On today’s show we’re taking a look at the aftermath of Hurricane Ian, a week after the event cut a path of destruction across the middle of Florida. I have spoken with several people I know in Florida who own property there and have recounted their experience in that harrowing day.
Beyond the immediate aftermath of the storm, and helping those who have lost their homes, the biggest question is on the future of the market post hurricane. Florida is no stranger to hurricanes.
There was Hurricane Andrew in 1992 which caused major damage and flooding in Miami and the Florida keys. That storm caused $25B in damage in those dollars. We learned a lot about critical infrastructure from that storm. The local telephone operators stored the battery banks which would keep the phone network running in the event of a power outage in the basement of the buildings. The flooding from the hurricane, flooded the basement and shorted out the batteries causing an even more widespread phone outage than merely the loss of electricity.
I used to own properties in Pinellas county and I spent several days shopping for property in Fort Myers and Cape Coral.
In the end I chose not to purchase. So many of the homes were too close to sea level for my comfort. The idea of a canal behind your home with your boat parked out back seemed appealing. But the reality of many of these properties is the network of man made canals is so extensive that you might have to navigate a few miles of canal before getting to the open waters of the Gulf. You would think that people would shy away from buying in hurricane prone areas. Did Miami lose population in the wake of Hurricane Andrew? Not at all. Back in 1992, Miami had a population of 4.1M people. Today, Miami has a population of 6.2M people. The city has added another 1.9M people in the 30 years since the hurricane. In fact, the population grew even in the year immediately following the hurricane.
How many of the homes in Florida are truly second homes is a topic of debate. According to state statistics, about 1.1M homes or about 14% of homes are second homes. I believe the real number is actually much higher. If you lived part of your working life in NY state or Mass which have very high state taxes, there is a large incentive to declare Florida as your principal residence and your vacation home is in NY or Connecticut or Mass.
There is no doubt that the real number of vacation homes in Florida is much higher than the official number. When I visit Palm Beach where my Aunt and Uncle used to have a second home, very few apartments have lights on in the evenings. That suggests to me that these apartments are vacant for a large percentage of the year.
Host: Victor Menasce