunity here.
Not just surviving the storm, but actually using it to create a better future.
Yeah.
That's a powerful message.
It really makes you think, well, that's about all the time we have for today.
But wow, lots to think about, right?
Whether you're a homeowner or investor or just someone who, you know, cares about the
future of the planet, this stuff matters because the choices we make, especially after a disaster,
they have these ripple effects.
So keep asking those tough questions and keep the conversation going.
Thanks for diving deep with us today.