What will the effect of the hurricanes be on construction/housing prices?

[Roger Feeley]

I read an article that claimed that there are not enough tradesmen in the country to rebuild Florida and Houston. That got me to thinking about what's coming next.

Insurance company failures: Particularly in Florida where the big companies pulled out. I fear that the companies that remained may not be able to absorb the losses. It all depends on the re-insurance.

Shortages:
-- Shortage in the trades: construction, inspectors
-- Shortages of materials: all kinds
then
-- A bubble of construction in Texas and Florida
then
-- Scandals involving shoddy construction work and materials.
-- Scandals involving flooded cars rehabbed and sold all over the country.

My takeaway would be that if you have to do construction, do it now. If you need a used car, buy it now or be very careful.

We recently built a house and I have to admit that I'm a bit concerned for the company. I'm guessing that they might lose people to high paying jobs in the south.

[Yonak Hawkins]

Roger, it may, also, depend on whether construction companies can maintain their crew of good workers with so many of them getting kicked out of the Country.

[Jim Becker]

There was a similar situation way back when SE Florida was devastated by (?) Andrew, at least relative to building codes, etc. The subsequent effort was apparently successful because all of that reconstructed housing and commercial space was in a much better place to weather the storm (pardon the expression) of the more recent event. Hopefully, the same will hold true going forward for both Florida and Texas as they rebuild from the shear destruction that was experienced this past week.

You raise some valid concerns about labor, materials and, unfortunately, unsavory contracting, etc., including shifting of labor from certain markets to the rebuilding effort. I guess this is a "mother nature enforced jobs program"...sadly, but realistically.

[Stan Calow]

Insurance company failures? No, just means insurance rates all over the country will go up to cover those losses. Thats the way insurance works.

[Frederick Skelly]

Insurance company failures? No, just means insurance rates all over the country will go up to cover those losses. Thats the way insurance works.

Yup. Hold your... well, hold on to your wallet.

[Jim Becker]

Insurance company failures? No, just means insurance rates all over the country will go up to cover those losses. Thats the way insurance works.

Some of that is going to be "real" losses by the up front insurance companies, but is also predicated on the re-insurance market and what they back up or not fully back up. Insurance companies actually take out insurance to cover themselves for catastrophic loss situations. There is, however, concern in the re-insurance market right now because of number of simultaneous disasters that are affecting their payouts to the base insurance companies. In the US alone, there are the two major hurricanes as well as the very expensive wildfires that are hitting the market hard. Fortunately, for folks in the US, insurance is regulated by the individual states and that can at least help mitigate rate increases for people in areas not directly affected by these major events.

[Stephen Tashiro]

Fortunately, for folks in the US, insurance is regulated by the individual states and that can at least help mitigate rate increases for people in areas not directly affected by these major events.

In regard to the flooding caused by hurricanes, is it the federal flood insurance program that covers it? That would put it outside state regulation.


Regulation can have some irrational consequences. For example, it's conceivable that it could put owners of beach property in the same class as owners of inland property and force inland property owners to share the risk - although I don't know that this type of regulation actually exists.

Federal flood insurance is based on "flood zones", so it's rational in that respect. In my location, the major risk for flooding is a break in the banks of a big irrigation ditch or a broken water main. I've never been able to determine whether various types of flood insurance would cover such floods.

[Stan Calow]

Federal flood insurance is a voluntary program, and in most places, few homeowners are willing to pay the premiums for it. Then again, it is federal insurance because private insurers won't take the risks. In the end, taxpayers cover the costs anyway since the program is subsidized by the government.

[Jim Becker]

Flood insurance is also only "pushed" when someone lives within certain areas, typically the "100 year flood" line of a given geography. In many of these store-generated situations, the flooding is well beyond the 100 year line and those homeowners typically wouldn't have even considered flood insurance. Compounding the pain, most homeowners' policies specifically exclude coverage for damage caused by flooding. Water damage from burst pipes is fine as is "wind driven rain infiltration", etc., but a big "nope" for flood related damage.

[Stephen Tashiro]

Federal flood insurance is a voluntary program, and in most places, few homeowners are willing to pay the premiums for it.

Full owners, yes - However, a bank that issues a mortgage may require flood insurance.

[Brian Elfert]

I believe if a mortgage is owned by Freddie or Fannie that flood insurance is required if in a federal flood zone. Even if your loan does not go to Freddie or Fannie your mortgage company is likely to require flood insurance to insure their collateral.

I have to have flood insurance for my detached garage and it costs $700 a year for $30,000 coverage. I do not have contents insurance to save money. My house is about five feet outside the flood zone so no insurance required.

[Mike Cutler]

1/3 of my property is considered inland wetlands. My house though is 22' above the 100 year flood plane.
I don't have to have flood insurance, but the neighbor does.his house is only about 4' above the flood plane, and within the 100year flood plane. He had to back fill to get that 4' .

[Steve Peterson]

Full owners, yes - However, a bank that issues a mortgage may require flood insurance.

There are many flood planes in the central California valley. Large areas of land have levees built to protect them from annual winter flooding. They get labeled as being within a 100 year flood zone and are forced to buy flood insurance. Supposedly, it is fairly expensive and the price of the houses are cheaper as a result.

Two issues result from these levee protected flood zones. First, the levees may be reaching the end of their useful life and there is not much money around to upgrade them. It is catastrophic when they fail. Second, some people buy a more expensive home outside the flood control zone, then the map gets re-drawn forcing them to add flood insurance.

Steve