Hurricane Florence made landfall in North Carolina on Friday, putting millions of people in harm’s way, according to officials. In addition to loss of life, the category 1 storm is expected to cause billions of dollars in damage from high winds and massive rainfall as well as disrupt the economy and real estate market in a vast swath of the country.
As of Friday, the storm had already dumped up to 30 inches of rain in the Carolinas, with more expected over the weekend. Natural disasters of this magnitude have an impact on everything from basic needs to the economy. The housing market is is being dealt a huge blow, which is something seen firsthand in places like New Orleans and more recently, Houston.
Hurricane Florence is expected to disrupt national home sales, according to Danielle Hale, chief economist for Realtor.com. The Carolinas made up about 6 percent of homes for sale in the U.S. in August, and the hurricane’s damage is expected to affect national housing trends.
Hale says that the storm will likely exacerbate the already short supply of housing in the market. Unlike Houston’s market, which was able to right itself within nine months of Harvey, Hale doesn’t believe the North Carolina market will rebound as quickly.
“I don’t expect we’ll see the same degree of bounce-back in the Carolinas, because in Houston the areas that were affected were year-round communities. There are a lot of coastal communities in North Carolina that are vacation or seasonal,” says Hale.
For homeowners, the impact may be devastating, lasting months and even years, says Renae Gibson, an agent with Keller Williams Platinum, who lived through Hurricane Harvey. Harvey, the 2017 category 4 hurricane, caused massive destruction in Texas when it hit. There was an estimated $125 billion in damage, according to the National Oceanic and Atmospheric Administration (NOAA).
“Some people here, who got flooded, took a whole year to fix their homes. It’s equally hard for sellers. There are people whose homes were under contract and now the storm hits and they’re out of luck. They could be carrying two mortgages and have to pay rent because their new house isn’t ready and they can’t live in their old house,” Gibson says.
What happens to pending real estate contracts during a natural disaster?
Natural disasters damage property, creating a mess for homebuyers and sellers. Every situation is unique and state laws vary, so it’s important to understand your contract and specific laws that govern the property you plan to purchase or sell.
That said, there are some scenarios that are standard regardless of where you live. For example, if a state of emergency is declared in your area, then the offices that process home sales are often shut down.
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For folks who are buying and selling homes when a hurricane strikes, the process will likely come to a screeching halt, Gibson says.
If your area was hit but your home was not damaged or flooded, the appraiser still has to reassess your property. This can nullify your existing contract.
This process can take time because appraisers are busy dealing with dozens of requests. The appraisal might result in a reduced valuation, which can affect the loan status, the seller’s willingness to accept a lower price as well as the buyer’s willingness to purchase the property.
For homes that were damaged, contracts are effectively nullified. At that point, sellers have two options: they can take the property off the market, remediate it and relist it or sell it as is.
“If your house was flooded, now you have to find a contractor. Everybody jacks up their price. The materials aren’t available. You can’t just walk into Home Depot and Lowe’s and buy doors. Now you have to wait 8 to 16 weeks. This is the kind of stuff sellers are dealing with,” Gibson says.
Assistance is available
There are several ways homeowners can get relief and help after a disaster strikes.
- If you have flood insurance, be sure to check your policy and talk to your agent to find out what’s covered.
- Many mortgage lenders offer disaster-relief programs. Be sure to call your lender if you need additional time or assistance paying your mortgage.
- If Freddie Mac owns your home, visit this link for more information: http://myhome.freddiemac.com/own/getting-help-disaster.html
- If Fannie Mae owns your home, visit this link for more information: http://www.knowyouroptions.com/relief
- If your home is FHA-insured, call the National Servicing Center at 877-622-8525.
- For VA home loans, call 877-827-3702 to speak with a loan technician.
- FEMA also offers help and information for dealing with natural disasters. Visit FEMA.gov for more information.
Key Hurricane Florence real estate statistics*:
- Coastal markets make up a significant portion of the Carolina real estate markets, accounting for 39 percent of the nearly 96,000 homes currently for sale in the two states.
- Nearly 38,000 for-sale properties are threatened by the storm. The median listing price of for sale properties threatened is $284,200, just less than the U.S. median list price of $295,000, and slightly more than the typical Carolina listing price of $270,000.
- Coastal Carolina counties represent 1.8 million households out of 6.2 million total households in the two states.
- Homeowners insurance: 7 things to know about what hurricane-related damage is covered
- 5 things homebuyers must know about flood insurance