How will Irma impact the real estate market in the short and long term?

As the first orange and pink hues of sunrise touched the early morning sky on September 11, 2017, Florida residents emerged from their homes to gaze upon the aftermath and havoc caused by the historic Hurricane Irma. With record-breaking winds hitting South Florida on September 10, 2017, it became apparent to all residents that South Florida wouldn’t be the same.

Many Florida residents, specifically those from the Florida Keys, had to endure mandatory evacuations and to this day, have not been able to return to see what this catastrophic storm did to their homes. Many residents of the mainland, including Miami Beach and other coastal cities, have also been unable to return and news of their property and belongings are left to the imagination as they observe updates via the news outlets. 

While many officials in South Florida praised the newer building codes and up-to-date structures the city implemented over 20 years ago in the wake of Hurricane Andrew, over 6.2 million people are currently suffering from power loss; a ghastly 60% of the state.   Neighborhoods are in disarray as trees were uprooted, roofs blown off, windows broken, cars overturned, streets flooded and power-lines downed. Yet, as the first responders and servicemen work diligently (many working non-stop through the night), South Florida is slowly showing her glamour once more.

But what does the impact of Hurricane Irma mean for the South Florida real estate market? Experts have yet to determine the full extent to which the effects of Irma will impact the real estate market, still many are counting on past and personal experience to give warning to all those in the real estate field that hard times may lie ahead.  Rumors are circulating that property loss caused by Hurricane Irma could range between $65 billion and $75 billion.  Many homes in South Florida, an estimated 1.3 million, are located within flood zones and only 34% of these have flood insurance.


“Insurance companies need to keep a certain amount of reserves to pay out claims. When their reserves are high, insurance rates typically are low,” said Izzy Green, CEO of the New York-based insurance brokerage Evergreen Insurance and Risk Management. “When a catastrophe such as a hurricane hits, and insurance companies pay out high claims, their reserves go down, which ultimately forces them to increase insurance rates across the board – meaning even in New York – in order to increase the reserves again,” he added.

My insurance agent has warned that increases are forthcoming and coverage lessened.  In the short term, it may not be a factor for those currently under contract or buying soon.  However, those with a longer term horizon (12+ months) for buying a home may want to prepare for the added cost or consider entering the market now and locking in rates. 


“Real property taxes are not directly affected by hurricane damage,” said Jerald S. Beer, partner at Ciklin Lubitz & O’Connell law firm in West Palm Beach, Florida.  However, there could be a trickle-down effect.  For example, if a home suffers $100,000 in damages during 2017, your real estate taxes will not be affected and that’s due to the fact that real estate taxes are assessed as of January 1 of the current year.  However, if the damage is not repaired by Jan. 1 of the following year, in this case 2018, the assessor’s office should reduce the value by at least the reported amount of damage. It will certainly result in lower property taxes.  However, this is an optimistic point of view given that cost for city services continue to rise and infrastructure repairs will be undoubtedly pass through to the home owner.


There were many closings that were delayed prior to the storm.  Insurance coverage was the primary reason.  Immediately preceding a storm, insurance companies stop binding insurance once the storm is within "the box".  And, since lenders require insurance coverage at the time of closing, it translates into a delayed closing.

The challenge once the storm passes, is that these events trigger what is know as "force majeure".  In simple terms; most contracts include language that deal with "acts of God", natural disasters and so forth.  It addresses the potential outcome from damage to property.   A seller typically has 14 days from the original closing date to assess, repair and close.  Otherwise, a buyer may cancel the contract and receive a full refund of his earnest money deposit.  In most cases, a re-inspection of the property will occur in order to ascertain damage to the property and if closing is even a possibility.

For now, it appears that both buyers and sellers are adhering to terms and are accommodating.  I see this as a positive reaction in the marketplace and the foundation toward stability. 


Only one thing is clear, that while South Florida continues to recover from this traumatic natural disaster, NOTHING is certain.  The short-term effects may include postponed inspections and closings, the possible long-term effects could be higher insurance rates, or lower property taxes, and even lower home values.  

However, historically, a phenomenon occurs post hurricane.  Insurance dollars usually floods into the marketplace and a surge of activity occurs.  Landscapers, electricians, contractors, and a slew of other trades are all busy and prospering.  This is what we hope will ignite the real estate market even beyond the typical increase in activity which occurs after Labor Day each year.  The long term economic affect, I feel, will be positive.

Real estate has always been very local in nature.  Our communities all have their different characteristics and unique vibrancy.  I have complete confidence that we will recover nicely and we will continue to experience high demand, both nationally and internationally, for our beaches, our diverse culture, favorable business environment, and our sunshine!

I am here to help guide you and make sense of it all; whether you are buying or selling.  I can offer 28 years of experience and having gone through not 1 but several storms myself, I have seen the highs, lows, hype, fears and can offer practical and sensible advice.