What CRE Can Learn From Florida Migration Patterns Following Hurricanes

Amid Florida’s recovery from two major hurricanes in the past two months, the commercial real estate industry is watching to see if residents will move away in favor of calmer weather and if homebuyers will continue to flock to the state as strongly as they have in the past.

The Sunshine State’s propensity for hurricanes has not deterred people from moving in over the years. Florida’s population has grown to 23 million residents over the past two decades, even after suffering through hurricanes Charley, Frances, Jeanne and Ivan. Just last year, Florida added more than 365,000 residents, the second highest of any state other than Texas, according to an Associated Press report. This population influx has bolstered the CRE market in Florida.

But the state’s real estate market has slowed recently, with single-family home sales down 12% year over year in September. High interest rates and rising insurance costs are likely causes, but disruptive storms might also be a factor.

A Redfin report last month found nearly a third of US residents between the ages of 18 and 34 said they are reconsidering where they want to move in the future after seeing the damage caused by Hurricane Helene, one of the deadliest storms to hit mainland America in almost two decades. About 15% of those over age 35 felt the same. In addition to storm fatigue, residents also worry about increasing insurance premiums and non-renewals in hurricane-prone areas.

Historically, outbound migration from the Gulf Coast tends to be short-lived following hurricanes, the AP report said. However, there is no doubt that hurricanes reshape the demographics of impacted communities.

A 2020 study by the National Bureau of Economic Research found home prices in areas of Florida hit by a hurricane were 5% higher on average than elsewhere in the state because of smaller supply. Wealthier homeowners who can absorb price increases tend to make up a larger proportion of residents in areas hit by hurricanes. Even when existing homeowners choose not to rebuild after a hurricane, the land remains valuable and other people will scoop it up and build new homes to stricter building codes that will be less impacted by future storms.

In Lee County, population growth slowed to 1.5% from 4.4% following Hurricane Ian two years ago. Those who moved into the area were younger, and men with no spouse or partner made up a large share of people flowing into the area. This is likely because construction and recovery workers were in demand there. In addition, the share of the white population dropped while it increased for the Hispanic community, and the percentage of utility and transportation workers in the county jumped, according to the Census Bureau.

Four years after Bay County was hit by Hurricane Michael, the county’s population has recovered to pre-hurricane levels after dropping by nearly 6% following the storm. However, the median age of residents rose from 39.6 to 41.4 and more people identifying as multiracial or Hispanic lived in the county. The share of households earning $200,000 or more went from 4.3% before the hurricane to 8.3% in 2022, a sign that some of the least affluent residents couldn’t afford to rebuild or return, according to the AP report.