Photo: Ed Uthman/Flickr
US homeowners affected by the recent hurricanes are expected to migrate into surrounding areas in search of housing, which will drive up prices and tighten inventory in those markets.
And the devastation caused by hurricanes Harvey and Irma has only exacerbated pre-existing inventory challenges, according to an October Outlook released earlier this week by Freddie Mac.
Some 270,000 homes were damaged or destroyed by the recent hurricanes, with 16,000 homes affected in the Houston area alone. Displaced individuals and families are now vying for a dwindling supply of homes in surrounding areas. Total home sales for August was a “weak” 5.9 million units, says the government-backed company that provides capital to mortgage lenders.
Texas and Florida, the two states that experienced the most damages from the recent hurricanes, together represent about 24 percent of the total number of housing starts in the country, according to Freddie Mac.
“Housing units impacted by the hurricanes are a fraction of the total starts in Texas and Florida, so we do not expect a huge national impact,” says Freddie Mac Chief Economist Sean Becketti, in the report.
However, the hurricanes did not help already low inventory levels.
“Building activities in the hurricane-affected areas may slow down as labor and capital gets drawn into rebuilding,” adds Becketti.
Meantime, mortgage delinquencies could rise an estimated 16 percent in hurricane-impacted areas, meaning as many as 300,000 borrowers could become “delinquent” and another 160,000 could become “seriously delinquent.” For its part, Freddie Mac has suspended foreclosures and evictions in the aftermath of the devastating hurricanes.
Securing skilled labor has been a thorn in the sides of builders. Despite 28,000 new construction jobs added nationally in August, the total number of construction jobs remains “below pre-recession peaks.”
Almost 70 percent of builders in Texas were reportedly having difficulties filling positions before the hurricane. In the wake of the hurricane, it‘s estimated that the Houston area alone could need as many as 20,000 skilled laborers to tackle the massive rebuilding effort, speculates Freddie Mac in the report.
Click here to read the entire report.