CoreLogic estimates that Hurricane Harvey could cause $40 billion in total damage, making the storm one of the most destructive in history.
The damage to Houston and surrounding areas ranks third to Katrina ($110 billion in 2005) and Sandy ($50 billion in 2012) as the most expensive hurricanes and the impact will be felt for years to come.
According to REITS, “Houston has approximately 1.6 million single family homes and total housing of 2.45 million units (including apartments)” and “the damage suffered thus far has disproportionately affected single family homes more than commercial properties.”
REIS estimates that Houston’s commercial property market is valued at $130 billion and “the demand for apartments will likely surge in the next few months as it did in late 2005 in New Orleans”. Since the amount of new inventory will be cut down, REIS believes “this may boost rents considerably, even as much as 10%.”
According to Matt Werner, Managing Director / Portfolio Manager with Chilton Capital Management,
“The catastrophe from Harvey will produce a ripple throughout the Houston economy. I would expect occupancy to rise among self-storage, apartment, and hotel properties. Pre-Harvey, all three of these property types were overbuilt, so this will help current owners, assuming the property is not damaged or destroyed.
Property repairs will be a boon for job growth, along with new residential construction. This wave will be temporary as the property types attempt to regain equilibrium, but it could last for several years.”
REIS reports that “given that so many homes and commercial properties appear to have been irreparably harmed, the demand for apartments will likely surge in the next few months as it did in late 2005 in New Orleans. At the same time, the inventory will be cut due to the storm. This may boost rents considerably, even as much as 10%.”