Repair and reconstruction in hurricane-affected areas are expected to be slow
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The housing market will see tighter inventory, a short-term increase in house prices, and an increase in mortgage delinquencies as a result of recent hurricanes, according to an analysis released by Freddie Mac.
Given the extent of housing damage caused by recent hurricanes, Freddie Mac said it expects a growth in housing demand in nearby areas as families look to relocate. As a result, those areas will see an increase in house prices.
Additionally, Freddie Mac expects rebuilding to be slow, as construction positions have been difficult to fill. In Texas, 69% of contractors already found it hard to fill positions before the storm hit. Freddie Mac said it is estimated that the Houston metro area alone may need as many as 20,000 workers to handle the amount of repair and reconstruction work.
Areas affected by the hurricanes could see a 16% increases in mortgage delinquencies, according to Freddie Mac, which has already suspended foreclosures and evictions following the hurricanes. As many as 300,000 borrowers could become delinquent, or 30 days or more past due, while another 160,000 could become seriously delinquent, or 90 days or more past due.
The hurricanes also exacerbated the shortage of home supply, with total home sales for August at 5.9 million units.
"Texas and Florida together represent 24% of the total housing starts in the US,” Freddie Mac economist Sean Becketti said. “Housing units impacted by the hurricanes are a fraction of the total starts in Texas and Florida, so we do not expect a huge national impact. However, the hurricanes won't help with tight inventories. Building activities in the hurricane-affected areas may slow down as labor and capital gets drawn into rebuilding."
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Hurricane fallout drives surge in past-due mortgages
Hurricanes drag down new-home purchase apps in September
Given the extent of housing damage caused by recent hurricanes, Freddie Mac said it expects a growth in housing demand in nearby areas as families look to relocate. As a result, those areas will see an increase in house prices.
Additionally, Freddie Mac expects rebuilding to be slow, as construction positions have been difficult to fill. In Texas, 69% of contractors already found it hard to fill positions before the storm hit. Freddie Mac said it is estimated that the Houston metro area alone may need as many as 20,000 workers to handle the amount of repair and reconstruction work.
Areas affected by the hurricanes could see a 16% increases in mortgage delinquencies, according to Freddie Mac, which has already suspended foreclosures and evictions following the hurricanes. As many as 300,000 borrowers could become delinquent, or 30 days or more past due, while another 160,000 could become seriously delinquent, or 90 days or more past due.
The hurricanes also exacerbated the shortage of home supply, with total home sales for August at 5.9 million units.
"Texas and Florida together represent 24% of the total housing starts in the US,” Freddie Mac economist Sean Becketti said. “Housing units impacted by the hurricanes are a fraction of the total starts in Texas and Florida, so we do not expect a huge national impact. However, the hurricanes won't help with tight inventories. Building activities in the hurricane-affected areas may slow down as labor and capital gets drawn into rebuilding."
Related stories:
Hurricane fallout drives surge in past-due mortgages
Hurricanes drag down new-home purchase apps in September
