Recovery After the Storm
Earlier this year, intense tropical storms devastated parts of Texas and Florida. As Hurricane Harvey hurled into Houston, Irma wasn’t far behind making landfall on the Florida coast. Given that both of these regions are hotbeds for real estate investors seeking strong rental yields, the RentRange® data team analyzed trends in the affected markets in an attempt to begin tracking recovery after the natural disasters. We used our RentRange database to pull rent trends for Houston, Key West, Pensacola and Tallahassee from January 2016 to October 2017.
Hurricane Harvey hit in late August, bringing record rainfall and flooding to the Houston metro area. Roughly 105,000 apartments and a whopping 196,000 single-family homes* were damaged by the storm. Evaluating the Houston market, we noticed an unusual uptick in rents after the hurricane struck. Given the seasonal decline shown in 2016, it was unexpected to see rents popping up after the storm. Additionally, we pulled data from Morningstar Credit Ratings, showing vacancy rates in the Houston metro rising to 9.8%.
Soon after, Hurricane Irma crashed into the Florida coast bringing winds upward of 130 miles per hour. Cities further west like Tallahassee and Pensacola showed little impact in rent trends from the storms. However, Key West showed immediate impact as rents rapidly declined in August and September. According to the BBC, nearly every home in the Florida Keys sustained damage from the storm. Data for October rents is not yet available but will be interesting to evaluate when it does become accessible. The Morningstar report showed the Sarasota-Bradenton-Venice metropolitan statistical area (MSA) experiencing relatively high vacancy rates, hovering around 7.7%
On a national level, average vacancy rates are starting to level off and are likely to drop in the next few months. Morningstar reported that in September, vacancies increased to 5.9% but are expected to decline as lease expirations decline in the single-family sector. Rents are still on par with our estimates, rising about 3.5% in September. The rating agency remarks that it is too early to attribute any of the rental or vacancy trends to the storms, but it will remain on our radar as times goes on and more data becomes available for analysis.