Houston area Realtor Shad Bogany had five closings scheduled for the week of Aug. 28.
And then Hurricane Harvey happened, drowning Houston with 51 inches of rain and paralyzing the city for nearly a week. All of those closings were put on pause, Bogany said, and he expects some of those deals will never happen.
“A lot of Realtors are probably having a loss of income,” Bogany said. “Imagine you had a bunch of listings in a certain neighborhood that flooded — you’ve lost all of that.”
Almost overnight, Harvey brought Houston’s robust real estate market to a screeching halt. Closings were postponed or canceled. New listings all but disappeared. Realtors found themselves inundated with calls from clients seeking temporary housing.
“For the last week or so it has really ground to a halt,” said Real Estate Broker Andy Taylor. “Other than rentals, which are on fire, the sales market is slow.”
Houston had one of the healthiest real estate markets in the country before the hurricane, according to the National Association of Realtors. Then came Aug. 25, with Harvey and its aftermath wreaking havoc on more than 50 Texas counties. The Federal Emergency Management Agency estimates that almost 800 homes were wiped out in Harris County and more than 119,000 were damaged.
Lawrence Yun, chief economist for the National Association of Realtors, expects a “pause in activity” — a slowdown in pending contracts and sales — in the Houston region in the coming months due to Harvey, and thus has downgraded his national home sales forecast for the rest of the year.
“The devastation caused by the hurricane and flooding could be enormous, and this will certainly have a negative impact on local housing markets in the short term as the focus shifts to recovery and residents get back on their feet,” Yun said last week, adding that “it’s too early to say what the long-term consequences will be to the area housing market and economy.”
Many Realtors in Houston say they are juggling the clean-up and restoration of their own homes, while simultaneously advising clients and helping them find temporary housing.
“My home in Houston is still under four-and-a-half feet of water,” said Taylor, who has worked in Houston’s real estate industry since 1988. His home, in Houston’s affluent Memorial neighborhood, flooded after water from nearby reservoirs was released, sending acres of water gushing into streets and homes that weren’t accustomed to flooding. Taylor said he didn’t expect the water to recede for another week.
Their cars were flooded too, so Taylor is working out of a Starbucks while he tries to find available leases for clients who suddenly need temporary housing. He is waiving any commissions on lease agreements, he said.
Mindy Tribolet has been a sales agent for 12 years for Bernstein Realty Inc. This week she’s busy trying to repair her two-story home in the Meyerland area, which was under contract and flooded downstairs. She doesn’t know yet whether the prospective buyer will go through with the sale.
She’s also been referring callers who need housing to colleagues whose houses didn’t flood. She said contractors came as soon as possible to clean up. Insurance adjusters came on Monday, and the drywall is out and the house has been disinfected, she said.
She and her husband, Michael Tribolet, had purchased another property about a month ago, in the River Oaks Shopping Center area near West Gray Street and Shepherd Drive.
“We’re pretty lucky we have a place to go,” she said.
Since Harvey swept through town, Realtors say their phones have been ringing non-stop with calls for temporary housing.
“We’ve been focused on helping people get into leases,” said Taylor, the broker. One client decided to offer his home for rent instead of for sale and “it was gone in 10 minutes,” he said.
“There is such a high-level competition for these leases that we’ve only been able to get a handful of people into houses,” Taylor said.
Metrostudy, which tracks the housing market, said the Houston metro was estimated to be oversupplied by 62,000-plus homes and apartments before Harvey hit.
However, the apartment market was expected to immediately tighten as displaced households and longer-term aid workers seek lodging, Metrostudy said. And the oversupply of housing will diminish as thousands of homes are condemned or damaged beyond repair, Metrostudy said.
Real Estate Broker Lance Loken said his group of agents gets 50 calls a day from people seeking temporary housing. But said it’s tough to find landlords willing to do short-term leases of only three or six months, Loken said, because that means they will have to try to rent their property again at the end of the year, which is historically a slow time in the rental market.
Tim Surratt, an agent with Greenwood King Properties said the Houston database of property listings has added a tag line for “did or did not flood during Harvey.”
“I anticipate an extremely pressured market this last quarter as our available housing stock in every price range gets absorbed from the over 200,000 homeowners/renters who will seek a dry place to land,” Surratt said.
Adding pressure to the market will be the labor coming to town to rebuild, he said.
“As we had billions and billions of dollars in damage, construction jobs and money will come to the rescue,” Surratt said. “All this construction, including the rebuilding of many roads, bridges, etc., that have been damaged will exert even more pressure on an already tight market.”
Ed Wolff, president of Beth Wolff Realtors in Houston, said the apartment occupancy rate went from 81 percent before Harvey, to 97 percent recently.
“There is opportunity for (agents) in situations like this, but it’s not opportunity you want,” he said. “The stories are devastating. We as agents have to take our clients through every step of the process. It is a psychological nightmare to flood.”
In the days and weeks ahead, agents are going to have a harder time estimating the appropriate list price for a home, Realtors said.
Typically, neighborhoods that have experienced natural disasters recover to a slightly higher per square foot value than before the event, “because you have a wholesale renewal of a product,” Wolff said. And homes that have flooded, if they are being sold as-is, will see their prices drop between 10 and 20 percent, Realtors said, though it depends on how susceptible the area is to flooding.
Wolff met Wednesday with a seller whose house would have been marketed for $470,000 before Harvey. Now, Wolff said the list price more likely will be $370,000 for the Meyerland home, which Wolff estimates will need about $50,000 in repairs.
Wolff said historically after other Houston floods, like Allison in 2001 and the 2015 Memorial Day flooding, home values on a per-square-foot basis increase, perhaps 7 percent to 10 percent, on average.
“But this is very atypical… history is not going to tell us what the future value of property should be because of the magnitude of this event. We don’t have anything in history to compare it to because of the size and scope,” Wolff said.
Loken is advising clients who want to sell to get their houses on the market as quickly as possible. “The buyers are out there,” he said, and are undeterred by the floods. “Last Friday, we put six homes under contract,” he said, with more homes under contract over the weekend.
Realtors say they expect “didn’t flood,” or “never flooded,” or “only flooded once,” to become popular marketing terms in Houston.
“With the magnitude of this event, ‘only flooding once’ is actually a positive,” Wolff said.
To make it easier for buyers and sellers, the local multiple listing service added a new box that Realtors could check as to whether a home flooded or not, Loken said.
Even with Harvey’s unprecedented flooding, Realtors say they are optimistic about Houston’s prospects for recovery, and don’t expect a long-term housing market hangover because it was so unprecedented, and Houston is a jobs machine and the headquarters for so many corporations.
“When you think about gas going up 25 cents nationwide because our city got hit by a hurricane, that’s indicative of how important what we do down here is,” said Wolff, who has been involved in flood control issues at the county, state and national levels. “You’re not going to move the ship channel further inland.”
Wolff said he doesn’t think there will be a mass exodus of Houstonians pulling up stakes.
“I feel like Houston is like the banks – too big to fail.”