Housing market in areas impacted by Hurricane Ian likely to remain heated

Hurricane Ian was devastatingly destructive. But there's one thing it couldn't do: cool Florida's red-hot real estate market. At least not for long.

Worse, it will likely lead to even higher home prices and rents.

Even Southwest Florida's housing market is likely to stay overheated — even with the devastation that Category 4 Hurricane Ian caused in parts of the region.

Housing industry expert Ken Johnson expects a temporary downturn in the home purchase and rental markets as the region begins to recover from the hurricane damage. But soon the markets will return to their previous heights.

The reason? Pre-hurricane, the Fort Myers area was facing "a severe housing shortage." That's only going to get worse, said Johnson, an economist at Florida Atlantic University's College of Business, who is a researcher on monthly reports on the nation's home purchase and rental markets.

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Newly released rankings based on August data — compiled by Johnson and Florida International University Hollo School of Real Estate Professor Eli Beracha — show that the Fort Myers/Cape Coral area had the most overvalued housing market of the nation's 100 largest metropolitan areas. They found that Fort Myers' average home price of $429,775 in August was 70.43% above the long-term pricing trends for home purchases in that market.

"It's already a hyperinflated market," Johnson said.

"There will be people looking to buy in Florida when the debris is cleared away," Johnson said. "The hurricane won't deter people from relocating to Florida in the long run."

The other Southwest Florida market in Johnson's ranking — Sarasota/North Port/Bradenton — was the nation's 13th-most-overvalued market. Its August home price of $501,955 was considered a 54.90% premium.

“Even with the constant threat of hurricanes, people want to live here in a warm and business-friendly climate,” Johnson said, in discussing the new data. “Several storms hit the state in 2004 and 2005, and more since then, and there was concern that existing residents and transplants may choose to go elsewhere. But the state is as popular a destination as ever. People have short memories when it comes to storms.”

Johnson and Beracha said home prices also are likely to keep rising in Fort

Myers/Cape Coral, even in the aftermath of Ian.

“The area already was facing a shortage of homes for sale before the hurricane — and that likely will get worse with so many properties sustaining damage during the storm,” Beracha said. “The properties that are in condition to sell will be that much more valuable.”

Six of the seven other Florida markets in Johnson's rankings were among the nation's 25 most overvalued housing markets.

They included Melbourne/Palm Bay (No. 4), Lakeland/Winter Haven (No. 6), Daytona Beach/Deltona (No. 7), Tampa/St. Petersburg/Clearwater (No. 9), Orlando (No. 22) and Jacksonville (No. 24). Miami/Fort Lauderdale/West Palm Beach was the only one out of the top 25, ranking at No. 38.

"We're tremendously overpriced around the state right now," Johnson said. "It's still going to be wildly unaffordable to live in many parts of the state."

Their rankings cover a range of housing, including single-family homes, townhomes, condominiums and co-ops.

Average rents

A separate study by Johnson and researchers from Florida Gulf Coast University and The University of Alabama found that average rents in the Fort Myers and Sarasota areas also had among the highest premiums in the country.

Fort Myers' average monthly rent of $2,186.48 in August was considered 17.59% above where it should be — a premium that ranked Fort Myers second in the country behind Miami from among the nation's 100 largest metro areas. Fort Myers also had a 21.61% increase in rents from a year ago, ranking it second in the county in that metric.

Sarasota's average rent of $2,409.41 was considered 14.08% above where it should be — a premium that ranked Sarasota eighth in the country. Its 15.71% year-over-year increase in rents was the 11th-highest increase in the country.

The rental index covers the entire rental stock of both homes and apartments.

The researchers expect Hurricane Ian to have a short-term effect on rents. Areas hit by the storm already lacked enough rental units, and the disruption caused by Ian will only slow down needed construction, forcing rents even higher near landfall areas — if only temporarily.

“In the long run, people still will want to live in Florida, increasing demand dramatically,” Johnson said.

Dave Berman is business editor at FLORIDA TODAY. Contact Berman at dberman@floridatoday.com. Twitter: @bydaveberman.

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Resale price trends

Separate data from the Florida Association of Realtors shows that median sale prices of both single-family homes and townhouses/condos in southwest Florida have jumped sharply during the first eight months of 2022, compared with the same period a year earlier.

Here is that data:

Fort Myers/Cape Coral: Single-family home sale prices averaged $435,000, up 23.6% from a year earlier. Townhouse and condo sale prices averaged $328,000, up 36.7% from a year earlier.

Naples/Immokalee/Marco Island: Single-family home sale prices averaged $785,000, up 23.6% from a year earlier. Townhouse and condo sale prices averaged $475,000, up 41.8% from a year earlier. The median resale price for a single-family home in the Naples area was significantly higher than in the other 21 Florida metro areas in the study, with the Miami/Fort Lauderdale/West Palm Beach area second at $560,000.

Punta Gorda/Charlotte County: Single-family home sale prices averaged $389,000, up 29.7% from a year earlier. Townhouse and condo sale prices averaged $283,196, up 32.6% from a year earlier.

Sarasota/North Port/Bradenton: Single-family home sale prices averaged $501,000, up 26.8% from a year earlier. Townhouse and condo sale prices averaged $371,000, up 32.5% from a year earlier.

Those year-over-year price increases were higher than the statewide increases of 19.4% for single-family homes and 24.0% for townhomes and condos.

This article originally appeared on Fort Myers News-Press: Housing market in areas impacted by Hurricane Ian not likely to cool down