It’s clear. The housing market can’t take the shock of a natural event. While the exact numbers are still too difficult to determine, an estimated 10,000 homes and other structures have been demolished by floods, winds, or fires sometime during the last three months. Another disaster lies at the threshold of residential real estate as one considers the construction labor shortage that was already present prior to these disasters; thus making reconstructions and its repercussions severely problematic.
According to cnbc.com, “’The housing market can’t take the shock of a natural event,’ said Nela Richardson, chief economist at a real estate company. ‘It can’t take any shock because we are so tightly wound with inventory. Any change is a big change, and you’ll see that play out across the South.’”
According to the National Association of Realtors, available home inventory is acutely low across the nation. It continues to fall, resulting in the drop of home sales during the past 3 months and causing entry-level home buyers to step aside.
Even before Hurricane Harvey, Houston was the most active U.S. market for home construction, and yet, the number of homes destroyed by the storm “…surpassed the total number of single-family building permits estimated for the city in 2017.” The National Association of Home Builders (NAHB) has asked the Trump administration for help.
The magnitude of the devastation caused by the multiple wildfires in California still cannot be quantified. The destruction of thousands of homes on the West Coast is beyond comprehension, and will have to be rebuilt from “the charred ground up,” requiring “every available worker in the state and beyond”.
“All the resources are being drained to the rebuilding effort…,” Richardson said. “That is going to increase the cost of housing and renovation across the nation.”
The NAHB’s monthly sentiment index revealed that in contrast to the actual construction numbers homebuilder confidence jumped in October, with home builders citing improvements in current sales and sales expectations. Strangely enough, that follows a drop in sales of newly built homes in August, both monthly and annually.