Houston, Texas is still one of the most popular places for American homebuyers despite mass-flooding in the wake of Hurricane Harvey.
According to The New York Times, Houston not only continues to see population growth, but also has a steady growth of up to 40,000 housing units annually.
“You have a country that’s divided between high-cost places like Bay Area and New York and higher unemployment areas like Detroit, and places like Houston pick up the slack,” BuildZoom chief economist Issi Romem told NYT.
Metropolitan areas such as Los Angeles and New York struggle with high-priced, limited housing and a growing population. Homeowners who can afford to purchase a residential space in these areas can buy homes with a 15 or 30-year mortgage and increase their home equity as they age. Yet, because many Los Angeles homeowners are often convinced to purchase homes they can’t afford, many end up in the foreclosure process and potentially homeless.
Houston, on the other hand, offers its citizens the metropolitan life they want with the affordable housing they need. This is because Houston real estate is able to build almost anywhere.
According to The New York Times, Houston’s housing market is tied to its population growth and the limited regulation on the market makes housing not only affordable but cheap. For this reason, many potential buyers are still interested in purchasing Houston homes despite residential flooding and hurricane damage.
Homeowners Sue and Roger Powell had been in the process of selling their 7,100-square-foot suburban home for six months. The Powells were sure they wouldn’t see offers on their home for years after Hurricane Harvey rendered their home partially underwater. However, this wasn’t the case.
“Somebody actually called [our real estate agent] before we got back in here,” said Sue Powell.
The Powells weren’t the only ones shocked by the interest. According to The Real Deal, the national real estate brokerage company Redfin had up to 45 interested home buyers ready to invest in storm-ravaged housing. Redfin chief executive Glenn Kelman was surprised that only eight potential buyers pulled out after the hurricane, only to be replaced later. Economists have predicted that interest in undamaged Houston homes will increase as well as the price of those homes. But many potential home buyers are still willing to purchase damaged homes.
On average, significant water damage can cost a homeowner up to $5,757 to $10,000. Not only that, but severe hurricane winds can create additional damage to a home’s siding, stealing up to 10% of a home’s value. However, potential home buyers are willing to overlook these damages for a discounted price, especially with insurance money assisting real estate developers and government assistance helping to rebuild the city.
“It is one of the most affordable housing markets in the country because people were able to build in places where they were likely to get flooded in the future,” said Zillow chief economist Svenja Gudell.
Many Houstonians have grown used to their area’s chronic flooding. According to CNBC, Houston suffered up to $3 billion of insured losses due to water damage between 1999 and 2009. That’s more than the entire nation’s expenditure on property damage caused by termites every year.
Yet, Houstonians still can’t be deterred from the housing market. Instead of looking elsewhere for flood-free areas, the city instead has begun building elevated housing in recent years. Brian Silver of BSA Concepts constructs new Houston housing a foot above FEMA-predicted floodwater levels.
“If you elevate your house,” said Silver, “you’re out of the floodplain.” And if your home is out of the floodplain in Houston, odds are the value of your home will be increasing over the course of the next few months.”