Tuesday, October 23, 2018
Business

Will Hurricane Irma slow Tampa Bay's booming real estate market?

Expecting the worst from Hurricane Irma, Tampa real estate agent Jeff Shelton fled to Atlanta where wind-whipped trees toppled onto two rental properties he owns. Back in Florida, his house and beachfront condo both survived Irma unscathed.

That's the kind of story he's happy to share with clients.

"I've got two executives with a major company that are relocating from Cincinnati and they don't have any concerns about moving to Florida," Shelton said. "California has its earthquakes and wild fires and mud slides and there are tornados throughout the Midwest. In Florida you know you're going to have hurricanes but what people are trying to do is be prepared. I think Florida real estate is still very attractive."

COMPLETE COVERAGE:Find all our coverage about Hurricane Irma here

Even in its weakened state, Irma caused plenty of misery in the Tampa Bay area. But the Category 3 winds and epic storm surge never materialized, sparing most homes major damage and easing fears that the area's real estate market could face a calamitous setback just it was enjoying such a strong rebound from the housing crash. So far, Irma's main impact appears to be some delayed closings and reinspections of homes under contract.

"Buyers want homes; they just want to make sure the home they are buying is in the same condition as it was prior to the storm," said Vincent Cassidy, president of Tampa-based Majesty Title Services. "The major thing we're dealing with is lenders who had approved mortgages and were ready to go but were going back out for inspections."

Even though traffic lights were out and trees were down, home inspectors hit the streets Tuesday. One gave the all-clear to a home in South Tampa that closed Wednesday. Overall, it's unlikely that more than 10 percent of the closings handled by Majesty's six bay area offices will be delayed, Cassidy estimated.

"Because we got that glancing blow from Irma, it doesn't appear it's going to impact our area except that (closings) that would have been evenly dispersed in September will be crammed in the last two weeks," Cassidy said.

Realtor Deborah Marcum watched nervously as Irma threatened with winds of 115 mph and a storm surge up to eight feet. She is one of the agents for Sunset Pointe at Collany Key, a waterfront condo community under construction on Tierra Verde in southern Pinellas County. As Irma loomed, nearly 30 units were under contract at list prices up to nearly $3.8 million.

After the storm passed, Marcum fielded numerous calls from buyers. Did anyone want to back out?

"Not a one," she said. "They just wanted to make sure their home was ok. They know the building is still standing and did not have any significant damage other than landscaping so I think they will feel more comfortable."

It has been nearly a century since a hurricane directly hit the Tampa Bay area and 32 years since Hurricane Elena caused widespread flooding. During the two most recent real estate booms, thousands of older homes in waterfront areas were replaced with ones that are elevated and far more wind resistant.

Although a hurricane could still have catastrophic effects on Tampa Bay, Charles Richardson takes some comfort in what happened to Punta Gorda's real estate market after Hurricane Charley slammed into Southwest Florida in 2004. Richard, now regional vice president of Coldwell Banker in Tampa, was living in the area at the time.

"There were a lot of people that came in and bought lots that were probably as low as prices could possibly be and built beautiful homes," Richardson said. "The renovation of Punta Gorda was spectacular. It's a beautiful little town but mostly new. It has great new homes built to hurricane standards so that was a very positive thing that came from that. It was an economic stimulus though not the kind of stimulus they were looking for.''

In Irma's aftermath, Richardson has yet to hear of anyone backing out of a sale. And he predicts that demand for homes on Florida's west coast will remain strong: Though the median price of a Tampa Bay house has risen to a record high of $225,487, prices are still affordable compared to many other areas of the state and nation.

"Living in Florida is still far better than living in most states," Richardson said. "With hurricanes you at least have advance warning, which is unlike disasters in most states.''

Tampa Bay's commercial real estate market is also experiencing a boom as population and job growth offset any concerns that retailers, distributors and others might have about the area's less appealing aspects.

"We have seen no drop-off in excitement for Florida because of rising sea levels or these hurricanes,'' said Lee Arnold, executive chairman of the brokerage Colliers Florida whose clients include TJMaxx. "This particular event (Irma) is a great example of what the new construction can mean when combined with strong evacuation leadership. All that comes together in a storm that covered almost our entire state and while we have losses, they are far less at this point than I expected.''

One thing that could wreck Tampa Bay's real estate market is flood insurance.

In 2012, while the area was still struggling to recover from the housing bust, Congress passed the Biggert-Waters Flood Insurance Reform Act that required premiums to reflect the actual risk of flooding. Soaring rates temporarily paralyzed home sales and prompted such outrage that lawmakers extended the National Flood Insurance Program and its rate subsidies to Sept. 30 of this year. After record flooding swamped Houston during Hurricane Harvey, President Donald Trump ordered another extension to Dec. 30.

But the flood program remains more than $25 billion in debt and there will be renewed efforts to make premiums actuarially sound — efforts that, if realized, could make flood insurance prohibitively expensive for tens of thousands of homes in the Tampa Bay area.

Realtor Martha Thorn specializes in waterfront properties in Pinellas County. She scheduled several closings that had to be postponed this week, but no one wanted to back out.

"I think a lot of people feel good about Pinellas,'' she said, "as long as flood insurance doesn't become a big issue.''

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate

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