Buyers, sellers looking for home bargains in wake of Hurricane Harvey

Opportunities have arisen for many in wake of hurricane damage

Buyers and sellers are keeping a close watch on prices and availability of single family homes in the greater Houston area in the wake of Hurricane Harvey.
Some are looking for deals on flood-damaged homes to rehab and resell as an investment, while others are hoping to get a bargain in a neighborhood they might not have been able to afford before the storm.
Kelly Krenzke bought her dream home in Kingwood from a couple that were already considering selling prior to it flooding during the storm. The couple did some renovation work, then sold at a discount that put its price within Krenzke's reach.

"We're definitely excited to get into something that we wouldn't have otherwise been able to," Krenzke said. "I mean, we just have faith that's its not something that's going to happen again and are at the moment just so excited to be in an area that we otherwise wouldn't have been able to get into."

Ed Wolff is with the Houston Association of Realtors, or HAR.

"You know we had a very robust 2014, and 2015 and 2016 was some of the lowest inventories of homes available in 40-plus years in Houston, Texas," he said. "In 2016 and 2017 the oil market took a little bit of a downturn and the economy was slowing down."

But, when the storm hit, HAR's single family home inventory was still tight which increased competition for properties coming onto the market, whether those were in flooded areas or not.

Danielle Hale is with Realtor.com, which tracks trends in home sales.

"In general, because of the inventory conditions that we're seeing where there aren't that many properties on the market and there is strong buyer interest we've actually seen prices rise even in those areas affected by the flooding," Hale said.

Richard Fletcher's West Houston home of 13 years flooded during the reservoir releases. When the waters went down he faced the same tough choice as many without flood insurance: Remodel and stay in his homes, or sell?

Fletcher initially thought he would fix up his home. But in the end, he decided to sell it at a loss to an investor without making repairs so the investor could rehab and resell it.

"We met with different investors and finally got an offer that we felt comfortable with," he said. "We felt an obligation to the people in the neighborhood that we wanted to sell to someone that was going to do a good job on the remodel and it wasn't just purely a flip for as much money as they could get."

Those with flood insurance had another option, according to real estate agent Holley Madden. They could sell for less, or even just for the lot value without taking loss.

"The thing with people who are selling right now, if you have flood insurance you're getting about the same value you would have if you sold your house before the floods."

Looking at HAR single family home sales figures shows Hurricane Harvey did cause a drop in sales in August, but from September through February sales were up compared to the same month the previous year.

However, prices did dip in December and January before starting back up in February.  March saw a decline in sales, but there was a continued uptick in average sales price and both prices and sales jumped in April.

HAR homes for sale page

(Single Family Home Sales figures
sales are compared to same month in the previous year
-source HAR)

Month Sales Average Price
September 2017 Up 4.2% Up 5.4%
October 2017 Up 7.5% Up 2.7%
November 2017 Up 7.4% Up 0.9%
December 2017 Up 4.1% Down 0.6%
January 2018 Up 8.9% Down 2.1%
February 2018 Up 5.3% Up 0.4%
March 2018 Down 2.5% Up 3%
April 2018 Up 6.9% Up 5.2%

Wolff cautions its still too early to tell the total impact of Hurricane Harvey on single family home values.

Historically, he said it takes up to two years to know the true impact of a disaster on home values in neighborhoods that have been affected.

"When you take into consideration flood insurance and other financial incentives for people to sell their property as-is at lot value, you have a false understanding of what the market value really is, and until we see the homes remodeled and the investors that have put money into these homes and have resold them fully remodeled and renovated, and until we see new buyers coming into the neighborhoods who might have updated or remodeled their homes, we won't know that those values are," he said.