MARKET BREAKDOWN
HOUSTON
Looking Back at Harvey to See Forward inHouston THIS MARKET IS MORE THAN JUST WEATHER.
by Brian Spitz
ouston may not be the leading trendsetter for fashion and culture, but it is a thriving town where 2.45 million working professionals enjoy long, stable careers in energy, manufacturing, aeronautics and transportation. The city’s pop- ulation and real estate market are often driven more by busi- ness than glamor; but over the last year, and far more publicly than Houstonians are used to, the biggest headline has been the weather. There is much more to our market’s story, though. THE REST OF THE STORY Before Hurricane Harvey, an important story was already playing out that had a huge influence on the economy and real estate market: the boom in the energy sector leading into 2014, followed abruptly by a sharp downturn in the com- modities market. The net population that had steadily grown before 2015 was slowing down significantly by 2016. With fewer people attracted to Houston for its shrinking energy opportunities and more needing to downsize in the wake of layoffs, real estate investors were able to purchase homes at a discount. At the same time nationally, large real estate invest- H
ment funds that were capturing larger market shares had their sights set on Houston as an easy market to break into. Then came Hurricane Harvey. Over the course of the storm, 27 trillion gallons of water dumped on Houston, affecting near- ly 135,000 homes. Current estimates project that Harvey will be the second most expensive natural disaster in history, costing about $125 billion in damage. People in areas that had never flooded suddenly found themselves seeking higher ground, not just during the rainfall, but also afterward as stressed water reservoirs were discharged to avoid breakage. Hurricane Harvey essentially amplified what was already happening in the Houston real estate market. Dispersed and unexpected flooding meant that many homeowners who did not have flood insurance or the means to repair significant flood damage out of pocket would need to sell their homes. Local Houston real estate investors who were already en- gaged with the community during the energy downturn were prepared for the calls soon after the disaster as people came to emotionally difficult but financially responsible decisions to sell at a discount. In this way, the market recovered remarkably fast to pre-Harvey conditions because homeowners with the desire
90 | think realty magazine :: september 2018
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