As Hurricane Harvey wreaks havoc on the Houston area, it’s important to remember that the most devastating effects of severe storms often don’t show up immediately. The real estate market is a powerful case in point. Once the skies clear and the waters drain away, Houston’s housing market is likely to find itself forever changed due to:
One of the most powerful effects that severe weather can have is to change which communities are considered attractive to live in. In the wake of a major storm, residents of a city or region often begin moving to houses at higher altitudes. This can lead to an enormous increase in investment in those areas, raising real estate prices, improving the quality of housing, and attracting businesses to serve the new residents. Meanwhile, residents and businesses leave low-lying areas, leading to lower housing costs and fewer investments. Given Houston proper’s flat topography, Harvey may drive investment out of the central city and into the surrounding suburbs.
Besides changing where people live in a city or region, severe storms can also affect the total amount of people who want to live in that area, usually for the worse. Hurricane Katrina, for example, led to an exodus from New Orleans, and, even after 12 years, the city’s population still hasn’t recovered. To the extent that Harvey leads to less demand for Houston area housing, the local real estate market may suffer an enduring drop in demand and prices, leading to less development overall.
Not only will Harvey likely change demand for housing in the Houston area, but it will also affect the quality of that housing. The record flooding that the hurricane is leaving in its wake will saturate local houses. This will cause water damage in the short run, while increasing the amount of moisture in the walls, contributing to mold growth. As the mold spreads, it will undermine both the structure of the house and the health of those living in it, thereby decreasing the property’s value.
Mold is particularly challenging for real estate agents, as it undermines the safety and integrity of the properties they sell. Real estate agents who are unaware that their properties are mold-infested could end up in serious legal trouble when buyers discover the problem. Any real estate agent who operates in Houston will thus have a responsibility to inspect each house they sell for mold, report any problems to potential buyers, and adjust the price accordingly.