While Boulder’s real estate market is something of a localized anomaly, we may be able to draw some insight into upcoming market behavior by studying the results of other natural disasters.
- Hurricane Katrina displaced over 750,000 households. The regional real estate market recovered years after. From May 2008 to May 2009, there was a 23% decrease in home sales.
- Gulf Coast Oil Spill: BP set aside $60M out of the $20B claims fund for real estate licensees who suffered a loss of income.
- San Francisco’s 1989 Loma Prieta Earthquake: Fearful buyers pulled out of deals, the mortgage industry ground to a stop. The 1994 Northridge Earthquake in southern California kept consumer confidence low. The California housing market returned to robust consumer confidence at the end of the 1990s.
- 9/11/2001: The World Trade Center bombings did not destroy consumer confidence; instead rallied it. The New York City housing market experienced unprecedented growth.
Disasters that appear to broadly threaten the economy can send investors away from property and into Treasuries and government -backed mortgage bonds. What will happen in the Boulder area? It is likely that the rental market will be excruciatingly tight for the next 6 months, while displaced home-owners-now-renters fix their homes and move back in. Demand for rentals and storm damage will likely decrease the supply of sale inventory. Will buyer confidence decrease or will the flood spur people to get settled in some high, dry property? Leave a comment about your expectations.