Real Estate Update Report and the August 1016 Flood
Everyone wants to know how the Market is doing since the flood in August. Here’s a little update on what we have seen.
1. There are some homeowners, who have gutted their houses, own them outright, have flood insurance and want to sell. Those homes are selling for just under half what they were worth before the flood. Those numbers actually work pretty well for the person who wants to make a move to a new home. Investors are buying these homes to fix and flip, or maybe even rent.
2. There are other homeowners with no flood insurance who are getting some FEMA money. The FEMA money is not enough to fully repair a house, but it’s a start. Some people, again, who own their homes and have no mortgage, are still opting to sell their house, especially if they have a place they want to go. These homes are selling just like the example above. FEMA $$ can only be used to repair the house and if audited, you will have to provide receipts, from what we have been told. Consult your accountant or tax attorney if you’ve opted to apply for FEMA aid and are planning to sell.
3. Some people are taking the FEMA money and fixing the house as far as the money will go and then selling it at that point in hopes of recouping the FEMA money. Again consult a tax professional for advice.
4. And then, some homeowners are repairing the house to live-in condition (whether with insurance or FEMA dollars) and will either sell the house or move back in. Just depends on each individual situation. There are also special loans available through FHA and Conventional mortgages that work much like a new construction loan and can be used to repair a house. Rates run about a half percent higher than regular rates
5. And the last category we are watching are the homes that were for sale before the flood and the ones coming on the market now. We have not seen a big price increase like we saw after hurricane Katrina. The market is a little sluggish but has started to pick back up. As lives slowly return to normal then the real estate market will follow.
The Pat Wattam Team at RE/MAX First has been busy meeting homeowners in various situations to help them crunch the numbers and see what will work best for them. No one knows what the market will look like in 6 months as these homes start to be lived in fully again, either with the homeowner, new owners, or tenants. My outlook is that we will have neighborhoods with practically brand new homes and if the people REALLY update them, then that should get past the stigma caused by the flooding. My thought process is that if a buyer has a choice between a 30 year old home that has not been updated and the same home, same size, and price that has been beautifully updated, I think they will pick the updated one. Now, if the buyer’s choice is between a house that flooded and one that didn’t and they are the same price and same condition, they will buy the one that did not flood.
I believe it is crucial to really upgrade flooded homes if the sellers plan to sell in the next couple of years. Back in 1983, when we had that big flood and so much of Old Jefferson flooded, buyers didn’t want to buy those houses for the longest time. But then, years went by with no flooding and it once more became a very popular subdivision. I believe the Great Flood of 2016 is a different story because it was caused by an anomaly in the weather – and, in my opinion, also man made (which can be corrected).
If you or any of your friends or family have questions on how to proceed, please don’t hesitate to have them contact us. Our direct line is 225-298-6900.